The fact they ask you to do this is not only a red flag for obvious reasons, but also because, they should know better how risky this is for you and if they had true good intentions they would have understood that and not offer you that option.What you can do is tell them..

Even you got hung up on the HELOC red herring.

On paper we were slightly in the red but much of that is due to one-year expenses/repairs & allowable transportation costs to get up to the property for work days ourselves. 

He was soooo deep in the red ON PAPER, and didn't know what to do.

That's the beauty of passive investing.

Any GC that does not work like this is a huge Red Flag and you should run away.2) Also any experienced GC should have theur own state-legal contract that spells out terms clearly and protects both of you.

They're definitely ahead of the curve, but Northwest Arkansas has very little red-tape when it comes to building.

Red tape with trying to get the HOA board to approve repairs.

I hope you were able to catch some reds and sea trout in the bay.  

Because that can be a red flag.