At that point, I will re-evaluate what I do with it (as one would do with any investment).2) I have no intention of building on or improving the land while the LLC is owned by the SDIRA.

The work doesn't have to be showroom perfect and I'm always amazed at the equity that can be created by making necessary improvements without paying retail.

My two cents says that his only fault was giving you over confidence that it wasn't an issue to be concerned with. 

Despite this, I am very confident in my analysis and numbers (I'm an engineer by training and enjoy the numbers aspect of real estate investing), so I could leverage my analysis as a means to convince lenders despite not having a track record of deals. 

They could learn that FHA will finance up to 4 units, get all their income documentation in place, get their credit score improved to the proper level, get the seller to do the required repairs, get funds properly gifted for their down payment, contest a bad appraisal and get it revised, and think their good to go......then they find out that while FHA finances up to 4 units, they have to be owner occupied, and the buyer can't do that so the deal is dead and all the work was for nothing.

Low initial investment that I can make some minor improvements to and rent without feeling like I have a ton of money tied up into it.Wilson, Yes the taxes are really high.  

We bought this place 3 years ago, for 130k could have sold it for 170 6 months ago. with renovations im fairly confident we could sell close to 200k based on recent comps. i think if we put 15-20 into it we can get it where it needs to be in order to do so.

I am researching flipping market and i can divide it on 3 segments:1. rehab - when someone gets ugly or under condition house, puts a small money to get condition shortly and sale it as soon as possible - a small profit, high dependence on purchase price. in this case we earn on buying.2. improvement - getting old or cheap house, puts more money to get more expensive house which we can sale for high price and get more profit. in this case we earn on buying and improvement to get highest price among around houses in that location3. re-building or building new one - when we destroy old and build new house. in this case we earn more profit when get something absolutely new with highest price.

I pick up the benefit of improving the property, the year-end tax write-off, and the tenants feel they're appreciated that I listened to their needs and addressed them. 

The property is in average quality due to some recent capex improvements.