IRA lending new construction and llc or llp

[Bret Ballard]

I would like to buy some property and have a spec home built for resale. Then rinse and repeat the process. My brother and his wife each have 401k's from a previous employer that they aren't actively managing and are interested in using for their high risk portfolio/s (both accounts are ~$160k) but they want to be as much hands off as they can.

We see 2 possible scenarios that we are considering that both appear to be legal but unsure on which would make the most sense.

First, they could convert to SDIRA's and separately lend toward my projects where one house is built using loan from Brother's IRA and a different house is built using loan from Sister-in-law's IRA in order to keep their accounts from doing business with disqualified persons.

Second, it appears that it may be possible that they could again convert to SDIRA's then use those to invest into a single LLC or LLP (unsure on which would be more appropriate and would have local lawyer set up if this path is taken) that I (or an LLC I already have) also am a part of and then I(or my llc) manage that company to have the spec homes built and sold.

I feel like I'm at the point that I've researched so much that I'm now forgetting as much as I'm taking in and want to get pointed in the right direction to start down the path of making this a reality.