I'm looking to have the lender lend money for the purchase of the land and then draws for construction. 

If it’s like a work friend that might be different but otherwise I’m a big no don’t do it advocateGood luckYou can get a lawyer to draw you up a lease if you want but you probably don’t need it.

A few get better prices and a few more overpay at the auction.Scenario 2 is essentially the Adverse Possession route mentioned by @Jerel Ehlert   But as he subsequently noted, Adverse Possession will not work unless the legitimate owner has abandoned his/her/their interest in the property.   

Older lines can be maintained with jetting (picture a pressure washer fed down the pipe to cut all the roots) and subsequently RootX type products.

My fear of this route is that we will only draw in tenants that we may not want to deal with.Pulling in a new mobile will be expensive and our equity will be next to nothing over the course of the next few years. 

So pretty straight forward.  3 points up front = $3k.The tricky part is that you'll need downpayment, cash reserves and you'll have to front the initial rehab and get paid back in draws, and that varies by lender.  

@Matt Davis I was fortunate to have not made any mistakes on my first, although I have made up for that over time with my subsequent purchases!

How common is for a group of investors to sell properties amongst themselves to inflate the apparent value of the property before approaching a HML to draw out the value?

Write down what was agreed to, have both parties sign off, and have a lawyer(usually sellers counsel) draw up a contract based on the agreed terms.

Let the buyers draw their own conclusion see if it is a good deal for them.