Once the plan is in place, which admittedly might take some time, they will pull your money (usually plus a bit more the eat away at the past-due amount) from the debtor's paycheck and the court will send the money to you.

To finance the remediation we took out a HELOC to the tune of $70k with a bit of money from insurance (another saga) ... paying $600 month interest only on HELOC.The house was just appraised at $514,500. 

As you've now likely wasted (or will waste) money on an inspection. 

Despite these challenges, we didn't lose money.

Its way easier to pierce the corporate veil than you think, and you'll most likely spend time/money on an LLC and it wont matter. 

I mean what are they getting for the extra money.

There’s many names for it, hard money, private money, reno loan, bridge loan. 

I started hosting on Airbnb when I would go away on business or on vacation, and began to really enjoy the hosting experience and that high of making money from a passive investment.

Private money lender How did you add value to the deal?

But you have to be careful where you invest and who you invest your money.