Loan losses and poorly performing loans cannot be eliminated and there is tolerance within the bond portfolio for the fall out. 

I'm not holding my breath, and intend to move forward with a deal today, but I wouldn't burn all my liquidity for a down payment with one deal at the top of the raging bull market we've seen in everything from real estate, bonds and stocks.

I can see a SDIRA as a good alternative when you already have a pile of cash in a 401k and want to invest in RE instead of stocks/bonds, but does it make sense when starting from scratch? 

Gritting my teeth as a dare to say, hard money loan for the repairs and negotiate fiercely on the points. 

Are you bonded, licensed and insured?

I am a licenced and bonded contractor and since I limit the number of projects I do outside of my own properties I charge a very reasonable rate.

If they started and didn't finish, you could be entitled to a bond claim up to $12,500, but thats it, unless they post a payment/performance bond for the whole project, which is more likely not to happen. 

Prices go up, demand goes down.Supply goes up, demand goes down.Demand goes up, supply goes down.Demand goes down, supply goes up.Demand goes down, prices go down.Bond prices up, stock prices go down.Bond prices up, interest rate go up.Stock price up, bonds down.Bonds down, interest rate goes down.:)

I don't have a Bloomberg terminal to tell you what their bonds currently yield, but it should be in the low 5% range today for a 10 year deal (roughly equivalent to your lease average life).  

The LOI is simply an understanding between the parties, it can be structured to have teeth but that beyond the scope of this question.An option when executed properly invokes an equitable interest in the property and depending on how it's written can force a sale should the seller later have a change of heart, file bankruptcy, or die.