The IRS rules forbid and direct or indirect benefit to you from your retirement account.

Furthermore; you are able to prorate expense/capitalize items indirectly attributable to the rental property.

But if its not performing, then buying the note and then foreclosing is an indirect way to acquire a property.

@Chris Szepessy sorry to say, I think that is bad advice.You want to take an indirect problem to the landlord and tenant (crime, lower property values, nuisance) and turn it into a DIRECT problem to the landlord by buying the property and trying to evict people who don't care for the law?

I understand indirect and indirect discrimination. 

IRS rules prohibit any direct or indirect transactions or provision of benefit between a plan and a disqualified person. 

There are also many places in between full leverage and no leverage that may be the sweet spot for some.Lever up and reinvest (does not have to be in direct real estate) or loose the tax benefits.  

@Brian WertI would suggest reporting 2 rental properties on your tax returnDuplex Unit 2 & Duplex Unit 1(1 room)You are entitled to a expense/capitalize all the costs directly attributable to the rental units.Example - You pay to advertise the units. you would be entitled to deduct 100% of this expense.You are entitled to take a pro-rated expense for costs that are indirectly attributable to the rental units.

You have a lot of direct and indirect employment from those two.

Basically, anything and everything that is related to the property itself whether directly or indirectly.