Seller likely does not want to 1031 exchange into another property, wants no management of the property anymore, and wants a somewhat passive income stream from holding the note.If you pay him 15% down that is a large chunk of change.It's different if they are financing close to 100% with 5% down and non-recourse loan.

One paid, one vanished so maybe someone will say they’ve had horrible experiences but I doubt it would be government caused.

trust deeds non judicial. so like in GA and MS  which is trust deed country or in GA its called a Deed to secure debt..it can be quit fast 90 to 120 days from filing the NOD .. in mortgage states and particularly NE states the process can take some time but usually at least one year.. to from what i have heard in NY it can take 3 to 5.. borrowers and lenders can also stall things out a bit using different methods.

Although if you publicized first come first served, I would find a reason to disqualify anyone who applied before this person you want.

However you decide to work it, make sure it is understood (in writing) that if they DO NOT purchase, the option fee is NON-REFUNDABLE.Good luck.

Let your lawyer add in penalty clauses for inferior work and non compliance with the time schedule.

This is not the business where you want to make mistakes or learn from your mistakes as if you get negative publicity upfront, those reviews will be there for a long time, and a huge majority of guests read these reviews before they decide on a property.I would also consider staying at another airbnb, especially by those who have high ratings and super host, to find out how they communicate or deal with their guests. 

In fact, most loans obtained for these purposes are non owner occupied loans and they may have pre-payment penalties, but that is getting way off base for this conversation.Lets stick to the topic at hand which is about how to set up QB for flip projects.

Or would this be non kosher and hurt relationships with future GC's?

This will vary based on how far your structure is from the connection but a rough estimate would be nice.You may want to call the public works division, I imagine they have to hookup the actual connections to the city service.