If you don't already own a home yourself, I always suggest house hacking as this gets some skin in the game, but also allows you to learn hands-on and offset your mortgage payments.

Or it may be surface water flowing from another lot, or surface water piling up from rain and not soaking into the soil, which may be some type of backfill they had dumped in at some point during the construction process to grade the lot higher than it was when they bought it.

I'm very conservative and want conservative leverage percentages, long-term fixed rate loans, high skin in the game and sponsor that has experienced at least one full real estate cycle and lost little to no investor money.

I think you are on the right track however its going to be necessary for you to have some "skin in the game" sooner rather than later - while it can be appealing and seemingly possible to build a significant real estate portfolio with all of "OPM" the reality is you are probably going to need to have some equity in these properties - 20% or so down from your own funds to keep building. 

Needed to get my skin in the game and found a great opportunity with a wholesale deal and had a good visible gap between our buying price and the value of the home so I interested me to this deal because of the way that me and the team would be able to learn and handle these opportunities in the deal to maximize ROI and asset lifespan of performance.

Investing with none of your own money is also always an option, but understand, when you have no skin in the game, it typically means that you will be giving up more equity at the exit and/or splitting majority of the cashflow during the hold.

We have charged $500 as a damage deposit since day one.I am of the belief that they need to have some skin in the game.

Your brain is going haywire and your body is simply trying to do all the changes and still fit into your skin.

Is there a driveway/patio/other solid surface near your house that would drain water toward the house?

They would require skin in the game (cash) and your analysis on a specific deal before funding 80-90% of the purchase price + construction costs.