It will be solved and brought current when they list the house and sell properly through a title co or closing attorney.Possibly do them a solid (since you are family, pretty please?)

It means they are not operating the property correctly, not reporting their expenses properly, they are owner operators and do everything themselves on the cheap, or a combination of these.Put together a pro forma based on how you will run the property so that you can get more comfortable with your numbers.  

I'll do everything legally (if this is legal) with contract and have the proper paper trails.If YES, would it make sense to rent at my mortgage rate or standard rate?

Investors should always complete their own research, due diligence, and consult with the proper professional services to their satisfaction, and act accordingly in good faith. 

If you put the right systems in place (think 4 hour work week) and you won't ever get a call and maybe have to put in an hour or two each week making sure the systems are running properly.  

If you file, your filing for Cause,, Failure to vacate after proper notice of non-renewal.

In my enthusiasm I already got involved in a thread, and realize, I haven't properly introduced myself:I am a home owner, accidental landlord on my first home, which is under water, but not deterred.  

One example given is that outside of your SDIRA - if you sell a property , it is immediately subjected to taxation to the tune of 20% or so - that means you only have 80% of that money available to invest into another property - of course you can do a 1031 exchange to defer the taxes - but doing a 1031 exchange is not always that easy - there are certain restrictions and time limits that you have to adhere to or you wont be able do it properly - you have to identify your subject property within 45 days and many investors will identify multiple properties so that if they don't get the offer accepted on one - then they have others to fall back on  - if you cant find another property quickly - then you may not be able to 1031 it.

The LLC may help a little if it is and has been properly created and properly administered but if someone dies or gets a serious injury, one way or another the LLC won't keep you completely out of harm's way. 

I start looking 2 months ahead to insure I have plenty of applicants and that they have given proper notice to their present landlord.