2 questions - Posted by Tony in MI

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.

Just my 2 very small Georges.


2 questions - Posted by Tony in MI

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?

Thanx in Advance and Happy Investing,


Answer to one question - Posted by Bud Branstetter

Posted by Bud Branstetter on February 18, 2002 at 22:27:20:

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.

Re: 2 questions - Posted by GL(ON)

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.

Re: 2 questions - Posted by Michigan Andy

Posted by Michigan Andy on February 18, 2002 at 14:43:57:

Where are you in Michigan? I have an answer for you on the 401(k) question, as I just cashed mine out (maybe crazy).

E-mail me directly.