Regardless of your intention if you treat applicants differently you could risk a lawsuit on perceived discrimination unless you are exempt from the Fair Housing Act and there's not any state or local statutes that may come into play.

The whole reason rehabbing even works is that price is driven by perceived market value (e.g. comps) and not cost.

Again, this is not meant to persuade you as to which structure is better for you as other factors are involved, but I thought I would try to clear up what you perceived as ambiguity.Do you plan to invest your IRA LLC in California?

One of the reasons I was motivated to move back to Ohio from across the country (~3 years ago) was due to where I perceived the mid-west relative to other areas that were a few years further along in the housing recovery.  

About 50% of investors use them.The biggest issue is that although many recommend the perceived protection of a LLC none have ever posted first hand experience of ever having needed the protection.

When done this way it perceived as "borrowing against equity" rather than a step transaction to access profit.  

Lot's of renters tend to have rough life experiences so are ultra sensitive to anything that is perceived as taking advantage of them.

I'd say the value of keeping the original tax base creams (like in $1000+ per month) any perceived advantage of the LLC. 

I would probably provide a short list of minor upgrades that they can choose to do to add perceived value as well.  

No matter how bad the data, buyers and sellers perceive Zillow as authoritative.