So the one's on the sidelines that did not get involved, and or are not coming from a position of strength--- now no longer can invest. 

Typical cost for the setup would be in the $15,000 range which would include production of the Private Placement Memorandum, Subscription Agreement, and Operating Agreement, Investor Qualification Forms, as well as filing Form D with the SEC, and state “Blue Sky” filings in those states where your investors reside. 

Then there were some issues with the inspection report that ruined 3 contracts prior to me getting involved.

I’ve been involved in real estate investing for over 30 years, so if you ever have any questions or need guidance, feel free to reach out.

The guy has already stated that he doesn't live there so that alone proves that he knows that was never the intended use (is their a police report or statement for your file?).

You could also try looking up money judgements filed against local businesses at the magistrate level and target them with direct mail or driving for dollars. 

File a complaint against them with the state licensing agency 

And I also see many questions popping up about running a short term rental business, which to me is more of a business than an investment although it does involve an investment in real estate. 

When you build a relationship and use a Banker time and time again they know your file, credit, and can determine what program would be best for the next step or cash out refinance.

Quote from @Garry Lawrence: I need advice on a serious situation involving a property I’m about to buy.