An alternate viewpoint is that the group is closing so many deals because they have an edge in a competitive market.

Establish an emergency fund and target stable long-term rentals or short-term rentals in markets you understand.House hacking or private lending can offer alternative entry points depending on your risk tolerance and hands-on involvement.

The alternative is to set up a self-directed IRA, or better, a truly self-directed Solo 401k plan, invest in alternative assets, and then do the conversion.

It kind of seems like you are looking to call their bluff but that only works if they are raising rents above market and you have an alternative. 

Take advantage of the lower downpayment programs early on and once you are tapped out of conventional loans, I would consider alternative financing. 

Alternatively, you're a 5 minute drive to the resort.

To navigate this, consider options like keeping your current home as your primary residence while house hacking a multi-unit property, using the HELOC funds strategically before moving, or exploring alternatives like a bridge loan or cash-out refinance.

I would recommending looking at your property through the eyes of the NBA, or Next Best Alternative, to see if there is a market for you property as a mid-term rental. 

Are there any red flags I should watch out for when dealing with buyers who propose alternative arrangements like this?

That said, there are alternative ways to meet the requirements, and with proper planning, you might not need to rely on these specific tests if most or all of the participation comes from you during the first year.