@Kevin D HooksThis is an absolute, 100% no-go.Your father is a disqualified party to your IRA.The IRS rules prohibit any direct or indirect transactions or provision of benefit - in either direction - between a plan and a disqualified party.Your IRA coming into this transaction saves your father's interest in the deal. 

If the bank is stating that there is....that is because they have an extra rule on top of Fannie/Freddie loans. 

As a general rule, in order to pick a market, I suggest you go with:1) your own backyard (maybe inaccessible price-wise as you mentioned)2) where you have family/friends3) where you frequent as a traveler4) where you'd want to retireBest!

Overlays are extra rules banks put on top of Fannie/Freddie rules to be more...selective...that might be a nice word for it. 

I’ve heard of a rule/law in Texas for non licensed individuals.

Applying the 1% rule, if the average rental rate for a given area is $1500, but the home value is $225K, that's probably not going to Cash Flow since this property would require at least $2,250 monthly rent to meet the 1% rule and make it cash flow.

@Adam Hale based on those numbers the 1% rule applies so it seems alright, but there are other factors you have not mentioned that are critical. 

Unfortunately this is a long distance rental so we broke rule #1 of being a landlord and depended on a 3rd party to provide us with updates on the property's condition.

According to him we may have a leg up because the decision was based on them being "model tenants", and that no longer applies.

Over the past 6 months I have been cramming as much knowledge about different investment strategies and have been extremely excited that i have gotten the chance to apply what I've learned and create some passive cashflow.I have 3 current buy and holds and would like to acquire 2 more before the end of the year.