The future owner would like to do the work themselves or with an unlicensed (and very affordable) contractor, but to get a permit they need a licensed contractor.  

Settlement lawyers I have come across use agent to buy, I will not go to any state that I am unlicensed in and buy without an  agent.

As an unlicensed builder your GL will not cover completed operations.

(Other financing arrangements might be possible.)You can only obtain one home equity loan per year, even if you have fully paid off the prior home equity loan.Regulation of LendersTexas restricts who may lawfully issue a home equity loan.An unlicensed person is not permitted to make a home equity loan unless that individual is either related with the borrower to the second degree, or is the seller and is providing financing for the property.A home equity loan must be secured only by the home itself, and the lender may not attach the loan to any additional assets as collateral.

@J Zhang, no not if you are an unlicensed broker in the state of Colorado.

You can still work with an unlicensed person, as long as they know what they are doing, and you can hire a licensed representative if you have to fight the IRS later.The single most important factor in selecting your tax person is technical competence.

If a wholesaler is unlicensed, and not under the jurisdiction of the CA BRE is there any recourse? 

Never hire unlicensed contractors.

If this happens, we will likely convert the property to a furnished or unfurnished LTR.Due to Airbnb and VRBO now requiring short-term licenses in Las Vegas for properties to be listed on their sites, unlicensed properties may turn to renting their properties out as mid-term rentals.

.), fail to execute contracts with vendors, use uninsured and unlicensed vendors, fail to be added as additional insured (likely don't even know the difference between being a certificate holder and being added as additional insured).