Posted by Michigan Andy on February 18, 2002 at 20:59:09:
I may be wrong, but think not. Having that 401(k) at any bank makes the bank no more secure about lending you cash on a signature loan than if you did not have it there. What’s to stop someone from getting the loan and then immediately moving the deferred comp fund anyhow? Absolutely nothing. Again, I may be wrong, but you cannot pledge the funds in a 401(k) for collateral, or security, on a loan. You can, however, borrow directly from your own fund, up to a certain percentage. I mean no offense to Tony, but $10k is not a lot to work with, depending on what he wants to do in RE. As a side note, I borrowed $4k from my 401 to buy my first 5-unit. Not quite sure if he wants to jump in with both feet like I did (ya know, lead, follow, or get the he** out of the way).
Cashing it out, placing the remaining $7800 or so (after the mandatory 22% withholding) in a CD or pledging as some other form of collateral against a working line of credit maybe a good place to start. I am not advising to cash out, just an option. By the way, the pledge against a WLOC is Ed Garcia & Terry Vaughn’s idea.
Posted by Tony in MI on February 18, 2002 at 09:48:36:
#1) I have about $10,000 in an old 401k account. I am thinking of taking the hit on penalties and using the $5000 to start my business and give myself cash for deals. Are there any ways around actually taking the money out and just using the dollar figure as collateral?
#2) Has anyone had luck using the weekly “Home Seekers” publication published by The Buyers Guide or similar. These are all RE Company listings so I am assuming the profits are not there. I picked up a couple for the multitude of mortgage/finance advertisements.
P.S. A new ad was run stating there is a new Co. providing lists of HUD and foreclosed props. Has anyone heard of a new foreclosure list?
You roll the 401K to a self-directed IRA. You then loan the money to me or buy a note that I have. I am sure I would be willing to loan you money personally or from my IRA. But then you could roll it over to a 401K in your own corporation and self direct the investments from their. You just can’t self deal but you can partner with yourself.
Posted by GL(ON) on February 18, 2002 at 18:08:47:
You should be able to borrow $10,000 from the bank that is holding the 401k on a signature loan. After all how risky is the loan while they are holding $10,000 of your money?
If they won’t do it try another bank. Tell them you will move the 401k to their bank if they give you a loan. When you get a yes, go back to the first bank and tell them you are moving your account unless they give you the loan.