Non Recourse Loan Quandary

[Amar Kapadia]

I'm planning to start investing into real estate from my solo 401K account -- which has to be a non-recourse loan-- and I have a quandary.

The interest rates for non-recourse loans on 1-4 units seem akin to highway robbery. Putting 1st Bank aside, I am finding rates north of 5% up to 7.75%! 1st Bank seems to have more reasonable rates, but they finance properties in very few geographies, CO an AZ being the two I might consider.

As an alternative, non-recourse loans for multifamily 5+ units appear, on initial analysis, to more reasonable, in the high 3% range. 

So I'm in classic analysis-paralysis trying to figure out whether to go SFR with a higher interest rate and depend on appreciation to make the numbers work OR to go with multifamily and optimize for cashflow while settling for possibly a lower rate of appreciation. BTW, I'm thinking about Memphis, Birmingham, or San Antonio (buy&hold not BRRRR).

Any thoughts or advice would be greatly appreciated.