You can buy out of state - but it's a little more risky.

As I gain more experience about investing, I suspect I'll learn about additional strategies where I can develope a niche as well. 2) I want to begin in wholesaling because from what I've read, it is a great way to gain expereince going through the deal process without putting much capital at risk. I

So I am of the opinion that attempting these types of investments are just to risky in potential violations of IRS guidelines and as such, why risk it, just use the funds as a lender and avoid such problems and managerial headaches keeping your IRA and you a much more passive and legal investment.Jon Klaus - If the other party is a non-disqualified party, you have zero issues, as Jon stated, i was under the impression that you would be partning with the IRA and in that case, you would likely run into problems, however, if you were to perform the property management, I believe you would still run into problems.

Forecasting results with large components of systemic risk is gambling at best.

The seller might just find that what you are wanting to do is too risky for how much money you are willing to give them to try.

He just wants to make sure the winners have enough upside and his risk is mitigated in case a deal goes sideways.

If the risk is minimal, it may be worth taking, because that basement unit brings another 500/month and I have not rent control due to the city calling it a 4-unit.

Also, the areas where you buy 4 to 6% per month properties are generally deemed too risky, and the banks don't want this type of collateral on their books, not to mention the small loan sizes are not profitable.

So figuring out the potential default risk is a little difficult in the posts.That said, generally speaking a relatively unseasoned payment history from a defaulted loan will trade around 3% to 5% higher than the value of the defaulted loan.

Financially the investment and risk is small and the potential rewards could be high.