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Updated almost 6 years ago,
Purchasing Real Estate with a Solo 401K loan
I would like to roll over funds from a 401K with a previous employer to a solo 401K with the intent to take a personal loan of 50% of the funds. I would take the $20K and add it with personal cash from my husband to purchase a duplex from an older relative for $35K. It appraises for $52K and is currently occupied with 2 long-term Section 8 tenants. I would do the max loan repayment of 5 years, but intend on paying off in maybe 2.5 years if not sooner by using most of the rent payments towards the loan repayment. Is there anything I need to consider that I may be missing if using a solo 401K loan? No early repayment penalties, nor any restrictions on what to purchase with the loan money? I know purchasing property from a relative is prohibited inside a retirement vehicle, but want to make sure it doesn't apply to the solo 401K loan as well.
Thanks in advance for any insight.