Self Directed IRA to buy and hold rental

[Sayli Mulay]

I am planning to open a Self Directed IRA and rollover funds from an old 401K account. I want to buy and hold single family rental. However, the account doesn't have enough funds to buy the property in full. The funds are sufficient for down payment + closing cost + repairs + reserve.

So I (my IRA) may have to take out a non-recourse loan, but interest rates on non-recourse loans are ridiculously high and plus other drawbacks like UBIT tax etc.

Any suggestions on better ways to use that old 401K ?

[Dmitriy Fomichenko]

@Sayli Mulay

You probably have been misinformed. If you go with one of the major lenders specializing in non-recourse financing for retirement accounts they have very reasonable interest rates. Yes, slightly higher than conventional, but still very good. I just looked at my loan with NASB and my rate is 4.25%. Far from being "ridiculously high". Perhaps you were looking at hard money loans, those are tend to be high, in double digit. 

Check out this list of lender that I've assembled over the years with non-recourse lenders, you may find one that would work well for you:

https://www.biggerpockets.com/member-blogs/2810/50272-list-of-non-recourse-lenders-for-self-directged-ira-and-401k

Hope this helps!