Portfolio Lender that lends in both Colorado & Oklahoma?

Question

I've seen a number of discussions about portfolio lenders, but wasn't sure if they tended to be national, regional, state, local, etc????  Are any of these companies national? Or at least regional? Or do they tend to be more typically local?

The only reason I ask is, I live in CO, but own a property in OK and actually plan on increasing my presence there rather then here... at least for now. I'm just now starting the process of setting up my Solo 401(k) and thought it might be nice to open the account with a bank that might be interested in lending in both locations if possible.

Thanks in advance...

Bill S. · Answer

@Bob Foglia based on what you have said, I don't see why you would need one that would lend in CO. My suggestion is to focus on OK and if you decide to buy in CO then it would have to stand on it's own. The scale of lenders to cover both states would likely mean you would be paying for lots of overhead. The best portfolio lenders in my observation are small community banks. As you noted, they lack the foot print to cross state lines and most won't even lend outside of the community they are located in.

Bob Foglia · Answer

Thanks for the input. I think I'll just stick with my credit union for the new account and work on refinancing the two properties as my next hurdle.

Thanks again to everyone who took time out of their busy schedules to reply. It is sincerely appreciated.

Mark Nolan · Answer

@Bob Foglia

Here is some good information regarding a non-recourse loan to a solo 401k plan.

• Non-recourse loan means that your Solo 401k can borrow (take a loan)  from a bank, friend or investor for investing  in real estate.

• Through the use of leverage or debt financing, the solo 401k greatly increases its available cash amount for investing.

• Non-recourse means that the lender cannot go after the Solo 401k  trustee/participant or the balances of the Solo 401k (also referred to  as self-directed 401k, individual 401k, self-directed solo 401k or Solo  k).

• If loan default or foreclosure occurs, the lender can only go after  the property for repayment, not any other asset of your solo 401k  including cash or the Solo 401k trustee/participant’s personal assets.

• Since the property is the only asset attached to the non-recourse  loan, these are the only funds that the solo 401k can use as collateral  for loan.

• Non-recourse loans in connection with 401ks are not new but only started becoming popular in the early 2000’s.

• Non-recourse loans can be obtained through certain banks (e.g.,  North American Savings Bank) as well as hard-money lenders (e.g.,  whether friend, investor, or company specializing in non-recourse  loans).

• While non-recourse loans can be structured for any term period,  banks that specialize in them generally set 15 to 25 year loan payoff  periods.

• Non-recourse loan frees up cash in Solo 401k for use in other  investments including additional real estate purchases because only some  of the solo 401k funds are used towards the real estate purchase that  is utilizing the non-recourse loan.

• Since a non-recourse loan is quite different from a conventional  loan, the qualification requirements are different in that the non  recourse lender (assuming you are going through a bank) will NOT look at  the following since the loan is to your Solo 401k, not you:

• Will not check to see if you are employed
• Will not check your income
• Will not look at your W-2’s
• Will not look at your tax returns
• Will only look at solo 401k assets not your personal assets

• Since non-recourse loan is to Solo 401k, the loan does not appear on  your credit report since your social security number is not used.  Therefore, it is important to use the Solo 401k EIN (employer  identification number) on all loan documents in connection with  non-recourse loan.

Dmitriy Fomichenko · Answer

@Bob Foglia I don't think it makes any difference

Bob Foglia · Answer

Thank you all for the input. I do  sincerely appreciate the collective wisdom here on BP!

Dmitriy, I apologize for the  confusion. I currently own two homes outside of my solo 401(k), one of which I would like to refinance.  Unfortunately, a non-owner occupied property, with a somewhat difficult financial situation (new business, etc) I thought parking my solo account someplace that might also be interested in creative financing, would be a good idea. I don't know if it really makes any difference as it's actually my trust's account… But I thought it I would ask.

Michael L. · Answer

@Bob Foglia Some portfolio lenders are national. We can finance properties in all 50 states

Dmitriy Fomichenko · Answer

@Bob Foglia

not sure I understand how you you connect the fact that you are setting up a Solo 401k with Portfolio lender?

If you decide to financing an investment property in your 401k the loan must be non-recourse, there is only handful of banks who specialize in this type of financing.

Bob Foglia · Answer

Once again, makes perfect sense. Thanks Bill. I do appreciate your time.

Bill S. · Answer

@Bob Foglia not sure about the checking account for a solo 401(k). I have never done one of those so not sure if there are any considerations about where that should be. Banks like funds on deposit so they can lend more out. If you plan to have significant funds in it then that might make a difference. Certainly whatever bank you end up choosing would want you to have an account with them.

Portfolio Lender that lends in both Colorado & Oklahoma?

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