I am working to get all of the numbers straight and potentially extend or move to a new lender to push this through.  

This can provide a better depreciation benefit than traditional STR real estate.If permanently affixed to land, it qualifies for real estate depreciation (27.5 years for residential properties).Considerations:Zoning laws and campground restrictions may impact legality.Self-employment tax risk arises if you provide substantial guest services.Vacation home rules apply if personal use exceeds 14 days or 10% of rental days, limiting deductions.Audit risk is high, so keep detailed records of participation, expenses, and rental operations.Given the potential tax benefits and complexities, consulting a real estate tax professional is advised to ensure compliance and maximize deductions.This post does not create a CPA-Client relationship.

OP I think you’re in a great geographic spot and potential REI strategy potential.1.  

My question is do I go forward with purchasing the property and deal with the higher insurance and potential hazard or is it smarter to walk away?

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

Since you haven't received the funds yet, you cannot claim any loss for 2024.If you receive the 10% return of principal in 2025 and the investment is officially terminated or sold at that time, you could potentially claim a capital loss for the remaining 90% on your 2025 taxes.

Also 4th quarter of last year Packwood and county officially did discuss potentially regulating STR's by either limiting numbers or adding a tax to cover increases in local services that are needed. 

Also, be sure to factor in maintenance and potential CapEx, especially for older properties.

I’m brainstorming ideas on how I can market myself to potential mentors in the STR game in order to gain experience.

   #3 if the pricing is such that investors are attracted and HOA does allow investors, they can potentially change the rules.