First deal questions
Working my first deal with a friend of mine. My investment funds are from my Solo 401k. We are able to do the deal with cash, including renovation costs, using a Tenancy in Common arrangement. He will be doing the renovation with no involvement from me, so as to avoid a conflict of interest. My question is this:
We are unsure yet as to whether we will flip this property or turn it into a rental. It really depends on whether we can get our asking price after rehab. If we decide to turn it into a rental, our goal would be to finance the property for an ongoing stream of income and recoup our initial investment. If we open a joint LLC that essentially owns the property, is this considered a prohibited transaction because the Solo 401k Trust is an interested party in both the original acquisition and the LLC that will acquire the post-rehab property and subsequent loan? If so, how else might the deal be structured in order to avoid conflict of interest?