What makes it even worse is that I have been in real estate investing for about 20 years now....just on a small scale, on the side as a sole proprietor, with a rental and have flipped a home, which made a substantial profit. 

I file as a sole proprietor. 

Is your business and  entity, like and LLC, or are you operating as a sole proprietor. 

Solo 401k plan can be adopted by any legal business entity, including sole-proprietor, partnership, LLC, corporation, etc.There are two ways you can contribute to the Solo 401k: employee elective deferrals (as an employee of your company or as self-employed) and profit sharing, which contributed by the business sponsoring the plan.You can learn more on the IRS website here:https://www.irs.gov/Retirement-Plans/One-Participa...

I assumed they were a corp because they are so large in my area, but later looked them up and saw they are a sole proprietor.

If he is a sole proprietor or an LLC, you will need to issue a 1099 to him for amounts paid directly to him (not for material you bought and transferred to him).  

BUT, depending on whether you are a sole proprietor (the first scenario) or a partnership (the second scenario) depends on what types of tax avoidance options are available to you.

Sole proprietor/DBA- Easy setup, pass through to my personal taxes, can use the cash management account in my brokerage account to warehouse/invest between opportunities.  

If you haven't already sought out financing...you could also apply for a business line of credit if you have an LLC or some lenders will even accept a sole proprietor with a business license.I know of such a lender if you're interested.

Here is how the IRS defines self-employment: Generally, you are self-employed if any of the following apply to you.You carry on a trade or business as a sole proprietor or an independent contractor.You are a member of a partnership that carries on a trade or business.You are otherwise in business for yourself (including a part-time business)See following link for more on this: http://www.irs.gov/Businesses/Small-Businesses-&-S...If or when you do qualify for a self-directed solo 401k, the quick answer is yes a SDIRA LLC can be transferred to a self-directed solo 401k.