Financing REO flip & sell with ROBS/Solo 401k

5 Replies

Good morning all,

I am in the process of getting started on my REI venture. I will have shortly a ROBS 401k account set up that will allow me to put 20%-30% down on an REO. I had originally thought since I had the money down, financing the rest would be relatively simple. But as it turns out, there are not many that loan for what I want to do. It appears HML may be the way I have to go.

Has anyone found lenders willing to loan in this scenario? Anyone with a ROBS care to share how they finance the rest of the deal?

Thanks,

- Chris

When I had a ROBS account, I was purchasing all cash, not financing.

You won't be allowed to secure the loan using your IRA or any assets within your IRA, so traditional financing is out. I'm not sure you could go the HML route either, as the lender is still going to require collateral -- since you can't use the IRA or anything in it, you'd have to collateralize against personal assets, but I believe you'd be violating ERISA rules by collateralizing something in your IRA with personal assets.

I'd talk to a good ERISA attorney (you should have one anyway if you're setting up a ROBS), and see what s/he recommends.  But, you may find it very difficult to get any financing for these types of investments.

This is who I used in Atlanta several years ago:

Ty Jordan

Jordan Law Firm, LLC

12th Floor

1170 Peachtree Street

Atlanta, Georgia 30309


@Chris Brown

Actually if the ROBS is setup properly where, for example, the IRA funds were transferred to the new ROBS 401k, the loan will need to be to the ROBS funded C-corporation and you as the owner of the ROBS 401k can personally guarantee the loan, however the 401k assets may not be used as collateral.