Hey Steven - An LLC is a solid choice for structuring your partnership since it offers liability protection and keeps things clean when splitting ownership and profits.

This gives much better diversification protection across geographies, asset types, strategies, investment subclasses etc. versus putting all the eggs into one basket.The downside is that it's not for everyone, and a person has to be comfortable with turning over control to someone else.

Another key benefit is diversification; an SDIRA allows you to include real estate in your portfolio, reducing risk by spreading your investments across different asset types, which isn’t possible with a standard IRA.Moreover, assets in an SDIRA often enjoy protection from creditors, adding a layer of security to your investments.

That being said, anything can happen, but if you run your numbers accordingly, make sure that your contractor is trusted and do all the other stuff you'll be a little more protected than the next person flipping that does not do this type of calculation. 

If you are just looking for principal protection assets you can do a lot better than empty houses, if that's what you are doing. 

Quote from @Scott Tennell: For real estate investors who have worked with private money lenders, what strategies have you found most effective in structuring deals to ensure both parties are protected and the funding process runs smoothly? 

Just trying to get as educated as possible before making any decisions, and setting up my asset protection accordingly. 

Rick, Your property is your business, and every decision should protect that investment.

A FHA 203k Loan is where the purchase price and rehab costs are rolled into a single loan.Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate) AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC/ LLC taxed as an S Corp, or an S Corp.

I hope you are working with an excellent agent or broker, they can create leverage and opportunity for you while protecting your interest.