I may be able to get her on bank draft or some other method. 

If you don't have much money to start, try driving for dollars, putting out bandit signs, and some other more time-extensive/cheaper methods.

The investor is aware and not concerned with the assumption, but having the assumption agreement is a requirement of the IRA custodian. 

Option 2: I have been finding more deals on the more expensive houses in the 250K+ range, i have crunched numbers on a handful of houses in this range come across a good number that have showed positive passive profits in the $200+/month range, but im concerned on these taking up to much of my active income.

If you're not concerned with cash flow, and have a long term hold outlook, San Diego isn't a bad place to invest.I joke with people all the time that ask "Why don't you invest in San Diego" (since I live here, but buy in Houston). 

Thanks  Vaughn and Caleb, my other concern is Closing cost that seems to be close to 5% of the PP.

Seems to keep valuations pretty fair or you can agree on another valuation method.

My biggest concern is that he said the tenant is on a month to month lease, (and he has not been exactly truthful on several statements) and the tenant says she is on a 1yr lease and wants to stay. 

My concern is that during this process someone else might bid. 

There are some cracks that look fine but a couple are a bit larger than nickel size which concerns me.