Prior to passing, Mom had subdivided her original property into a front lot with the main house on it, and the back lot with her little "retirement cabin" on it. 

Saved me paint anxiety.

I'm willing to sacrifice my time, body, friends, and sadly, family as I work to save up for my first purchase.

Is he retiring to the good life on a beach?

Saving half of that for expenses it would net me $1510 a year if my math is right.Does this make sense?  

After all, their money isn't earning that much sitting in a checking or savings account so they may be happy to loan it to you for as long as you like.

Put money aside in 401k and take a nice tax savings now, but not be able to leverage the money easily for REI.

Are there any attorneys who have knowledge on how to structure deals with private lenders who want to invest in real estate with their IRA, 401K, savings or stock, etc.  

@Amber TurnerThen you have the choice of going Freddie, or Fannie, whichever is more advantageous, if needed.Reminder that retirement accounts can be used for reserves, at 60% of value.Below is particular to your situation as you described it...Fannie:4% of unpaid principal balance for non-subject property investment properties.6 months of PITI for subject property. 

I've been told that we both roughly have 50k each in our STRS retirement benefit payout instead of taking a pension.