Everyone we have networked with says we must have skin in the game to do any kind of joint ventures/learn from them or even join a team, which we would love to do, however we basically gave our life savings to a family member to deal with a health battle.

I may be misreading this, but from my experience of human nature and working with teenagers, if you see this young man as a "punk" or "jerk" and treat him like one, he'll fulfill that role.

- well it all depends on the nature of the LLC that you have a membership in. 

Alternatively you can use private or hard money for both the purchase and the rehab but you’ll most likely need to have skin in the game and put down 20-30%.

This seems like an assumption or a resilience to ask them (which is totally natural).

It depends on if IRS considers you an investor or trader. they look at different factors, I pulled court cases where they looked at these:(1) the taxpayer's investment intent; (2) the nature of the income to be derived from the activity; and (3) the frequency, extent, and regularity of the taxpayer's securities transactions (Kay; Mayer; and Moller)  A taxpayer is a securities trader only when both of the following are true: (1) the taxpayer's trading activity is substantial; and (2) the taxpayer seeks to profit from short-term swings in the daily market movement, rather than to profit from the long-term holding of investments. 

Growing from 2-4units to larger building is natural progress, i don't thing is "biting off more than I can chew?"

@Greg Horowitz  naturally if the property is older and not rehabbed you will have higher maintenance.

What is the nature of the work?

If they have no skin in the game and they aren’t playing a “mentor role” I don’t know if I would give a percentage of the profits.