Anybody gotten a mortgage on SD 401K owned property

[Eric M.]

Until now, all my SD 401K purchases have been all cash. I am aware that you are allowed to get a mortgage for them and am considering it but the bankers I have spoken to seems as clueless as I am.

I have been told by some that the deed cannot be held in an "investment entity" name, which obviously the 401K is.

Has anyone done this? How does this work in terms of qualifying, etc.?

Thanks

[Loren Whitney]

Non-recourse loans aren't as common as recourse loans. You won't find them being offered by larger names in the mortgage industry. Smaller regional banks and credit unions usually do more of this from my experience. There is one large national lender that offers non-recourse loans and I'm sure you can find them with a quick Google. I'd mention their name here but the board admin might disapprove since I'm still a newer user (respect).

One nice advantage about using an SD 401k for leveraged real estate is an exemption from Unrelated Business Income Tax (UBIT). In most cases, debt financed real estate investments in 401ks are exempt from UBIT. Do your research and you'll find that this can add up to quite a bit in savings.

Cheers!