Non-Recourse Loan for Commercial in NY State

[Ron West]

I have a 6-unit multifamily property under contract and all the numbers are looking good. I want to fund the deal with a self directed SOLO 401k set up for my real estate business. Unfortunately, the IRS restricts SOLO 401ks to non-recourse loans for borrowing.

I have been having trouble finding a non-recourse commerical loan for multifamily in New York state. Another thing that is barring me from loans is that the purchase price is around $200k, some lenders only do $500k and up.

I have 1 lender that might be able to lend on this deal but I want to make sure I have a back up in case it falls through.

Can anyone provide a advice, referral, or recommendation for find this type of loan? I am also open to referrals to loan brokers, as long as they can find me something. Thank BP community!

[Jaysen Medhurst]

Hmm...my wife and I did a 401k loan when we bought our primary and it's 10-year payback. Maybe because we're using it for our primary. I'm not positive, @Ron West.

One important clarification: your profits are not "tax-free" if they are realized in a 401k, they are tax deferred. You will be paying taxes when you withdraw funds in retirement. Don't think you're out maneuvering the tax man. The only way to (partially) do that is to 1031 until you die.