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buying RE with solo 401k

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  • buying RE with solo 401k

    I have a solo 401k with about 60k in it from my independent contractor days and from a rollover of a previous qualified account. Given my current W2 work and no foreseeable 1099 income, as well as the UBTI exception for solo 401ks, I was thinking of buying a SFH to rent out.

    Has anyone done this? Is there something special that needs to be done with the solo 401k (it's at Fidelity, and I filled standard paperwork for it) to use it for the purposes of real estate acquisition? How does one get a mortgage with it?

    I've read the 2 bigger pockets tax books, and it has decent information on it, but not the nuts and bolts. Can someone provide guidance or point me to a resource to help?

    Thanks!

  • #2
    Did you check to be sure Fidelity will allow you to invest in alternative assets in a 401k there? If not you may need to move it to a custodian that allows it. Any loan needs to be non recourse according to IRS rules and they are tough to get for SFH but you can check with local banks to see if they'll do it. I find they'll do it at a lower LTV, anywhere from 50-60%.

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    • #3
      The only problem is if the $60k is insufficient. You will need a self directed solo 401k. Different animal.

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