That means that I have to either: have enough cash to make the purchase and do the entire renovation (I don't) or move into a house that isn't yet adequate and live in a major construction project for the next 6 months (I don't want to).Is anyone aware of a lender that will do a cash-out loan without requiring occupancy prior to closing?

Depends on how will be doing all the leg work and putting up the financing. are you experienced or is the new partner bringing the experience. if you are putting financing and leg work then I will go with a higher %. if everything is split evenly then you can go 50/50 on profit. please create operating agreement to avoid issues later down the road.

I think it is related to the high property taxes, high cost of living in NJ in general, the new SALT law and creeping mortgage interest rates...those who don't buy with big profit margins built in will be challenged to make money when they exit the deal. 

(Due to the fact that I handle our finaces and his language barrier) with some major upgrades done to the house, we have a little bit of equity in the home and our lender has talked to us about digging into our line of credit.

Since there's not a lot of upside equity potential, would you buy and hold and keep generating $700/mo, or establish a good rental history and sell it off for $60K in a year or so, potentially putting $28K in profit back to the IRA?

If your going to add an serious equity and sell for a profit, it most likely wouldn’t be in good enough condition to pass FHA loan.

Being a Realtor is one of the most profitable real estate businesses you can run if you are a top producer.

Some split the profits too, but it does not seem as common.

The costs alone will massively eat into your profits and a home run might become a base hit, at best. 

I made a fair profit, left the property better off than I found it, and had a great tenant.