All Forum Posts by: Bruce Harding

Minneapolis suburb area.  Nice suburb.

I have a real estate agent that I was going to ge in on converting a home into a senior assisted living facility.

Because I would be funding with my 401K Trust a Securities contract has to be drawn up.

Due to the time this property closes there won't be time to get an attorney to draw up this contract.

So I am going to do a loan to the agent on the property secured with a mortgage and lien.

My question is this a fair deal:   Loan Amount is $75K 

                                                        Term is 18 months

                                                        I am being offered 12% interest rate

I have never done one of these before so I am asking is this a fair deal for me or is interest usually more on this type of scenario ?

I am applying for commercial credit.   I have 2 scenarios that I don't know how to handle on the application.

1) I am applying for the loan and not including my spouse on the application.   She pays a certain amount of our residential mortgage payment every month.

    So do I list her as additional income somehow on the application or since I pay about 2/3rds of our mortgage do I list that amount (2/3's) as my personal mortgage obligation every month ?

2) I own a townhome - second property that is categorized as a personal residence.

    My wife's son lives there an he pays the mortgage every month.   I split association expenses with him every month.

    We have no formal lease agreement and I don't raise rent as this is kind of a hybrid situation.  He simply covers the mortgage for the property.

    Do I list this as additional income on the mortgage application ?  If I don't it will show I have a second mortgage with no income coming in against it.

Not a ROBS.   I am referring to using 401K and setting up a Trust with a checkbook account.

Lenders will require more down I realize.  35 - 40% and I will be working with portfolio lenders and non-recourse loans.

So my plan is to work syndicated commercial deals where you get your money back out in 6 - 12 months.  Buy under market when possible and/or add value.   Another component I am looking for is good cash flow.  This way I can progress to larger and larger deals.

This will be my strategy.   

Ah ha.... Think I have it figured out.    My plan allows it but the box for real property is checked "no."  

They are checking but I think this can be changed with a simple ammendment to the plan.

I am with a small company.

I read this article on this forum:  

https://www.biggerpockets.com/renewsblog/understan...

From everything else I have read it is my understanding that you can't get a loan against a 401K larger than $50K.   According to this article this may not be correct ?

Am I misinterpreting the article ie. Is it implying rolling over the 401K into an IRA ? I don't see the details spelled out.

I am self employed. I have a self directed 401K. I also have a self directed IRA from the past.

To roll over my 401K into my IRA I would have to shut down my S-Corp and start a new S-Corp I thought.

I am seeing that.   I negotiate in another industry - I negotiate the buy price and the sell price on every deal.  It is a distressed product business.

I understand numbers.   And this has been quite an eye opener exercise.   My first real world deal.

Last year I analyzed purchasing a semi-tractor trailer AND a Driver and working with a broker.   Too slim of margins due to the brokers cut.   And I did not know the business well enough not to need a broker.  (You also need a Class A License because drivers have been known to pull their truck over and walk away on the job !)

However I do understand numbers and when they delineate RISK.

Going to keep looking.   I figure it might take me 2 years but that's OK.

Yeah I am not going into the deal.  Numbers do not work.

I am starting to think this also. I have requested the T12 from the owner but have only received the P&L so far.