Relative would give you personal non-secured loan, you payoff the balance of the 401k loan, rollover funds into self-directed IRA and then IRA would buy a rental property.

For instance, what if I identify a property for the exchange, but then, after performing due diligence, decide against purchasing the property due to a defect that is uncovered during the inspection?

Value it entirely on existing performance.

Your family member could also provide the financing on it and make money every month with a positive cash flow spread between the debt and the rent collected or be like a guarantee person that is the main backer for the long term loan your Bank or other lender that  owns that property with a long term loan with that property  on a security  loan until that loan is paid off.Not saying the fix up budget makes this decision fairly difficult but i would say to not have a house that needs over $5,000 on the "make ready" expense to make a 20% gross return giving a cost price and sales price you gave on your example.What you could do to find a deal is pretty limitless. 

So are you going to hire 24 hour security?

The landlord and tenant may agree that the tenant is to perform specified repairs, maintenance tasks and minor remodeling only if:(a) The agreement of the parties is entered into in good faith; and(b) The agreement does not diminish the obligations of the landlord to other tenants in the premises.3.

I'm going to see the properties this weekend.I also have a lender that says they will do 100% financing if I have the financial sheets, leases proving the current performing income. 

Look Unless it’s in your lease I would tell them that if they want it colder then go buy themselves a window unit and if they really fight you about it go buy them one and take the cost directly out of their security deposit .

See if one of them would go with you to the property to assess the work and how much it would cost to repair the house and capitalize on the "forced appreciation".Or, you can perform "sweat equity"...doing some of the work yourself if you have some experience with renovating and repairing property.Also, be sure to soak up the free knowledge here. 

You're very trusting to allow (insist) on your tenants performing their own maintenance.