To me they are a distinctly different category.

There is no distinction between occupied or unoccupied or to the type of loan agreement or improvements as to securing property arising from default of an installment sale or mortgage, improvements on the land are irrelevant.

IMHO you and her would be better served by originating your leads via a distinctly different method. 

That distinction is often blurred, resulting in litigation and misbegotten legislation.A wholesaler is not selling  the property - they are selling their position in a purchase contract.

This is what I would consider a distinction between a real investor and a gambler.  

Some custodians like Equity Trust do not like that the LLC model erodes their fees and not only will not support this, but actively promote the idea that the IRA LLC is a recipe for trouble with the IRS - which it absolutely is not if used properly.When it comes to determining the active business vs passive investment distinction, and therefore potential exposure to UBTI, there is no hard and fast rule.  

After that 3 day audit I had back in early 2012 over my 2009&2010 returns they nailed me for SE taxes & disallowed legit well documented mileage etc.They sure make you feel guilty going in & after I cut the check for the extra owed plus penalties I got the distinct feeling they were going to audit me every year thereafter.BUT I just got notified that I over paid my taxes for those same years ??????

Do what's right for you.Also, I get the distinct impression that the seller may just be a manipulative person, not necessarily inclined to sell, but she is simply getting her jollies. 

I believe there is a distinction (I'm viewed by the IRS as a "real estate professional")I think I may short sell an investment property I own in CA and expect to sell it for 60K-70K less than what I owe.

you have some distinct advantages over many others..