It kind of defeats the purpose of investing in real estate!

We've sacrificed so much to build what we have now, and it would be heartbreaking to admit defeat.

That said, with an experienced flipper, hard money in LA should be between 10-12% and private money all depends on your own resources but typically 7-10% and not over 10% in CA due to usury laws (unless the lender is licensed or a licensed broker underwrites the translation -which defeats the purpose of avoiding a HML).

And b/c most s.s. homeowners are psychologically defeated by the time they need s.s. help from already working with the banks, and getting nowhere, I'd make it clear to them in your letter that you already have an experienced RE Agent that can work their s.s. for them, is specialized in s.s., and will work with the bank for them.

Make sure that you tell all of your friends who can vote in Kansas City to try and defeat this. it would be nothing but extra cost and hassle from a city that can't even enforce the  laws they have on the books now. 

And do you think that financing in personal name to later transfer the property to an LLC, defeats the purpose of the entity?

For me, investing/living in places like the high desert or even the Inland Empire and commuting to Orange County for work defeats the purpose of why I invest in the first place.

If they were fully refundable it would completely defeat the purpose of a deposit.Considering this is your first time dealing with this guy and you have some legitimate concerns, he should have no issue at all with you placing the deposit with the title company.

Defeating the purpose of the strategy.  

It defeats the purpose of an investment.