While I may enjoy inflation adjusted debt destruction, I do not like the idea of owing more than I started with.  

Rents here have not kept up with inflation, but there are some areas that support a little higher rents. 

It's much too rich and too much grey area (how would he know you aren't inflating costs/etc)0-2 points upfront, 8-12% interest with a 4-12 month term is standard for hard money.

My goal is early retirement after paying for my kids’ college, but I want to have something to do and keep making money after I retire, so I started looking into REI.I own a small rental in SF Bay Area, but this market became very inflated and I’m thinking perhaps I should 1031 out of here.

Inflation, why not?

You literally might direct traffic from the convenience store to your hotel at that price.The 200 room property in question, according to owner relative of sorts, says last he 'heard', the asking price was around $4.2 million (“as is” condition); but that building requires 'an exceptional and significant' amount of work.Is the 'apparent' discount supposed to hint the level of rehab work to be expected or are stock prices just inflated?

I've worked with them here and have routinely found their numbers inflated and they bank on bidding wars among investors to increase their profits, while you will be hard pressed to make any.

When we don't we call the same economic force inflation.

You will end up handing back the property to its owner - who is fortunate to have someone look after his mutt for awhile and then reclaim it.Long term inflation of around 3% is the benchmark for long term capital appreciation.

You can set their reward at a maximum to suit your greediness - but there is no justification to seek to gain a tax benefit for yourself at their expense.If you were to pay them 10% then after tax they would net around 7% - if you give them 5% they will end up with only 3.5% (marginally above the inflation rate)