Rewey: Your Comment: "the ultimate solution is to pay it off if it gets called due."

Old skool K&T systems are simply not designed for the electrical loads that houses have today.

It seems more your fault for choosing the "lying" contractors from the tenants point of view, if you ask them to pay up, I'm sure they would.

That is what we thought, but are being told we have to pay SS and medicare on this now even though it is "deferred." 

He knows the loan will pay and they won't default because he knows they're solid. 

My belief for SFR is that prices simply don't move much and grow slower than inflation.

I would also pay by activity not by the hour.  

I'd pay it & chalk it up to lesson learned.

All rents you get from this property has to go back into the SDIRA but if you get a 20 year mortgage (that the rent can cover) and can pay the rental off by age 65 you will have turned that $90K into several hundred thousand’s of paid off real estate.

Reporting the proceeds you pay to seller on a 1099 sounds reasonable.