We never miss payments and avoid debt on anything.

On top of that the seller has so many expenses on the property that it will only debt service at 55% Loan to Value.

This may well be true, by the way.The other, weaker way would be to explain that by making a loan you are putting yourself in a debt position, which means a fixed rate of return (assuming the borrower pays, which we will for the sake of argument, ha ha).

In this case, I would throw away the pot and return the deposit based off the condition of the unit.I'm not sure this would be enforceable in court and I know I would not want to deal with the headache, but you could keep the deposit, notify the tenant of your reasoning for withholding the entire deposit, and if it ever escalated to anything more you could just release the deposit beyond damages as a settlement.

That will get you going and give you a way to keep your debt to income ratio down. 

I am still working on my long term goals since I will be focusing more towards paying off my small student debt in the first year or two after school.

Any financing in your model would need to be non-recourse, which is going to be more like $40-50K that you could pull out.  90% of that would go to you and 10% of that would go to the IRA - you can't choose to leave the IRA in the deal and cash yourself out.If the IRA is involved, you cannot rehab the house personally and would need to hire that work out.The use of debt-financing with an IRA introduces a tax known as UDFI, which will not add up to much, but is something an investor would want to understand if they pursue a strategy such as this.So could you embark on a strategy in this vein and generate good return for your IRA?  

You don't need to concern yourself with hoa debts, back taxes, etc.  

While this doesn't work for everyone this helped us use the equity for another property and pay off a considerable amount of debt.

Our economy is so reliant upon the expansion of debt, confidence is paramount.