Solo 401k funding and loans
I am buying a rental property with my solo 401k. However this will use most of my funds. Has anyone here purchased property with their solo 401k? My question is: after purchasing the property and renting it out can my 401k then take a loan out against the property. I'd like to free up this cash for another deal.
Most Popular Reply
If your Solo 401k provider did not provide information on this topic prior to establishing the plan, they are not doing their job.
Yes, a Solo 401k may use leverage such as a mortgage. The mortgage has to be non-recourse, meaning no personal guarantee from you. This limits your choices of lenders and will require higher down payments and reserves than you might see with a loan on which you are pledging a personal guarantee, but it is still a powerful way to use leverage in your retirement plan and generate higher overall cash-on-cash returns.
The leading lenders are First Western Federal Savings and North American Savings Bank.