Is there something stopping the borrower legally from tapping a portion of the reserves cash and putting 10% down to take on the land contract for the 12 immediately after mortgaging the 18?

My overall REI goal is to acquire an investment property every few years so that when I retire in 15 years or so, I will have enough passive income to augment my pension allowing me the choice to continue working or not. 

I'm not a multi-millionaire (yet) but I'd like to know what they look for in a good deal and in a good borrower. 

If that is correct in my understanding then you are effectively lending monies to your IRA, which is prohibited.If on the other hand you are stating that you are creating a JV (20% IRA, 75% personal and 5% third-party), and your portion is a personal guarantee pledge of ownership to borrow the monies to pay for your share, then you are extremely close to stating that you are using your IRA based partnership to enable you to get a loan which is a prohibited transaction.While these appear to be good food for thought, as professionals we would be happy have you test the case with the IRS so that we can all learn from your experiences (I am sure Brian would concur too) :-).

Especially if you have an appraisal to show him there is no other choice.

A borrower or an owner with interest in the property can not short sale a property to themselves.

As interest rates ARE so low, and you have cash, why not just borrow conventionally?

Prime meaning, good borrower, good collateral and good origination.  3.  

Some final notes are that my father is willing to co-sign or co-borrow on the mortgage.

At an 6% capitalization rate (very achievable) you are left with $9k net operating income. lets assume when you borrowed the $120k from the bank they lent it to you at 3.5% interest over a 30 year term.