SDIRA/401k questions

[Scott Sauri]

First of all, thanks to everyone who takes the time to post on this site. I've been reading for a few months now and have learned a lot. This is my first post and I hope this thread isn't too old to be commenting on now, but after some searching, this seems to be the closest to what I am looking for.

I have already converted an old 401k to a SDIRA and used that to fund a checkbook/IRA LLC. I am currently looking at properties and there a few that I can buy outright, but I have more options available if I decide to finance (obviously).

My questions are regarding the financing. From what I can tell there are only a few lenders that make non-recourse loans and I am currently working with someone from NASB as they seem to be the most referenced national lender in this area.

However, after reading this thread, I am now wondering if I should be borrowing against my current 401k rather than obtaining financing from NASB.

1. Can I borrow money from my current 401k and then lend that money to my SDIRA LLC? Can I or my 401k even make a non-recourse loan to my SDIRA LLC at all?

2. I'm reluctant to borrow the money to partner personally with my SDIRA LLC on a deal, because I am worried about that creating a prohibited transaction since I can't really afford anything on my own without investment account money. Although I'm not really clear on
the rules there.

For example, if I have $100k in my SDIRA LLC and $200k in my current 401k, could I borrow $100k from my current 401k to buy a $150k property? Would this not be considered a prohibited transaction because I, technically, could have afforded the property on my own by borrowing $150k from current 401k?

3. This is really a separate, but related, question. Given the above account balance examples, even if I decided to buy a cheaper property outright with my $100k SDIRA LLC, would it make sense to borrow against my current 401k to buy a second property outright? The cheaper properties that I am looking at are between $60k and $90k and would likely get a rent between $900 and $1100. Those numbers seem in line with what Mark H. was calling a good deal earlier in this thread.

What is the downside to doing this? Just the risk that the real estate investment will not perform as well as the mutual funds that those funds are currently invested in?

Sorry for the long post!