Favor SD401k over SDIRA?

[Damien Cobbs]

This is my very first post! I have been reading about Self Directed IRAs as it was a recommendation from a conference I attended (and paid quite a bit for) regarding real estate investing. The way it was described made it seem like I could roll money from my previous employer 401k's and use that money to fund buy-and-flip property transactions. From my reading, a lot of reading, I think I have determined that a SDIRA is not the vehicle I should use. From my understanding, and please correct me if I am wrong, any proceeds from the flip would have to go back into the SDIRA, meaning that I could not use the proceeds to pay off other business expenses. I also could not use entities that I, my partner (wife), or family member set up.

I turned my research to self directed 401k's. They seem to be a better fit for what I am would like to do. I can roll over money from 401k accounts I have from former companies into a self directed 401k account. From there, I could loan myself the lesser of 50% of the SD401K or $50k to use for whatever purposes I choose. I would then have to replay the loan over the course of a specified time frame at a particular interest rate. Is that correct? Here is what I want to do (using arbitrary numbers):

- Put $80k into a self directed 401k account

- Pull $15k out to use for a down payment for property to rehab

- Use hard money for balance of rehab property purchase (I know the rates can be high for hard money but I have not built the private money relationships yet as we are not proven yet).

- Use Business Line for property rehab costs

Now, after the rehab is complete and the property has sold, I would then pay off the hard money lender, repay the business line, and then put the $15k, interest, and a little extra back into the SD401K. The rest of the money (let's say $17k) would then be used for business expenses, small salary, and used to build company reserve funds. 

I know that pulling all the money directly out of my old 401K's to completely fund the purchase would generate a rather substantial hit to the funds available to which there would be limited recourse as a $100k loan may actually only generate $65k of actual available funds. This would also wipe out any profit if I were to try to put $100k back into the property.

Is there anything that I am missing? Is there a better/different way? I have done so much reading that my mind is turning into mush. I really think I am hit by the analysis paralysis bug. 

Please advise.