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Updated almost 5 years ago,
Structuring a partnership investment using a 401(k) loan
My next investment purchase will use a 401(k) loan from myself or my wife’s account. I want to structure it in a way so that we are paid back so that the loan balance can be reduced quickly. The point of this is to simply have the funds back so that we can move onto our next investment. The target property almost definitely has to be a value add minimally distressed property that can be refinanced after repairs, or a straight up fix and flip.
Where I am confused is to how to best word a partnership agreement to be reimbursed and how that would affect my cost basis in relation to my partners?
In full disclosure, I have no intention of charging my partners interest since the 401(k) interest will be paid back to us ourselves only (no need to justify charging interest to counter the bank interest we’d be paying had it been a traditional bank loan).
Thank you in advance.