There is definitely loans available in the 9 to 10% range, but you may have lower LTV and be putting more money down, like 20% instead of 10%If you are borrowing for rehabs make sure you ask about draw process, fees, restrictions on changing plans, draw schedule, time to process it etc.As you shop don't just look at rates ask how quickly they can close, if they have discounts for repeat clients, in house appraisal or 3rd party.

At what point does IRS draw the line and classifies this as a business?

New tenants will expect a better property at a higher price.Finally, a junky property draws difficult tenants.

Your lawyer will draw it all up, for the benefit of the bank, and after the fact you and your parents can do what ever you choose regarding pay back. 

I do think you would have a hard time drawing folks in if it is in a bad area..... 

@Morgan YangJust make sure you have a good draw schedule where you don't send all the money upfront and have some person on the ground to verify work.A lot of people do this but a lot of people get burned on the first one.

Ohio 2001) holding an LLC eligible because it draws its characteristics from both corporations and partnerships and, therefore, “is similar enough to those entities to be eligible.”  

Under such a structure, would you take an initial investment from investors for project #1, but have a commitment from them that you could draw upon for projects #2, 3, etc?

Things can get a lot more complicated as you expand your portfolio and begin to tie in other investors, which is when you would really want to tie in an attorney to draw up strong operating agreements for you. 

I can see the draw, especially since it isn't so much based on your individual credit as it is on the property.