Seems to be only the cash transactions occurring in some neighborhoods.

If there are those occurring for these small apartments other investors will buy units cheaper for cash and then start out with lower rents to steal your good tenants and lease up their place.

With this policy however, I can not get liability coverage for any injuries that may occur at the property.

Definitely familiarize yourself with the self directed IRA do's and don't related to prohibited transactions.Quest does a good job on the educational side of teaching this, so attending their free classes are helpful.The self directed IRA administrators make the money in a combination of ways, there is usually some sort of yearly maintenance fee, and then some charge based on the value of the account, while others charge based upon the transactions that occur usually from the account (money coming back to the account from investments is often not charged, but this may vary from custodian to custodian).Hope this helps some.

J Scott wrote a hypothesis some time ago about why this occurs.

If there is a second occurance then you could look for alternatives.

The existing building or what the space is being marketed for might not be it's highest and best use.A teardown and resell to a developer or finishing out the space to rent might be the way to go.Is this the old commercial part of town or where the new building and growth is occurring??

A CFD usually has an underlying mortgage, adding the previous owner as a loss payee or mortgagee is a clear signal to that lender that a sale transaction has occurred and you may then be addressing the due on sale issues.

You are allowing the borrower to harm themselves for your gain.

That does not account for any appreciation that may occur.