A lot of people under-estimate how much work is involved with owning real estate, especially if you go the route of self-managing.

These programs very commonly involve restrictions and conditions on use, refinance, or resale of the property. 

The STR is a lot more work and even if you get a manger, you may have to be involved.

In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do.

As a bank will be involved I am trying to think of the best way to structure this. 

What financing options are available when partnering with a solo 401(k)? Can you use conventional loans, or does the loan need to be non-recourse?

MFA are involved and recommended Zeker - this thread has me second guessing proceeding with them - any further thoughts on using them? 

If you do a proper foreclosure and notify all parties a tax foreclosure can clear up an otherwise scrambled title. 

The current landlord for this property is kind and is more willing to pay for replacements on the home which I believe is mainly because she used to live in the home so I didn't really need to spend much for any problems that arrived other than minor things the home is over 150+ years old so it has its quirks.The tough part is that I am paying a bit more in rent for this home but it has a lot more potential than my other unit, it has a good-sized backyard which I'm debating on adding a hot tub or a fire place but seems like a fireplace may be better maintenance and cost wise.

You are possibly setting yourself up for immediate failure.....there are too many moving parts and too much money involved to mess up this facet of the project.