If you know your builder friend is legitimate and you think the risk is worth the reward, there’s nothing wrong with it.The builder could find cheaper interest for sure, but if you aren’t charging points or a 5k per lend it might work out to be a win win.

My county has a list of houses that have back taxes owed on them that is updated as people pay those back taxes off, but I am trying to learn how to scout the properties that are on the list and how to go about winning them at auction and how to take possession of them.

I would get together with your agent to get as much information as possible. generally the contracts are fairly buyer friendly so that you can back out due to inability to get financing (just dont get financing if you want to back out), upon inspection, etc.generally sellers are worried that deals will fall through and tend to want to release more information earlier so that should something get into contract, the deal will go through. if the deal falls apart, they are stuck with yet more monthly payments while the deal is in contract then have to put it back on the market which will take time to court ankther buyer.this leads me to believe that they are suspect or are worried and/or trying to hide information. they could be just poor negotiators thinking they want to take you for everything.id say: a) be totally comfortable walking away from the deal even if you have already put some $ down for inspection and what not bc it’s better to lose a little money than to get stuck win a big mistake long-term to lose even more moneyb) see if the other side would be down to just sit and lay out some next steps so everyone is on the same page. can use this meeting to listen and just use some empathy to figure out what’s going on on their side, why they’re playing the deal this way. it could be that they don’t trust you yet so they are guarding themselves

This allows the investor to negotiate a low price to purchase, allowing them to renovate and generate instant equity in the property.

Explain to them that it's a win-win.

There's your answer right there...you and other STR owners need to win positions on the HOA board so you can make your voices heard.I hate generalizing all HOAs, but I think HOA board members often view things as "us" (read: full-time residents) versus "them" (read: "rich" outsiders/investors). 

They ended up leaving after we served a 5 day which was a huge win, to be honest.   

You can win in any market, but only if you know your goals and understand the market you’re in.

Also, just because you qualify as an RE Professional one year, does not mean you will the next.When you work with a handyman, just put down, "Worked with handyman on x problem for x property.And yes those are some of the reasons audits are picked, the computer sees X amount of w-2 income and x amount of RE losses and you get hit with an audit, the key is to win it with no change, so that way the they can't audit you on the same thing for a few years.I highly recommend creating summaries and calendars.

Everyone wins.