If the buyers are cash buyers why don't they just put their money in a CD and earn 5%?! 

Take care to not commingle funds.The best advice is for you to spend money 💰 with an attorney in your state that is focused on asset protection.

We did the real estate tour again 3 months ago but with the amount of cash we have, the home we want to build will be about $14k per month so I projected that it would lose money. 

Whoever has the money, is what will happen in Hawaii.

Then I could keep his/her deposit money and any capital improvements put into the building.

I would say the best thing to do if your looking to save money and make as little mistakes as possible is get one for the first property and is willing to grow with you.

I'd make sure you can get financing (eg are approved for that amount) and then if you're willing to take the risk of not being able to pull all of the money out that you expected and the numbers still work, then try it.

The property is nice enough and in a good enough location that I would be comfortable living there for that amount of time, but I am ultimately looking to make money on this deal. 

Analyze this with him and then 2) have him start bringing you properties that he has run numbers on, in a serious spreadsheet, have him sell you like he was your partner.When you think he's ready and has saved at least some money for a DP, help him get started with a little loan/gift.

I had 1 rental property in the past, thought this would be the starter rental to my portfolio ended up being a money pit and drove me away from real estate investing.