Stay in control by denying the request and demanding to be responsible as the Owner/Manager/Operator

You can also work directly with a tax attorney or CPA who is familiar with these plans.All 401k plans must remain current with changes to the tax code, so you will want to have an ongoing relationship with a legal resource that can provide periodic amendments.The advantage of a quality firm (not just a document provider) that specializes in self-directed Solo 401k plans is that you will have access to training and consulting advice so that you can operate your plan within the framework of the IRS limitations.

Less than that, you may as well operate as a flipper of cars or a wholesaler of merchandise.  

On future deals, the sponsor is willing to take a minor (10-15 %) ownership to oversee operations as long as we, partners, take responsibility for financing it through a bank.

Normally the settlement agreement would stipulate something like: you and/or the seller pay a much reduced amount of fines (I think on one occasion it was agreed a > $500,000 fine would be reduced to $20,000) to the city and the city will drop the outstanding violation, in exchange you agree that you will actually remedy the violation(s) within a certain amount of time (apply for the appropriate permits and so on).If you are confident that you can negotiate with the city and resolve it that way, it may be logistically easier to buy the house with the violations, and then resolve them aftewards (my first point)... but it's obviously MUCH safer for you to come to a binding agreement with the city prior to closing (that stipulates that the city gets paid for whatever they agreed to accept for the violations right after closing).

@Tanner GishIf you are looking to flip real estate using retirement funds, then the ROBS 401k may be an option provided you satisfy the real estate operating company requirements.

That way if someone slips and falls at any particular property the lawsuit only invovles that llc and its assets.I believe a series llc can also do this, and allow you to have a flipping company and operating company all operating seperately but as a whole.

As the new owner, you would need to operate according to the terms of the existing rental agreement (written or verbal) until you enter into a new rental agreement with the tenant.In the absence of a written rental agreement, you will need to proceed with caution.

I know I need to leverage it, and I am just looking for strategies to grow my Buy and Hold operation at the moment.

It is one of the reason they want to rent not buy.On the other hand, I know of people that operate in a C class working neighborhood and they have lower standards because that is who their demographic of house appeals to .