After this first purchase we're looking at making a bigger purchase towards the end of the year, or early next year on something that can offer more cash flow.We were initally looking at the Killeen area due to the low amount of cash needed up front, but if we could find comperable properties in the Austin or other areas near us that we're familiar with then we're certianly open to those as well.I'm meeting with an aquaintance next week who works with mortgage investors, so if I can get a better rate than what we've found from traditional refinances we may look at pulling a little more cash out.

You stated that the seller would lose money if he sold traditionally so you are offering a valuable alternative here.

Don't be afraid to take risks or non-traditional paths.

Unfortunately, the existing Roth would have to stay separate, but if your overall financial strategy is to employ Roth and Traditional tax strategies, the Solo 401(k) may be a good choice.

thanks for the update ......it sounds like the declines from the lenders  are  consistent .......so continuing the  traditional loan angle  right now  isn't  likely  going to prove  successful  ( I could be  wrong )  .....ideas :  1) Go to a private lender and get some type of loan from them  2)  as you mentioned that  one person stated  you would qualify for an " asset  based "  loan - try to  locate a  lender that  has a  program you might be able to  use your assets   as collateral for a new loan

While I was looking at more traditional three or four bedroom SFHs, I came across a FSBO 1 bed/1 bath 450 square foot home, built around 1950, being offered for $45,000. 

Instead, let me give you some highlights to the HomeStyle loan and see if it fits what you are looking for:The down payment is 15% of the After Repair Value of the home.You get your renovation bid, then give it to the appraiser, who the sees the work and bases the value on that.The rate is a little higher than a traditional mortgage but it's about 1/2 the rate of hard money. 

We both work, and she wants her money in traditional investments, and allows me to do my real estate stuff.  

This would allow me to get the house for much less upfront than a traditional cash sale.

You have a very strong application for non traditional lending.