The benefit of the conventional loan as opposed to a 3.5% down FHA option is that you will topically see lower interest rates and have the ability to terminate PMI payments once your LTV hits 80%.  

For us the willingness to put our home on the line came down to repayment ability.

I have no idea about whether this is legal or not but it sounds like you are selling your position/assigning your right to purchase back to the seller who has the ability to buy this position from you just like any other buyer.

You could offer them an option to pay a fee in place of rolling the dice on your ability to re-rent it (I think a lot of management companies do this), but I think if you tried to put in a fee like that it would be voidable by the court.

This will depend on the buyer and their ability to repay.

@Mark DavidsonHere are considerations in choosing a Solo 401k provider and bank to provide the account:Solo 401k Bank Account Considerations:Here are some general considerations:If you want access to bank checks, a debit card and/or the ability to ACH funds out, you will need a bank, credit union etc. rather than a brokerage.There are 100s of banks and credit unions that have opened accounts for a Solo 401k.Keep in mind that the bank's role is limited to simply providing the account (i.e. no tax reporting, no recordkeeping, etc.) such you may wish to de-prioritize familiarity with Solo 401k plans and focus on other things that are important to you (i.e. branch locations, fees, etc.).If you want the ability to invest in stocks, mutual funds, etc., you will need a brokerage account.Many brokerage firms will open "free" accounts (i.e. no setup fee, no maintenance fee), which will also come with checkbook access and the ability to wire funds out such that they function as a "hybrid" between a bank and/or brokerage account.If you are looking for names of banks that open bank accounts for Solo 401k plans, there are many banks where we have received positive feedback including Wells Fargo, Bank of America, PNC along with local banks and credit unions just to name a few.

The amount of time spent managing the day-to-day hinders the ability to grow the portfolio/ scale the business! 

I received a bill for $1,300 from the sewer company, basically all of my cash flow.

If this is your plan but you have the ability to hold the property longer in case you have to, then I don't see anything wrong with this.

The value you bring might be in the form of capital, experience, access to deals, the ability to put in a lot of work, etc., etc., but you have to bring SOMETHING to the table. ...regardless of what type of value you bring, it has to be sufficiently valuable for the mentor to benefit (and if the mentor is a highly experienced and successful RE investor, their time is extremely valuable, so they ain't gonna come cheap!).