From there, they will likely deliver those documents to you, help you setup a bank account for the trust, and support you in any transfers or rollovers of existing retirement funds into the new Solo 401k.

By renting a second place for a period of time, you are just worsening your financial situation by increasing your expenses while not adding anything to the asset column.Personally, if you're OK with living where you are now, I would use down payment and go hunting for an investment property that will produce positive cash flow to help offset your existing losses on the condo.

When I describe the type of houses I buy and the numbers, most non-investors are surprised that type of property exists in my area.So maybe they are available in your area: ask local investors.

It wasn't presented as "watch out for this problem" - more like "the contract might say this, so don't freak out about it, it's normal for Texas".Most of the people getting this document would have been buying suburban-type houses, new or existing, for maybe $130K on up (1997 price).

I suggest you ask your bank about a blanket loan, they should be willing to refinance the existing home at the payoff if you were keeping it as a rental and provide purchase money for the new home. 

A debt deal with added downside, that is.I'm not sure I understand the concept of the sponsor retaining 80% ownership if the investors are contributing 100% of the capital.  

But started buying junk properties for under $10,000 using all the creative formulas I could think of (credit cards, commercial over draft protection, credit lines, partners, lots of Subject to Existing Mortgages, delayed settlement, flips and seller/contractor partnering). 

The option component gives you the option to buy or sell the option to a buyer.The biggest downside to this arrangement is that you would not retain any of the benefits of ownership (loan paydown, depreciation, etc.).

I'd be willing to consider coverage for the improvements as they exist and not necessarily the replacement costs. 

If the PM  has to ask the owner fore permission for an expense every time, it can delay the repair, irritate the tenant, and make it difficult for the PM to retain tenants and uphold a certain standard of service.