I have a guy looking to sell a few of his Broad Ripple properties that he bought over 10 years ago that are still cash flowing and have great renters, but he would sell them if someone really wanted to give him what the homes are actually worth....problem is, they don't really hit the 1% rule and are not "deals" like most investors want. 

It is breaking all the rules and will likely continue to do so.

Check the rules of the auction and see ow long you have to settle up once you win. 

;) You mentioned CA, so maybe the rules are different for other states?

Rules are different on a HUd that is a RM. 10% Em.

.- no title seasoning on cash out refinances unlike FHA which has 12 months of title seasoning after purchase before you can use market value value or conventional which requires 6 months after acquisition (this applies to CO refinances where you used financing initially to purchase not DFE or delayed financing exception which is an all cash purchase and there is no lien/deed recorded on the property at the time of close), This becomes very handy for  creative RE entrepreneur once you learn how to force equity through adding value to properties you can use VA's no title seasoning advantage to increase the speed at which you move from deal to deal quicker than Conv/FHA- no self sufficiency rule when owner occupying 3-4 unit properties which FHA has (a rule that makes buying 3-4 unit FHA properties in high cost areas nearly impossible) so this a huge plus- use of rental income or other peoples income (OPI) to help you qualify on your 2-4 unit VA purchase (FHA and Conv does allow this too)There's a lot more you can do to optimize your mortgage planning from an investors perspective.With the introduction of the 2018 Tax Cuts, you can structure your taxes strategically to not only greatly reduce the tax impact but also remain bankable to most money sources.

No rule that says you have own your residence to invest in real estate. 

As a general rule the more risk the higher the cap rate but you’ll dig in and learn more.

Can those who use this 'rule of thumb' stir up some conversation and defend your rationale?! 

To learn about the solo 401k loan rules, see the following. https://www.irs.gov/retirement-plans/retirement-pl...