In this case assuming the fact pattern is in the past tense and has already occurred, you might consider a qualified opportunity fund and using the cost basis in the relinquished properties to reinvest in replacement properties.  

Leaks may occur as a result.

I have heard a few horror stories about people who have bought condos, then almost immediately after had to pay some bulk amount for some problem that occurred before they lived there.

I personally deliver letters on the day of closing (in the evening after closing has occurred).

But the learning that occurs while doing is invaluable.

All the activity was catered to the commercial multi-family space like @Roshan K. has mentioned, a 2-4 unit can't offer the same amenities but the purchase numbers on the per sq ft was similar, basically sellers are looking to see if any entry level buyers not knowing what they are doing will over pay, with all the new product online and stabilization hasn't occurred yet, their should be a spread between the two.    

You also must plan for these instances to occur in your planning process.

@Jeff McMahanIf your intention is to be personally involved in the rehab process, then a self directed IRA or Solo 401k would not work, as those plans require all transactions occur at arm's length - in exchange for the tax-sheltered status of the retirement plan.The Rollover as Business Startup program would be an option for you to explore.  

What areas of the underwriting would you likely assume the errors occur in order to produce such a high IRR? 

If, on the other hand, you did own the building when the (presumed) injury occurred, the adjuster or attorney will likely then determine whether perhaps the statute of limitations has run out on the claim.