Go ahead and sing one round of kumbaya for every layer of insane risk the OP is asking about, then triple it because the problems he will face compound exponentially. 

Say you make 20% compounded and double your money in about 4 years. 

If it is a rental that she is current on and doesn't have some big hardship then probably not a good candidate for a short sale but if she just wants to get rid of it then she might bring money to the table for the privilege of not owning it anymore.If the place needs a lot of repairs and some bigger houses are going for as little as $75K (BTW $75-120K is a BIG range, you need to tighten that up a lot) around you then it is very likely that it is not worth $40K.How motivated did she seem to be rid of it?  

No experience on my end, but looking at it from a financial point of view, depending on your age and retirement goals, it may not make much sense to take 401K money out to fund rentals unless their cap rates are really good.Depending on the amount in the 401K, it may be able to compound and provide a much higher ROI in future years than cash flow on rental properties could.  

I don't want to pay for the privilege to allow the bank to make interest off my money.

According to my rudimentary math, I would need to earn about 21%  compounded annually, to gain the same dollars by keeping.

Hello Sage (love that name) my name is Christina Clark and I wanted to ask you about your tlo connect I have a list of people I wanted to see if I can get in contact with some are deceased and I would like to get next of kin I heard good things about TLO but not everyone has the privilege of being able to use them thank you so much if you can @sagewhite

I have been involved in investing for less than 5 years, but have been privileged to be involved in one of the most exciting markets in the county.  

In the residential mortgage space, interest is compounded semi-monthly, not in advance and amortization are 25-years or less.

But If I'm paying 10% apr then it is $10,000 for a year use of the money. if it is just the time used then it is $833 per month( 10,000/ 12 mns.) unless of course it is compounded monthly, then the amount would be a little more each subsequent month. can anyone explain how a typical hard money loan works?