What if they have a dependent disabled 40 year old child they are responsible for?

Both are ROTH's so I will never pay tax on the gains or incoming rents.You sound like you already know the rules, but you can't ever use the property for you or your parents or kids as long as it is held in your IRA.

You are partially liable for the neighbours child being bitten. 

My parents are on the verge of retirement (unfortunate timing) and I'm trying to think outside of the box for them with their current retirement strategy.

I would have no problem renting to the 20-year old, but the 16-year old should not be on the lease, nor allowed to live there without a co-signed lease from her parents.

But I know a child needs to have Income to open a Roth.

I own a rental in Colorado but my parents have always rented it so I would still call myself a beginner, especially in the property management side. lolLooking to purchase some homes around Charleston and Summerville and always looking for a good deal to go bigger and get into multi-family units as well.

I have the opportunity of a parent who has offered to purchase a house in cash and allow me to make monthly payments to them to slowly purchase the home from them at 0%.  

I currently do not owe a house, but my parents have thought about doing a HELOC (home equity line of credit) to help me buy a side-by-side duplex.

She said their parents would be paying the rent.