(I am okay with that as well)Do I just create a 1099-R?

*This post does not create an attorney-client relationship or CPA-client relationship. 

My idea was to obtain a bank loan to cover the outstanding balance on their current loan and then create an owner financed note for the remainder of the purchase price. 

It IS frustrating but it comes with the territory.I would absolutely love to see your dad create a profile on BP and share his knowledge of this subject in this forum.  

“Printing counterfeit banknotes is illegal, but creating private money is not.

Do I have to create a LLC or Corp to buy & rent real estate as a foreigner?

Don't really want to transfer ownership to other persons as that creates all sorts of other problems such as tax implications, insurance implications, legal issues etc.  

I'm thinking about getting large landscape stones to create a barrier. 

Now consider it may be more money but also consider the fact that if there is a claim you can count on your insurance to do what it was created to do which is to insure.

@Jake Parks - If you're pooling money together and providing a return for people/there is an expectation of profit for someone else and that other party is not involved in the decision making/management of the deal , then you are creating a security and the answer to your question is a resounding yes.The big thing you have in your favor with partnering up with family and friends is that you have a relationship with these people already and that's the biggest thing that the SEC is looking for.