This way you have tied up the property and have control over it, but do not have to purchase it/close on the purchase until you are ready at which time he would exercise the option to buy and then proceed to close on the purchase.

I like having the control over the investments, even if it could go south.

@David FlandersWhat you seek is not really achievable within the framework of the IRS rules.If the IRA purchases the property, then a non-recourse loan must be used.Once purchased with the IRA, a property may not be transferred to you or an entity you control, so that you can then arrange for debt-financing in your own name.Your only option would be to find a private lender willing to lend to the IRA at a more aggressive set of terms than a bank.  

However, for this property by beautiful Lake Merritt, under rent control, it will not generate enough income to support a 75% LTV.

You should be talking to regional banks as well as the big players and see what both have to offer.  

It's OK to locate your new business in your living place if you can close it off and have minimal distractions, especially personal ones.Try to stay in control of everything you are responsible for.  

In regard to institutional real estate investments, the advice of an expert who works in the industry every day, knows all the players and their track records, and performs due diligence on each offering is a great benefit to you and comes to you at no cost.

If he wants to have total control over his retirement funds instead of going through a middle man for every investment and every transaction then he may want to explore Checkbook IRA. 

You make your money when you buy...you realize your profit when you exercise your exit strategy down the road.If you do anything now, rationalizing on future events you have no control over, that will recover your loss (overpay) at purchase, you lose.  

Amil, here is what i have done in the past with LLCs and partners.There was one main operating llc that i controlled since i was the leader on the endeavor.