Your question doesn't make sense, can you clarify? You're talking about a loan to buy a house, and then you are talking about portfolios and income.
Focusing just on this question,
I have a question on a family loan. If it is less than $100K with 1% interest, and you buy a house with it.
What do you need to report as a borrower, and what is the tax consequence?
Borrower
The borrower can not deduct this as a mortgage on schedule A unless the loan is secured by a lien on their property. Assuming it is not, the borrower has nothing to report on their tax return. Buying property is not taxable and is not reported (it might be taxable when sold). Borrowing money is not taxable (unless you default and don't pay it back), you aren't earning interest you are paying interest, and you can't take a tax deduction for the interest.
If this is business property (like a rental) you can deduct the interest, even if the loan is not secured by the property, but you should have good documentation that shows the interest is tied to the building as an ordinary expense of doing business.
However, the lender has an issue
The IRS expects loan to be made in a businesslike manner, and that includes charging market rate interest. The lender must charge interest, and report the interest as taxable income on their tax return, even if the borrower is a family member. If the lender charges no interest or below market interest, they must still report and pay income tax on the interest they could have received if they had charged at least the applicable federal minimum interest rate. This is variable, is reset every 3 months, and is currently about 4% APR. This is called imputed interest.
https://www.irs.gov/applicable-federal-rates
