What type of insurance should I carry?

An hour later he calls me back and tells me that the seller cannot carry the $20k and that I would have to come up with the full 15% down plus have 6 months PITI in reserves.

Account ClosedFair enough John, carry on. 

But is there a limitation on the number of properties that you can BUY from sellers who are willing to do carry-back financing?

The first option is seller financing, see if the seller will carry the loan.

You can make an agreement saying that the Private Lender will put up the Capital, while you render service and carry out the rehab.

Most agents carry E&O insurance.

You're actually look at a seller financed "wrap mtg", which is a form of sub2, with the seller carrying the balance.  

He doesn't want to deal with it and will carry the note to me for $200k (its worth $250-275).

@Daniel DietzYour analysis is in the right direction, but not quite there.1) Determine the debt financing ratio - in this case .602) 60% of the gross income is then looked at by UDFI3) 60% of all deductible expenses are applied, so 60% of straight-line depreciation, 60% of the interest on the note, 60% of property taxes, etc.4) $1000 exemption applies5) The net amount after deductions and exemptions is then taxable to the IRA, and the trust tax table is used to determine the tax amount.Even if you have a negative UDFI liability, it can be worth filing the 990-T in case you can carry that loss forward to future years.We have a UDFI calculator on our website and if you PM me, I can send a link to you (BP does not want me posting that outside content on their forums).