This is a new venture that I'm looking into and real excited about. 

I would get an attorney or title company involved to create your loan documents to ensure they comply with the law and cover all the aspects you need.Another method that is likely your best bet to take on investors is to create a joint venture (JV).

Aren't they losing money?

if it is unsecured loan that is the consequence, you lose they entire thing. as far as tax write off, sorry but none.

Meaning that if you fund a $5K EMD and then decide not to close you lose the EMD, or you pay for an inspection up front and risk missing out on the deal while you're waiting for the report.

Buy and large I manage these rentals and we think of it as my side venture, not his.i already have the LLC but my tax guy won't file the rental in the llc because he says I need more than one rental and probably a Different kind of business entity.

There are many ways to buy cheap elsewhere but still lose your shirt. 

This property gives me significant income, so losing it would be an extreme loss.

My vision includes developing the land into a destination with features like driveways, walking paths, utilities, and unique lodging structures.Here’s my tentative plan1.Place the existing STR in an LLC2.Apply for an SBA small business loan to fund the next steps, including a feasibility study (~$10k+), land clearing, and infrastructure development.While this direction excites me, I’m torn between pursuing this venture and continuing with a more traditional approach—buying one home per year using conventional loans.I’d love to hear your thoughts:•Has anyone transitioned from STRs to glamping or similar ventures?

I would venture to say very few landlords correctly hold their deposits based on local landlord/tenant law but as long as the money doesn't walk away and is not wrongly withheld from tenants its highly unlikely wrongfully storing the funds will become problematic.