Are you planning on staying in that area?

If you choose to move forward, I recommend having a backup plan in case Hawaii outright bans STR.

My plan would be to use the equity loan from the second home to purchase another great deal (3rd home) and use the rental income from the second home to pay towards the equity loan and then start renting out the third home to get rental income and start paying off the mortgage on the 3rd home.

Nathan is right regarding timelines, need to plan for 60 days for anything you want.

Red flags for me include people who are overly optimistic without considering risks or those who don’t seem to have a clear plan for their contributions to the partnership.

Now I am brand new to real estate so this could be dumb but I'm reading Brandon Turners "Rental Property Investing" book and I was intrigued by chapter 3 where he list out 4 plans to start with when getting into real estate.

They are holding the proceeds from my sale and I am planning to buy a couple of DSTs shortly.

If for some reason I need to return security deposit at a different time I'll either take the 3mo interest from their security deposit, or I'll do a trade from my reserves. 

I actually have done a lot of research on this because I love 1980s and 1990s arcade games and plan to collect my favorite 7-8 games eventually.

I just bought my first rental property in Baltimore, MD, and I’m planning to rent it out by the room, including the basement.