"Strangers on a Train" buy and holds with solo 401k or IRAs?

[Katherine S.]

I came across the term "peer to peer" investing and jumped to the wrong conclusion as to what it meant...but that mistaken idea is stuck in my head.  Got no search results, so I'll ask the forums.

We're are building a rental portfolio, and are nearing retirement.  We have lots of resources in our solo 401k, but are limited to $50k loans, or investments in properties that we can't actively manage, which doesn't suit our model.  However, we could make loans to a non-disqualified person who is also buying rental properties.

So I got to thinking about a criss-cross arrangement...could two unrelated people building rental portfolios who also have substantial funds in their 401k or self-directed IRA invest in with each other?

Is anyone doing or interested in doing something like this? 

[Brian Eastman]

@Katherine S.

While your IRA/401k can certainly invest in a deal associated with an unrelated 3rd party, you do not want to create any kind of quid pro quo arrangement where you essentially provide capital to them so they can in return provide capital to you. The IRS would potentially (and likely) see this as an attempt to use that 3rd party as a conduit to your own IRA funds.