For every person that jumped in the ocean and swam, I'm sure there are many others who drowned and were left in ruins.  

We're nervous about this getting much worse or the house getting ruined before we can finish this deal(assuming we even decide to proceed-the home is owned by a family friend but vacant).  

I can write an entire page on this but that will take too long. you'd benefit better from reading a book about it.Unless you are finding a property at a MASSIVE discount, I would not suggest choosing hard money. there is a better chance of the deal going south and then you've ruined your name/credit.Just an example of being safe: You find a property at 50% under market value that doesn't require TOO much rehab, so in example, you'd want some cosmetic touches, updated kitchen, bathrooms etc.

There are so many moving parts to the process and an uninformed appraiser can ruin a good deal. 

My advice is to never get yourself into a situation where a friend or family member has financial or decision making power over you, because you never know when it will go south and ruin your personal relationship. 

seen all carpets ruined with pet urine and stink oh and subfloor had to be ripped out as well . thousands in damage can happen if left long enough

I think I am making a big mistake by not acting but fear that acting without proper education could ruin me.

Also, you would bill your friend each month for the charges they own you.I would also suggest making up a contract between you and your friend, so everyone knows who is doing what and there is no opportunity to have a royal agreement about something and ruin a friendship.

Ask yourself, if things go badly, will this ruin our relationship?

The risks of ruining your credit or getting sued are significant.