This will be non-owner occupied. 

Yeah negative equity is not good, and make sure that the lender is on board with 5% down for a non owner occupied investment property before assuming that they are. 

There are ways to off set the fee, charge pet rent (I charge $250 non-refundable and $50/month per pet), some tenants have two dogs and pay $100 a month extra. 

Is there a contract (verbal / prospectus / partnership)?

I am not a lawyer, but I believe you are in the clear to send him a new check, non certified, as long as you keep the original, unopened and returned check that shows it was sent back as undeliverable. if he ever makes waves surrounding the sec deposit, you can then show the judge that you sent the original by certified mail within the legal timeframe. in addition, save the written correspondence showing he refused to accept a certified letter.

Since IRS rules do not allow you to provide personal guarantee - such loan must be non-recourse.

On the other hand, I feel that some of their other funds (for example the ones involving ground up construction) are too speculative for a conservative non-accredited investor doesn't have a lot of extra cash to speculate with.

My husband also has a friend who works for Real Estate Reformation, another fairly non-standard brokerage, although I don't know a lot about it.  

You take a non-cash flowing piece of dirt.

@Mason Clark It's not clear if your offer is in writing or just verbally?