Self Directed IRA (by Sallylee [AZ]) Jan 20, 2018 6:30 PM
Self Directed IRA (by Dan [NY]) Jan 20, 2018 7:02 PM
Self Directed IRA (by Bret [MO]) Jan 20, 2018 9:13 PM
Self Directed IRA (by BRAD 20,000 [IN]) Jan 20, 2018 10:15 PM
Self Directed IRA (by David [NC]) Jan 21, 2018 1:32 AM
Self Directed IRA (by Dan [NY]) Jan 21, 2018 4:22 AM
Self Directed IRA (by Sallylee [AZ]) Jan 21, 2018 9:26 AM
Self Directed IRA (by Sallylee [AZ]) Jan 21, 2018 1:25 PM
Self Directed IRA (by Robin [WI]) Jan 21, 2018 4:27 PM
Self Directed IRA (by Sallylee [AZ]) Jan 21, 2018 4:55 PM
Self Directed IRA (by MMIT [VA]) Jan 22, 2018 9:43 AM
Self Directed IRA (by Sallylee [AZ]) Jan 22, 2018 5:53 PM
Self Directed IRA (by BRAD 20,000 [IN]) Jan 22, 2018 11:18 PM
Self Directed IRA (by Sallylee [AZ]) Jan 23, 2018 8:00 AM
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 20, 2018 6:30 PM Message:
Anybody on MrLL have any experience using some or all of their IRA to buy rentals? I believe it is referred to as a self directed IRA. We are experienced LLs with 10 properties currently and know the return would be better on a couple more RE investments. Our current CPA kind of himmed and hawed about it saying we would have to keep really good records, etc. What do you know about it???? --107.2.xx.xxx |
Self Directed IRA (by Dan [NY]) Posted on: Jan 20, 2018 7:02 PM Message:
I just completed a self directed IRA deal in NY. We have two separate LLCs. One being owned by my self direct the other being owners by my wife’s. The two LLCs joined and conpleted a joint venture. We were able to get a hard money lender do the nonrecourse rehab note who we were very happy with regarding the draws and the process. After the rehab was the property was refinanced into a 10 year, 15 year amortization. The finance cost does add up due to the two notes. However, I’m happy how everything worked out. NY is difficult to find nonrecourse lenders. We do plan on holding on to the property long-term do to the tax advantages. However, the transaction was involved and complicated. We have a separate company set up for each LLC and the joint venture. I would maintain records and do your banking, don’t mingle funds and know the rules.
I come from a family of CPAS and not all CPAS now the rules for a self-direct. I’m a non-practicing cpa, but I have a good base to do my own research and gather the needed info. S --107.77.xxx.xx |
Self Directed IRA (by Bret [MO]) Posted on: Jan 20, 2018 9:13 PM Message:
Sure, you can buy property with self-directed IRA funds, but you should not manage it yourself. IRS views IRAs as a separate entity, almost as if your IRA is another person. You can't do anything to aid, grow or help your own IRA. To do so is called "self dealing" and is prohibited.
There are strict rules about who can and can't work with your IRA. If you get caught self dealing your own IRA, the IRS can and will blow your IRA up, deem it distributed, and taxes will be owed on the whole amount immediately.
If you buy property with your IRA monies (which is perfectly legal) have someone else manage it.
--107.209.xxx.xxx |
Self Directed IRA (by BRAD 20,000 [IN]) Posted on: Jan 20, 2018 10:15 PM Message:
Sallylee,
Call my guy Mike Todd at IRA innovations 615-794-8961.
Having done some houses in my Self Directed Roth I now suggest folks “be a bank” and loan out money rather than buy a property. Push paper. Properties need “things” - work, labor, materials, insurance, inspections, taxes, fillings, leases, attention, care, property manager...and YOU are not allowed to touch ANYTHING! No painting, cleaning, showing, screening, leasing...You must hire everything. This can be awkward and one tiny slip can ruin your entire IRA.
This is not like normal rehab or renting. You MUST get educated.
A Self directed 401k is safer. If you make a mistake it only affects that one transaction not the entire IRA.
BRAD --12.215.xx.xxx |
Self Directed IRA (by David [NC]) Posted on: Jan 21, 2018 1:32 AM Message:
Disclaimer: I am not an attorney or accountant and only relating personal experience.
I bought the 3 books below and listed them in order of best to worst. If you get just one, I liked Sorensen the best.
