hey @Chris Masons thanks for the imput, i do like the property initially, but at this time i dont have any access to anyone who is ready to commit to an investment at this time. of course i would not really want to do any downzoning, i just wanted to confirm it was a prohibitive as i suspected, thanks for the help guys.

In the specific case described in the original post, selling back to the original homeowner is, as Will stated, almost always prohibited.

Alternatively, I can save and invest in a market where the prices are not prohibitively high.

I've personally been to seminars in the past where I heard the lecturer promote ideas that would be 100% prohibited by IRS rules - but it sure sounded like that IRA was free money that folks could use as part of their new get rich quick business and had the room excited.  

Posting rules prohibit me from putting that here.

Can my self directed ira llc loan my ROBS C Corporation money in which my C-Corp is owned 95% by my 401K and the other 5% is owned by me personally, or is this still considered a prohibited transaction?  

When working with clients' tax advisors, oftentimes we have to educate them on the subject.There are tax rules that apply to such plans about which you must be aware, but it's a great strategy for those that embrace it.Key items that you should be considering as you invest are prohibited transactions and UBIT.

My only issue now is that prices in my local market (San Diego) are prohibitively expensive.

She finally did get caught, as was asked to move out.She did this in the beginning of AirBnB - landlords have now caught onto it and many expressly prohibit the use of their units for short term rentals. 

The house doesn't need any improvement and it's legally zoned in a neighborhood that doesn't prohibit this.