Work in areas you know and personally ensure there is plenty of profit for the borrower.

The use of borrowed funds within an IRA generates Unrelated Debt-Financed Income, which is taxed. 

The private lender would be an idiot if he lets the borrower set up the terms and the lien. 

My end goal is to borrow a larger sum of money for commercial Realestate under the LLC.

Back in the day, it was common for a borrower to stop paying on the junior because they would not foreclose.

@Chad Smith@Chris Mason1) Regarding taking a 401k loan: You would have to confirm that your 401k plan allows for a 401k participant loan (and that you have not had a outstanding loan in the last 12 months since your ability to take a loan is reduced by the amount of the highest outstanding balance of any 401k loan that was outstanding in the last 12 months).If yes, you can borrow up to 50% of the balance not to exceed $50,000.The repayment terms are equal monthly/quarterly payments (as you prefer) of principal and interest (e.g. prime + 1%) spread over a 5 year term (or longer if you will use the loan to purchase your primary residence).

I would borrow rehab funds or try to get an interest only period on the loan so I wouldn't have to rehab the units out of the cash flow.

after rehab, get rented, you refinance the property, borrow against the new appraised value of the rehabbed property.

@Mike HoherchakFrom an ROI perspective, the ROI tends to increase as you borrow more money --- at least at the pro forma level.

Well interest is essentially payment for the money that you are borrowing.