They own a house and relocating for work.Party2: Willing to pay $4,450.

I wanted to purchase a vacant house adjacent to two of mine years ago and it ended up selling, listed/sold same keystrokes to someone with a connection to the nonprofit for less than what I would have paid. 

My question is, why did you buy a house for 115k that you didn't plan on rehabbing with a hard money loan?

We also had the option of another type of policy that was even less expensive that would have required us to spend at least 1 night in the house and rent it at least 30 nights each year.

Learn the eviction procedure for your area, perhaps contact a lawyer in the field to help you with this one, and get the fraudster you're currently housing out on the sidewalk to sleep in a cardboard box where they belong.You're going to lose plenty of money here, but this will never happen to you again, and you can minimize your losses if you move as quickly as possible.

Once I placed an ad for a 1BR apt, an open house and people started coming.

It may make the most sense to focus on home 1 and then leverage the funds from that sale to complete house number 2 and purchase more projects. 

Yes we are all in house.

Quote from @Collin Luckett: I have a couple houses I’d like to put under contract as fix and flips and would like to you private money lenders to help fund.

I wanted your typical 3 bedroom house (not necessarily 2 bath) which cash flows.