Can I buy a property in my Solo 401k from the owner who is willing to owner-finance?
Yes, as long as the loan is non-recourse you may use owner-financing. Be sure to instruct escrow/title company/attorney preparing loan documents that there is no personal guarantee.
Yes. The financing will have to come by way of a non-recourse loan. A non-recourse loan is a method of financing in which the 401(k) participant will not be needed to personally guarantee the loan, nor will the other assets of the borrower (the Solo 401k) be used to secure the loan. The only action a lender can take in case of default of the loan is to acquire the asset on which the money was loaned.
Is it possible to use a Solo 401k as collateral for a third party loan?
No. If the Solo 401k itself takes a loan to buy a property, for example, the loan has to be in the form of a non-recourse loan. This means that the lender has no recourse in the event of default other than to foreclose on the property.
I’m going to invest in a real estate deal with my Solo 401k, but I’m a short of the funds that I need. Can I take out a short term loan from a friend or relative? Does the loan need to be paid back with funds from the Solo 401k?
Yes. If you don't have enough funds and are not able to rollover additional funds from another qualified account or make contribution, then taking a loan to finance your investment is possible.
You want to make sure that:
The 401k trust is receiving the loan, and there is no personal guarantee. This will make the loan non-recourse.
The loan must be paid back using funds of the 401k. Using personal funds for the repayment of the loan would be illegal.