I'm currently in talks with CPAs and lawyers to explore and make a decision on the best way to structure our partnership and LLC (the property will be held in a legal entity).

TENANT understands that TENANT may be held responsible for any water and/or mold damage, including the costs of remediation of such damage." 

@Joy James, Any type of real estate that has been held with investment intent can be sold and 1031d into any other type of real estate intended to be held for investment use.

These (modest) funds are held in my Self Directed IRA and now need to put these lazy funds back to work.Any thoughts on where the best place within BP to look for potential borrowers?

Remember, when Title is held by a legal entity you need an attorney to represent the LLC if you have to go to court.So, are you going for a some sort of "hybrid" setup? 

If they have no mortgage, they have probably held onto the property for a long time, and if that is the case, they have likely seen some appreciation as well.

I always bring a strong flashlight and a poker(I use an 18” screwdriver, I’ve seen inspectors use ski poles).

In my situation, they held back funds until I got parts of the house renovated, and then I'd tell them the part was done, send a copy of the invoice and they would release funds to repay me. 

Earnest money is held by lawyer.On the original day of closing, the seller revealed there is a tenant still in the property and the closing was postponed.

This is above the $150,000 threshold which allows you to offset rental losses against other income.However, you shouldn't be discouraged and think that real estate is not helping you out from a tax standpoint.Hopefully your real estate investments are cash-flow positive and being wiped out by depreciation and it is not adding on to your taxes.Regarding deductions - you are entitled to deductions regardless if the property is held in your personal name or in an LLC.