ForumsReal Estate InvestmentsNon-recourse loan (debt financing) for LP real estate investment

Forums Solo 401k Real Estate Investments Non-recourse loan (debt financing) for LP real estate investment

  • Non-recourse loan (debt financing) for LP real estate investment

    1 Reply
  • Top SubjectReal Estate Investments
    Top ForumsReal Estate Investments

    Kunal L.
    Top SubjectReal Estate Investments

    May 16, 2022 at 5:45 am

    I want to see if I am eligible for Non-recourse loan (debt financing) for the type of real estate investment I am planning through my solo 401k. The type of real estate where I am investing as one of the limited partners (LP) whether I can apply for a non-recourse loan or not.

    Kunal L.
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    May 16, 2022 at 5:51 am

    If the LP is making the investment, the solo 401k cannot apply for a nonrecourse loan. The non recourse loan would be to the solo 401k directly if just the solo 401k was going to invest in the property where the solo 401k takes title to the property.
    The LP can obtain financing since the LP is making the investment (taking tile) not the solo 401k plan.
    Lastly, the solo 401k participant generally can’t invest in the same LP as his or her own solo 401k. If you do, then other rules come into play such as the following:

    You and certain family members cannot work or provide services to the LP; and

    you, your solo 401k plan and certain family members personally and/or through their retirement accounts cannot own in aggregate 50% or more of the LP. To learn more about these rules, visit here.

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