They've got to either put more skin in the game that makes you whole or make it worth your while from a payment / cash flow perspective.  

The hard money lender will probably want to put a (2nd) lien on the property, and the title/escrow/attorney should disclose that to them.If you're trying to find it with a bank, I doubt even gap funders / private money would work because the bank wants to see your skin in the game as a borrower. 

While a 203K loan may make those concerns go away, you'd have to have really thick skin to do a short sale AND a 203K loan at the same time.

It may never happen, but nevertheless, I am determined for now to do what I can to find that one property which will allow me to start my journey into RE investment world.My advise to you is this: have a thick skin.

No lender does 100% regardless of the rate since you have to have skin in the game.

I've talked to other lenders in the past who wanted us to have a certain amount of skin in the game because of our lack of experience. 

I think you have irons in the fire and they're all glowing hot.

Or does this interfere with the "skin in the game clause?"

Has worked well for me but finding motivated sellers willing to keep some skin in the game for 18 months to 36months is tough since there are so many buyers.

His skin would be: it's local to him, cross country for me,  so he'd manage and rehab, and the 29k is coming from him at $500/month til done.