Or you may have an ARM or balloon.

Most custodians who accept Single Member LLCs as IRA investments will require that you appoint some kind of "special advisor" - a licensed CPA or attorney - who will provide the required oversight and review of all of the LLC's transactions to be sure no prohibited transactions are occurring.Another solution is to designate a property manager (should be a non-disqualified party to keep things at arm's length).

So here is the deal:Purchase Price: $45,000PITI: $409.62Loan: 5/1 ARM, 3.5%, 20% down payment Estimated Rent: $1200/month15% Maintenance/ month: $1808% Vacancy/ month: $96Cash Flow/month: $514.38So we did need a good chuck out of our pockets, which kind of limits our capital for the immediate future.

For property inspector go to ASHI.com search for certified.Go to IREM.org search for ARM certified property managers <50 units, CPM certified >50 units.

One possible approach would be to report code violations that might force the local government to force the squatter out on health and safety grounds, which could break the AP.Adverse possession in Texas is 25 years, Louisiana is 30 years while Costa Rica is 6 months.

Would any of you risk ARM's as I don't anticipate paying off the property for at least 20 years.

I have a friend who does this type of business hard money lending its definitely not cheap money so you'd have to be making extraordinary returns in real estate to profit from borrowing from this source if I understand correctly what you mean by Performance based loan.You can obtain loans secured by real estate either by lien or pledged equity from portfolio or business banks as well these are usually revolving lines of credit like HELOC's or adjustable rate mortgages like 5/1 ARM's etc.

To your point, and my biggest issue with iFunding's methodology, is that there isn't any checks & balances or arms-length transaction requirements for providing comps and the future sales prices and those comps directly determine  Projected Returns.  

Breakdown:Purchase Price- $75,500Rehab and Carrying costs- $44,000Out of Pocket- $7,000Construction loan on a 5/1 arm @ 4.65% Taxes- $700.

Understand they won't likely be able to answer a question like "is this a good neighborhood" (although they may answer it anyway) but they will be able to give you an idea of whats going on locally.And second lastly I would say don't make the mistake of trading safety for a good deal.