For my SDIRA, I write paper and do equity participation deals with flippers. 

The prohibited transactions (the don'ts) are very clearly identified by the IRS here:https://www.irs.gov/retirement-plans/plan-particip...So in most cases there is very clear line between the do's and don'ts.

You personally taking a participant loan from your 401k and then you personally investing in your own deal (not your 401k).

That way the investor is tapping the benefits of cash flow and participating in appreciation over time.Lastly, If we do the math, someone who has a good solid investment portfolio in large markets can now fund several MF investments in smaller markets using a relatively small portion of equity in their existing portfolio.

So here I am ready to jump in and start actively participating - meeting people and building my network, and hopefully making a few deals to get the ball rolling.Please reach out and say hi! 

While I first found BP a few years ago (and have listened to every podcast episode), I am only now able to truly participate.

The solo 401k allows for checkbook control from the onset; The solo 401k allows for personal loan known as a solo 401k loan; It is prohibited to borrow from your IRA; The Solo 401k may be invested in life insurance; The self-directed IRA may not be invested in life insurance; The solo 401k allow for high contribution amounts (for 2018, the solo 401k contribution limit is $55,000, whereas the self-directed IRA contribution limit is $5,500); The solo 401k business owner can serve as trustee of the solo 401k; The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required; When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution; Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31); When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.

If the private lender participates in part of the profit, are they subject to higher taxes (such as personal income tax) as opposed to lending at a set interest rate?

The value that your wife is bringing to the table is actually easier to convert into a percentage of ownership in the deal because you should have a pro-forma and financial projections for the deal and the commissions that she will not charge actually have a dollar amount that is easily calculated based on the numbers you are projecting.Our business model is based on syndications for large multifamily properties where we bring equity from our investors as limited partners and we participate on the general partnership side of the deal alongside our operating partners (which in your case would be the builder).

Depending on the investor's net worth, they may be required to meet the requirements of a sophisticated investor as defined by law in order to participate in your offering.