RV Park Syndication

3 Replies

@Ryan Wright

Some additional options you can consider, if they are applicable to your personal & financial situation: 
1) re-shuffle your portfolio allocation e.g. reallocate from securities (stock, bonds) to RE
2) borrow from your 401K (consider the tax implication of repay loan using after-tax dollar + need to repay loan in full within a short period if you part way with your employer or are terminated)
3) borrow from your cash value life insurance policy 
4) tap into equities from your primary or rental properties
5) good old fashion credit card - I still get some 0% APR promotions for at least 15-18 months from some companies. Very careful here. I won't recommend this unless the investment is of short-duration and collateralized in senior most position. Also be mindful that drawing down a credit line, depending on your credit utilization, can negatively impact your FICO so if you need your score for some other borrowing, then don't fully drawn down.

As with all things, you should weigh the risk/return of your intended investment, your costs of funds, duration match your assets & liabilities appropriately and fully understand the tax implications, if any, so that earning a risk-adjusted excess return is worth your while.    

Originally posted by @Helen C. :

@Ryan Wright

Some additional options you can consider, if they are applicable to your personal & financial situation: 
1) re-shuffle your portfolio allocation e.g. reallocate from securities (stock, bonds) to RE
2) borrow from your 401K (consider the tax implication of repay loan using after-tax dollar + need to repay loan in full within a short period if you part way with your employer or are terminated)
3) borrow from your cash value life insurance policy 
4) tap into equities from your primary or rental properties
5) good old fashion credit card - I still get some 0% APR promotions for at least 15-18 months from some companies. Very careful here. I won't recommend this unless the investment is of short-duration and collateralized in senior most position. Also be mindful that drawing down a credit line, depending on your credit utilization, can negatively impact your FICO so if you need your score for some other borrowing, then don't fully drawn down.

As with all things, you should weigh the risk/return of your intended investment, your costs of funds, duration match your assets & liabilities appropriately and fully understand the tax implications, if any, so that earning a risk-adjusted excess return is worth your while.    

Here are the general considerations regarding 401k loans.

401k Participant Loans

  • If your 401k plan allows for 401k participant loans, the maximum loan amount is equal to 50% of the balance up to $50k. The repayment terms for a 401k participant loan are equal monthly/quarterly payments of principal and interest (typically prime plus 1%) over a 5 year term (longer if used to acquire your principal residence).
  • Please note that if you take a full $50,000 and then pay back the loan, you can't take another $50,000 until 12 months after the first loan was fully paid back.
  • Per the loan offset rules that went into effect with the 2018 Tax and Job Act: if you leave your job and the loan is current at the time you leave your job but then the loan goes into default because you left your job, you will have until your tax return deadline (including any timely filed extension) to make the loan current by depositing the outstanding balance into an IRA (and thereby avoid the taxes and penalties that would otherwise apply).

 

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