That way,  you could legally use the money in the account to purchase investments such as real estate, etc.

Put as little money in as you can to buy it, but if you are buying in a location where you expect prices to drop 20%...why would you buy there? 

If you're serious & confident you can lease your properties up in time, you may want to consider putting significant rent money and EMD up front.Feel free to shoot me a pm or give me a buzz at contact info in bio - always down for a chat!

If you don't have sponsorship, by definition you don't have a deal - full stop. in some aspects, but but I'd argue in development you have to find land and partners at the same time. you have to have a competitive advantage and local knowledge. may not apply and probably different sectors. we break development up into multiple raises like Series A, Series B, etc in venture debt and discount equity tranches based on what stage the investor comes in for higher returns it's earlier like when we are investing in engineering services etc we recapitalize and spend our money with an equity sale and recapitalization. structured finance is so interesting 

And no matter how you try hard to be kind, people don't always see things from the Landlord's perspective when it comes down to money.

Is anyone using money market funds for this purpose?

If you have doubts do not go with it is my adviceIt is a lot of money if you have second thoughts rightThere will be other deals in Gulf Shores ALFrankly it is not such that thousand people are waiting in line to buy there:)

Is there a way to offer and buy a property for cash (either private or hard money) then refi into a mortgage at 95% LTV?

Also, since it is nearby the LA county areas, how does earnest money work?

You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property.