I understand that you can use a self directed IRA to buy a property (either in full or as the down payment).

Everything went along well till a bit of a hiccup at the end when the seller (owns the neighboring property) realized they didn't have a direct driveway into the property and tried to 3 hours after anyone signed get an easement off of us to get access to use our driveway (no way too much liability). 

These do not come after you personally, but are tied direct to the property.

The appliances will stink, the light fixtures will stink when they are turned on and heat up, any residue in the vents will stink the house up.

@Paul CaporaliAnother avenue to consider would be to use a self-directed IRA to purchase the property.

Ive never marketed to them directly and I'm not quite sure how to begin?

From what I'm hearing from local note investors, many of them focus on NPN acquired directly from hedge funds given the steady increase in foreclosures. 

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I'm doing some research now but perhaps someone could shed light on the importance of carry-back percentages?

@Priscilla Wong Depreciation as a tax break is another consideration that can dictate  the direction you go here.