After you get a few deals under your belt you'll start to recognize the difference between "properties that are for sale" and "properties that NEED to be sold". 

(You might not want to try this approach if you are a soft sale because they will be very good at what they do, and they are a good option for people desperate to sell who want to offload a problem).Partnering with an expert is not a bad idea if they have a proven track record, can sell the property without paying listing commissions (they will need to be licensed) and if they will put the renovation money up and manage it. 

It sounds like you recognized the red flags fairly early on, yet you decided to proceed with things until the red flags become too numerous.

If a project was funded, then completed successfully and profits distributed, that sponsor's next projects would be funded even faster as he has proven himself and made investors happy.

I don't have the experience raising money, but from what I've read and listened it's showing a proven track record to show your experience and professionalism.

It may very well be, but I'd guess that this behavior is recognized as undesirable for lienholders because no one will bid the properties at the auction because this sort of behavior discourages it.  

If your mortgage was FHA then LTV would only be recognized from the original value.

That being said, there is a lot of competition at the auctions these days and the chance of an "amazing deal" not being recognized and bid on (and probably bid way up) is slim to none in my experience.If you're interested in auctions though, there's nothing wrong with going to watch and see how it works so you'll be more prepared when you have the money to be an actual bidder. 

Forming a series LLC (assuming your state recognizes them) will also make life easier on you.

I can't tell you how many books & tapes I've bought on shiny real estate things :) Pat yourself on the back for recognizing the danger, and pick one or two things to start with and learn the ropes on.