Also, I am considering to do a hard money loan vs a conventional loan for this property and roll over to a traditional loan to occupy this property to minimize cost during any of the rehabbing.

It might preclude your future personal involvement.There is an alternate structure known as a Rollover as Business Startup that allows you to capitalize a new or existing business with retirement funds, and be directly involved in the business.  

@Mike ReynoldsA ROBS 401k is referred to as a Rollover Business Startup 401k because it allows you to finance your own business startup without paying taxes and penalties.

@Dane FitchDo you already have a self-directed 401k and are asking about help with rollovers, or do you need the 401k as well.

Following are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k Similarities Both were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions;Both are prohibited from investing in assets listed under I.R.C. 408(m).The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company  (IRA LLC)must be utilized;The solo 401k allows for checkbook control from the onset;The solo 401k allows for personal loan known as a solo 401k loan;It is prohibited to borrow from your IRA;The Solo 401k may be invested in life insurance;The self-directed IRA may not be invested in life insurance;The solo 401k allow for high contribution amounts (for 2016; the solo 401k contribution limit is $53,000, whereas the self-directed IRA contribution limit is $5,500);The solo 401k business owner can serve as trustee of the solo 401k;The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;Pre-tax IRA contributions on reported on line 32 of Form 1040;Pre-tax solo 401k contributions are reported on line 28 of Form 1040;Roth solo 401k funds are subject to RMDs;A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.)

There is no benefit (ie employer matching on the rollover funds) unless the investment options are stellar.  

Talk to a tax adviser about moving that money from your old company's 401(k) to a rollover IRA or other retirement account before you make this move.If you have equity in your home, you may want to consider getting a HELOC from a local bank/credit union.  

Yes Jane, you can roll over your retirement funds into Self-Directed IRA or Solo 401k and use it for real estate investing.

I realize that as the leases roll over I can change the terms so that the tenant pays for the water, but am wondering how high the risk factor is in the meantime.

I suppose if anything had a 33% ROI my rollover time table would work, but netting $1000 a month in cashflow would make the long term goal take much longer.