Either you guys are partners (i.e. both of you are active participants in the investments), or one of you is active and the other is passive (i.e. an investor versus a partner).

Even a junior lienholder that participated in the 2MP program (Which was the HAMP program for junior lienholders, which is now defunct) opted in to the program voluntarily.

However, you can borrow from the solo 401k through a participant loan and can use those funds however you wish including for improving a property that you may already own. 

I have a condo unit where the HOA participates in a "crime-free" program where no one with a felony in the last 7 years can buy or rent a unit in the complex... point being it's been 10 years and he's had no other issues so I would be OK with renting to them. 

Great post, @Steve MaginnisI'm working on a sale now - the owner is self managing landlord, he's proud how much money he saved for 25 years of owning few condos.He was renting his condo for $650/mo - no lease, tenant pay cash, he pays HOA, taxes and happy to have $400/mo cash flow.I rent exactly same condo for my tenant in this development for $890, same expenses =$250/mo and my PM=$100.

P.s I’m certainly on board participating in any local BiggerPockets events in Ottawa or Toronto.

@Alan FaitelNo as the solo 401k participant loan rules come into play.

If a trustee auction allowed any sale to be retroactively canceled and the buyer's money not refunded, I can't imagine anyone participating.

It does require self-employment activity, but has a lot of advantages: Compared to an IRA, Solo 401k contributions limits are roughly ten times higher.There is no custodial requirement for the 401k.You don't need the additional expense and administration of an LLC to have checkbook control.There is a built in-Roth component whereas IRAs are either traditional or Roth, not both.A spouse can also participate in the same Solo 401k plan.The Solo 401k has additional tax benefits over an IRA when investing into real estate using leverage.The penalties for prohibited transactions are less severe, though it's best not to utilize this benefit :)

Joe TomkoDistributions are not required from Roth IRAs even once the IRA participant turns age 70 1/2.