I personally would stay away from IRA borrowing period.

@Harold GroetsemaThe taxpayer is your IRA and you should use the EIN of your IRA.  

Has anybody transferred from a traditional IRA firm (Edward Jones, etc) to an reputable Investing IRA, where they will let you invest in rental properties, not just a primary residence? 

This is a great forum with very knowledgeable members that will help to guide you in the right direction, whether that is real estate sales, wholesaling, flipping, rentals, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance.

I've used 12% hard money loans many times.If you have a 401k or an IRA you can borrow up to 50% or $50K (whichever is lower) and that would be your cheapest way to fund the rehab because the interest payments are basically paid to yourself.

Compass bank will write a loan for first time buyers with as little as 3% down, and firstbank will do IRA loans, so I don't see why you couldn't get a loan from someone, I'm just not sure who.

You also have to consider UDFI (unrelated debt finance income) which is generated when an IRA borrows money to purchase real estate.

Can the person pay the downpayment from a self-directed IRA if they themselves will never live in the property, and their equity goes back into their IRA upon sale of the property in the future?

I work with one of the foremost experts on IRAs and tax law in San Diego if you want his information and really are considering purchasing real estate in the name of your IRA.

However, you need to set up an account.The children may be eligible to put the money into an IRA/Roth IRA account.