Reference: https://www.irs.gov/irm/part4/irm_04-072-011.htmlWhat you proposed is indirect prohibited transaction with is Prohibited! 

He is proposing one of the following: a.) asking $28K for the property purchase and he says it needs about $80K worth of work for a flip (which he'd like to do the work if I buy it).b.) bring $12K to the deal, do a joint venture, he'll do the work, and we split the profit of the saleI'm in the process of finishing my first flip and I've never been approached with such a scenario and I have no knowledge of the Zion market to know if this is a good deal. 

I would propose that people travelling to Silicon Valley using AirBnB are generally more savvy using technology.

They are even proposing rent control in some political circles on top of the $15 an hour minimum wage.

The fringes of the flooding area will be more salvageable than closer to the worst of the flooding.There may very well be new legislation enacted locally to protect against frauds and rip-offs.

As I prepare my next proposal I am trying to make a far offer that gives them one last chance to accept my original offer before they are absorbed into a nightmare of fines and repairs while not having cash flow.

.-  If you go the route you're proposing, check out the local regulations and zoning restrictions on "in-law" units (also called Accessory Dwelling Units or ADU's).

"Irwin,I've spent some time thinking about your proposed business model and, also, doing some research and, taking a conservative approach, have concluded that you would be selling real estate and therefore would be subject to real estate sales licensing laws.

What you're proposing could be considered a boarding house.

I read quite a few proposals online and most seem to get declined.