There should be nobody outside the system, regardless of how they got on US soil.

Current ideas are to view it as a partnership, or an interest-bearing loan from me to him.

@Avi Lah99.99% of these you will have to bear these costs as most states are buyer beware and the seller may not have known.If this was done to my house I would have had no idea as I bought it the way it isAlso an attorney to pursue this will cost you more than the fix and again you would have to prove the seller knew about this and willfully withheld it from you.

You said a “little” money, so bear in mind if you transfer that into a self directed account the annual contribution limits are $7k plus $1000 catch up over 50 so it may take a while to get it to a point where you have enough to invest in real estate.  

Skippy the bear is the company mascot.

LLC is for asset protection and has no bearing on your taxes.

If I am reading this correctly, your recommendation is to get the soils report and speak with a structural engineer to estimate a grading, retaining, and foundation cost.

In the 1980s there were lots of lawsuits in the area against builders - soil was peat and lots of foundations issues. 

Do you know what kind of soil you have there (meaning will this happen again or is it one and done)?

My measly 40k won't even cover the permits and soils reports on a new construction project here.