I also have $100,000 in the bank, and I'm trying to figure out what steps to take next.

For me, I am a little hesitant because I would be in a situation where I would be trying to secure traditional lending (which should be very feasible given credit scores & what $$ amount I am pre-approved up to from my banks), meaning that I assume I would be forced into using my first-time homebuyer loan incentives.

And equally for the buyer, if you want to renovate and refinance or cash out, wouldn't you have to pay off the entire mortgage at that point and the bank would know it was always the buyer paying off and not the seller?

Just like any bank..

I offered $100k cash sale or a $150,000 bank sale.

Is any bank offering a HELOC based on the combined equity?

That's a technical banking and legal term.

The funding comes from people like me; usually there is also a bank loan, which increases the overall return (but adds a risk, obviously).Overall, I am very impressed by Neal's approach.

That is the best option if you are truly trying to help a family member.you cannot get control of the mortgage, you can do sub2 but you are not in control, the bank could call it due if they see the property transfers title.The other way is for you to buy it from them at market rate, then rent it back to them at market rate.

You could see if there are any local banks that would do a HELOC(tough to find).