Dive in but I would say definately get an LLC to define the terms of the transaction.

But I wish I'd spent more time thinking and defining our goals and then shaped our approach accordingly. 

This will include a defining of scope for the first time. it had always been do the next thing.... which apparently works sorta but leaves a big gap of knowing what is or isn't the "next thing".Here is a list we are working on of all the Real Estate related paths and side paths and rabbit trails.

While you're getting financially ready you'll need to better define your "why" and the strategy you're going to use to get there.

Further, are you defining risk as likelihood of default or potential lower ROI?

At least for MLS deals, your job is to do the market research to find what type of property you are looking for - then define that property type to your realtor.

I know the my criterior is not narrowly defined but I'm a new to REI and open to considering MF in different areas. 

In summary, prohibited transactions seem to always be defined as using 401k assets for the advantage of the individual.

I think separately, FHA doesn't allow gifts from non family members or "a close friend with a clearly defined and documented interest in the Borrower"?  

This is not specifically defined in the tax code, however.