We’ve had a lot of talk about buying real estate in your
self directed retirement, solo 401k, but what typically happens and where do
you turn if you need more money than your retirement asset has in it?
While I will provide one other resource, there is probably no
better known lender in this niche than North American Savings Bank (located in
the Midwest), but which lends nationwide. They provide what is known as a
nonrecourse loan (see Wikipedia here: http://en.wikipedia.org/wiki/Nonrecourse_debt
) or you can read the North American Savings Bank (NASB) site for the
frequently asked questions (FAQ found here: http://www.iralending.com/docs/FAQ.pdf
This one page FAQ is excellent for those contemplating such
an investment or wondering what the rules are from a bank perspective. Here is
a quick screenshot of the FAQ.
of the big questions we hear is – what kind of property is eligible? From NASB’s
perspective they outline these property types: Single family detached
residential, warrantable Condo’s, PUD’s, duplexes, 4-plexes, and multi-family
(5 or more units).
The NASB folks also have a blog, but they are not too
regular at posting. Their last post in March discussed how to buy real estate
with your self-directed IRA, which is pretty obvious given their niche, but still
useful. Another post quotes almost an entire article from the Wall Street
Journal on people buying foreclosures with their self? directed retirements –
this was new to me and very much worth the read. It was from the WSJ online in
late November 2007.
The other great resource we know of is based in Washington
State and services mostly Western Washington — Pacific Crest Savings Bank: (http://www.pacificcrestbank.com/page.asp_Q_navigationid_E_100
). My fellow AllBiz Advisor, Gary Anderson, has worked with Larry Enselman
before and has had good experiences.
To be fair, there are other local banks out there that will
do a nonrecourse loan in their local markets, which can be a great source of
funds alongside your retirement account. Finding ones that are knowledgeable
and do such loans regularly are hard to find, but can make your investment
efforts far more lucrative and successful.
Happy nonrecourse loan hunting .