Purchase/Rehab w Hard Money Loan, Re-fi w DSCR Non-Recourse Loan

[Gary Sewart]

I'm planning to invest in my first buy & hold for renting out. My intent is to purchase and rehab it using my Solo 401k, together with a non-recourse loan from a hard money lender (I know several via a local REIA I participate in). After the property is rented and has demonstrated cash flow for a few months, the goal is to re-finance it using a long-term (15-30 yr), lower interest DSCR non-recourse loan. My assumptions are: a) the hard money loan can be arranged relatively quickly since I know the potential lenders well, allowing me to close quickly if needed, and b) the DSCR loan will take longer to get (as a newbie) and that its interest is signifantly lower than the 12% hard money loan.

The solo 401k element is important, since I want to shield earnings, appreciation, etc. from taxation. As I understand, the non-recourse part of the two loans is important to avoid being subject to the UDFI rules and UBTI tax.

There's a lot in all of this I know, but my basic question is this: is this approach (hard money loan first, DSCR loan second) and are my assumptions reasonable?

If so, what are some qualifying questions I might ask a potential DSCR lender, especially related to avoiding UDFI issues?

Many thanks,
Gary

[Erik Estrada]

Quote from @Todd Goedeke:

@Erik Estrada You are kidding right? You are supposedly a lender and don t know what banks give out non recourse loans where retirement accounts are involved? Check with some of the providers of self directed IRA and Solo401k accounts. All the account holders use non recourse loan lenders.There are forums on Bigger Pockets to further explain it to you.

 Good to know. I’m pretty sure you don’t know everything there is to know in your trade. So no need to be rude about it. Thanks.