You may avoid the taxes if you deposit the funds in an eligible retirement plan (which includes anIRA) within "3 years and a day" of the date of the COVID-19 distribution (note: compare to a 60-day rollover).

@Neil McCartyIf you are self-employed (i.e. active self-employment earned income separate from your w-2 income) with no full-time w-2 employees, you can set up a Solo 401k and then rollover your 401k funds from your former employer 401k and/or non-Roth IRA.You could then take a loan of up to 50% of the balance not to exceed $50,000.

@Brendan August1) A CARES Act Distribution of pre-tax funds from an employer plan can be paid back to a non-Roth Rollover IRA.

That “rollover” satisfies “paying back” the distribution thus no taxes have to be paid.

Although you wouldn't be limited to the amount you could rollover.

What happens if the neighbor ignores stakes, roll over them, take them out?

You can't buy much real estate with one year's contribution so you probably would have to wait a few years until you accumulate enough funds to invest in a deal (unless you have some other retirement account which you could rollover into SDIRA). 

Set up a self-directed IRA or truly self-directed Solo 401k plan (if you are eligible), perform tax-free rollover and invest in real estate inside of a qualified retirement plan.

These lenders offer short terms such as a year or less - it allows you to exit and roll over to the A side without penalty.

I assuming this is a trad 401K that you can not roll over or withdraw w/o penalty, and therefore the elaborate scheme.