Using Solo 401k as a private lender

[Zoltan Fagyal]

I've been reading a lot about Solo 401K here on BP and elsewhere and I see a lot of posts but I couldn't really find specific info on using Solo 401K to fund a flip.

A little background info. For about 2 years now I have been investing with a local RE professional who flips houses. I'm usually getting around 10% on my money. I'm a full-time employee and also have an LLC that now holds a rental property. I don't have any retirement accounts yet. I was thinking that I'd set up a Solo 401K and use it for RE investments. I'm also getting into flipping and BRRR but based on what I read this may not be a good idea to use Solo 401K for that.

So if I kept investing anyway as a private lender. Would it make sense to do that through a Solo 401K account? 

Second question: what if my circumstance changes and I start hiring employees in 2-3 years? What can be done with a Solo 401K?

Thanks for all your help in advance!

[Dmitriy Fomichenko]

To qualify for a Solo 401k you need to be self-employed or own a small business without full time employees other than owner(s), can you confirm if you qualify? 

If you qualify then you can use your Solo 401k plan as a lender to fund this local investor's flips. This makes perfect sense, all of the interest income you get from the loan will be sheltered from taxes. 

If your business hires employees in the future you would have to either terminate the plan or amend it to include eligible employees (by law you have to offer the same benefits to your employees).