@Jerome Morelosno offense but... this doesn't make a lot of sense to meHELOC rates are high so for this to work you'll have to give them a great return to make this work for them...way too complicated for my taste

Someone had mentioned that the option they want is WAY more expensive than an owner's policy of title insurance. 

In highly touristy areas like lakes or vacation spots, an STR typically generates higher income from short stays but may not attract long-term tenants due to seasonal demand.However, if the property is in a more versatile location, such as near schools, businesses, or urban centers, it may work as an LTR, providing steady income and fewer management demands. 

You now have $5k in unreimbursed expenses, and 2 houses; one with a $200k mortgage worth $250k (giving you $50k in equity), and; one with a paid off HELOC, value and mortgage unknown, but presumably with more than $165k in equity.You should also treat the $5k unreimbursed renovation cost as a debt and pay it back (even to yourself) accordingly.There is no tax due because not only did you not make any realized gain, but there was no sale. 

We have already been offered 209k for the land itself, and it's likely able to fetch a fair bit more.

To offset no income 'reduction' from lack of qualified rerirement plan contributions I held a lot of real estate with low land value. 

Being 20 and having sex with a 17 year old or peeing on a public street is a lot different from raping a 5 year old.You rented to him and there is nothing now you can do.

I love the area however, I have done a lot of research and am having a hard time making the numbers work out in terms on COC return.

Makes your property more accessible (at least on the surface).Bad: Has a cost which is not used most of the time.

I’ve worked with a lot of first-time buyers, and common concerns like HOA restrictions or property management costs often come up.