If that was the case then the duplex would be better, on paper any way, but then on the other side the duplex is spreading your risk over only two units so if you loose a tenant that is half of your income, where as in a quad when you lose a tenant its only 25% of your income.

Another downside is you loose on the advantages, of the Federal Tax Code, by closing in a LLC. 

Silicon Valley has been a hotbed...and will continue to be...until tech looses some of its secondary funding from outside the U.S. that will incur a cooling period.  

I was surprised to find that they negotiate pretty loosely...

If the tenant feels they have nothing to loose, there is no incentive. 

Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

Combining IRA funds with personal funds can be done if carefully structured, but certainly not as loosely as you suggest.  

If I do this, I would not only save me time on buying and fixing again but also not loose the 10k or so that it would cost me to sell it (not to mention the moving costs).

And now check out a chart of the 10 year treasury (loosely tied to mortgage rates).  

This way, if they back down for any reason, they loose the "option" amount, which will the allow you to sell their "custom" home to someone else and have less risk.I am not an attorney, so make sure you get an attorney if you decide to go this route.