With an Operating Agreement, separate bank account, etc.? 

And your IRA/401k is a separate legal entity from you.

Hello,More SDIRA questions - I am putting them under separate heading to hopefully make them more useful to others too.I understand that I can not 'do the work on the property to make a profit'.

As a general rule, each entity that files a separate tax return (partnership, s-corp, c-corp, etc) will need its own QBO subscription.

If this is going to be a limited PARTNERSHIP (you references "we"), then you will have to have a partnership return completed separately and earlier (March 15th) and the numbers will be put on a K-1, which then will be put on your normal 1040 which will be due on April 15th. 

That shouldn’t be too hard either because the kitchen and bathroom are right next to each other only separated by a wall (would just need to figure out the hose bibs). 

The only way I thought I could protect myself better in this situation if I were to decide to move forward would be to cross collateralize by taking a first lien on a separate property of the borrower.

That is a great point as well, I have noticed there are a lot of Accountants/Bookkeepers out there that have no idea what they are doing with Real Estate and they think it is like other types of business, they charge based off those businesses and find out they have to do more work and Real Estate needs more details and separate reporting and they do the bare minimum which ends with an investor having to pay someone like me to clean up everything and get them back on track.

A comprehensive investment partner can help you navigate these considerations and make the most of your investment.If you choose to work with a company that offers a full range of services, you’ll benefit from a streamlined process without the need to assemble and manage a team of separate service providers yourself.

Business or rental SPACE that is separate from the living area affects your gain/loss calculations.