As you have found this is a non issue concerning price for OO.I've looked at investment properties of the same smaller portion being flat to the entire roof being flat.

I just don't see how $50/ft2 is possible, even given your large square footage.I would also be super concerned with partnering with someone that has never GC'd a complete project like this before.

I'm looking to soon buy my forever house with my fiance and I am concerned that I won't be able to afford my next rental after that.I cash flow (after mortgages) roughly $1,200 a month between the five units (we live in one) and our combined take home pay from our jobs each month is roughly $4,000.I would like to completely finance the next property but also not get a normal loan.

Do not be concerned that you are a NEWBIE.  

My biggest concern with this is is the higher interest rate you get, which I've seen can be around 5.2% instead of the 3.6% rate you can get with a conventional loan and 20% down.

Normal maintenance is expected, but I can imagine this area wouldn't be very pleasant for a rental as far as upkeep is concerned.

A concern I have is that there aren't a lot of four bedroom homes in our neighborhood (ie are we pricing our home out of comparable range).

As far as the title question is concerned, absolutely! 

There is something called UBIT in a self directed IRA that you have to concern yourself with if you invest in real estate.If you are worried about the tax hit, you can always cash out a part and self direct the rest.Sorry about the loss of your father.Gino

I am still concerned that "they did not know what they were doing" and I may have future troubles should the need to file a claim ever come up.