Should I continue mediation or pursue legal action (considering the time and costs involved)?

This is a big legal issue that may weigh in favor of the investor.

I was interested in the finance and legal aspects of operating a multi-state buy and flip equity fund.

Get a real estate attorney with some experience in the matter and have them use a PSA and back you up legally, perhaps even help with some due diligence.

I also don't know if it's legal.  

If you like the the area and can afford the house it would be like buying a luxury or sports car.

Any idea how much legal help would cost?

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

After he teamed up with a local intermediary in the Bay Area.. from what I read in the Wall Street Journal, Lockton has been helping investors streamline these moves.. he ended up freeing enough capital to invest in a mixed-use building in San Antonio that we’d been eyeing for a while.I’m no attorney or CPA, so I’m not giving legal or tax advice here, but there’s definitely something to be said for repositioning your insurance to fit your broader investment goals.

My figures are below.TaxDeed Winning Bid: $489.00 (My Bid May 2013)Property Clean-up: $450.00 (mowing, trash removal)Taxes & Insurance: $80.00 (2013 & 2014)Sale Advertising: $130.00 (Signage, Newspaper Ads, etc)Filings & Legal Fees: $245.00 (Deed, Lien Releases, Sales Agreement Docs)Total Costs: $1395 (approx)Sold for: $3250.00 (August 2014)That is better than the 25% I would have received if the property was redeemed during the redemption period.