I didn't have assets to sell or any passive income to help me out as a college student.

UNLESS you have a large amount of liquid assets available in the event you need them, but still the long game wins.Best of Luck.

Sure, Ken.Especially since he wants to be a passive investor, it would be much simpler to be a member of your LLC if these are the only assets that will be inside it. 

On a typical leveraged acquisition of a residential multifamily we look for 15% Cash-on-Cash...once you climb over this, you're probably getting into the D-class assets that are too much hassle for the returns.

Most banks/brokerages I’ve spoken to want me to put the funds in a pledged asset account.

When I tried to obtain answer on my own, I already found posts like those:https://www.biggerpockets.com/forums/25/topics/377...https://www.biggerpockets.com/forums/87/topics/346...https://www.biggerpockets.com/forums/55/topics/241...But didn't find the answer.

these are called low value assets and low balance loans.. its a widely known fact in the standard mortgage industry that these are the highest risk.it cost as much to foreclose on a 40k loan as a 400k loan.. there Is no money.. and those properties tend to be in less desirable areas or flat out war zones or worst area of a city..

A good one can be a huge asset. 

1) Why would his financial advisor tell him this when he stands to make interest on his asset?

Following are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k SimilaritiesBoth were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions; andBoth are prohibited from investing in assets listed under I.R.C. 408(m)The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company  (IRA LLC) must be utilized.