Or will it be paid out to each party and when.

The only insulation that stands even a chance of getting you close is going to be spray foam, and it's going to cost the earth.

Both parties may want to take the cash and run..

If so, that sounds exactly like mortgage fraud (a felony) and conspiracy to commit mortgage fraud.The easy way to test the ethics of a situation is to put yourself in the other party’s position.  

Neither party to a contract is entitled to unilaterally cancel it.

I'm sharing this in the "success stories" section because I can't stand how discouraged people get, and I truly despise the mindset of "i'll just wait for the market to crash"We need to find a way to make it work - no one will do it for us

Execution of a quitclaim deed is relatively simple, and requires little more than both parties signing the deed and, if required in the state where it is executed, having the deed notarized, acknowledged before a notary or with a jurat signed before a notary.

. - This will help attract and keep a quality renterSeek counsel from multiple parties. - You should hear the same advise, or something may be off. 

According to the IRS rules you are considered to be disqualified person to your IRA and as such are prohibited from providing any services to your IRA:https://www.irs.gov/retirement-plans/plan-particip...If you had a long term tenant you probably could get away without using third party property manager, however vacation rental will have high turnover, which will require significant involvement from you, and would be considered as you providing service to your IRA, which is prohibited. 

If they want a third party, that's no big deal, either- find a friendly broker.