I decided to take my broker managed traditional IRA and move it to a place where I could self direct. I chose CamaPlan out of Philadelphia but you can easily get a list of SD IRA companies off the web. They were responsive to my calls. Once I transferred I converted my traditional to a Roth so that all proceeds will grow tax free (and a few other reasons listed in the books). You must have enough money to pay the taxes on the conversion (if you do this part) since you can't pay the taxes out of the IRA since that would be a distribution. You don't have to convert from Traditional to Roth that is just what I did. Works the same if you keep it a traditional you just pay taxes on the back end.
Now you can have your chosen IRA company buy your real estate and pay your bills out of the account. They will do all your real estate paperwork. They sign all your documents (you do not - only direct) or you can create a "checkbook" IRA like the below books suggest.
I chose to create the "checkbook" IRA where you create a LLC and direct the IRA company to buy 100% of this created LLC. Now the LLC will buy the property and you will control / direct it.
So I asked at CamaPlan how do I do that and they work with Kerr & Associates also out of Philly. You want a lawyer who knows how to set these things up property to do the work. Your local lawyer is not the person to chose. You create an LLC called Sally Smith SDIRA, LLC (or anything you want really) Once the LLC is created you direct your IRA to pay the lawyer bill. You do not personally pay it or that is considered a contribution. It must come from within the IRA.
You go to your local bank with your LLC docs and your EIN number and say I need a business checking account but I can't give you any money to open it and it will have to be transferred in from my IRA. So the bank looks at your funny and says I'll have to talk to the VP and you explain the whole thing and finally somebody says OK I'll wait until you transfer the money in to fund the account. You can't use your own money to open the account because that would be like making a contribution to your IRA (read the books its a bit complicated). Also you don't open it with your name on it. You get your brother or trusted individual to open it for you. This advice differs from the books but it is what Kerr & assoc suggested. So you need to trust the person opening the account since they sign all the checks you are directing them to make.
Then you fill out the forms from your IRA company and say I need you to wire transfer $X to this new LLC I bought.
Suddenly you have $ in a checking account and can go buy something! Woot! Now like Brad said you must be completely hands off. You can't personally fix up the property - you must hire it out. Read the books.
It has taken me 3 months to get to this point where the LLC is funded. I have made no purchases yet. It is a work in progress.
Books:
The Self Directed IRA Handbook: An Authoritative Guide For Self Directed Retirement Plan Investors and Their Advisors Mat Sorensen
The Checkbook IRA - Why You Want It, Why You Need It: A private conversation with a top retirement tax attorney (Self-Directed Retirement Plans) (Volume 2) Bergman, Esq., Adam
How to Buy Real Estate (and Other Cool Stuff) in Your IRA Bronchick Esq, William --65.188.xxx.xxx |
Self Directed IRA (by Dan [NY]) Posted on: Jan 21, 2018 4:22 AM Message:
I would also suggest reading a few books. Again, many folks have different situations. The SDIRA can certainly be used to hold paper. I personally wanted one property in the account that I thought would be a great deal.long Island is a different market compared to many other states and housing is usually more expensive, so funding and flowing are difficult. The SDIRA is all about how it is set up. I have Todd as the custodian and used matt Sorensen as the attorney to set everything up from the two LLCs and the joint venture agreement. He’s the expert in this area, while I’m not. I will most likely just hold some paper going forward from the account. You can do joint ventures with your SDIRA as long as you initiate the process at the start, again get an attorney to advise. I did find funding with a nonrecourse in NY to be the most difficult aspect of the job. In regard to not doing the work yourself just use a GC and make sure you have a solid deal. --68.192.xxx.xxx |
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 21, 2018 9:26 AM Message:
Thank you all for your thoughts, we have been studying up on it. --107.2.xx.xxx |
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 21, 2018 1:25 PM Message:
Brad, it actually would be a 401K we would use. I have a lot to learn before jumping in. F
Thanks again!! --107.2.xx.xxx |
Self Directed IRA (by Robin [WI]) Posted on: Jan 21, 2018 4:27 PM Message:
We've done this in two different forms. Before you start, you need to make sure you really understand the rules. We have a SDIRA with Mike Todd, and he's been good, but he's not a lawyer and ultimately not the best source of information about what is "legal" or not. Here's what we've done:
SDIRA #1: I bought a rental property entirely with funds from my SDIRA. I'm not allowed to touch any money, so for rent collection I had a choice of either letting the tenant send a check to my IRA custodian each month, or having them deposit it in a bank account that was not mine. I don't accept checks for rent, so I have a "financial friend" (NOT a direct line relative) that opened a bank account for me. Rent money goes in, repair money and other expenses go out, and once a year an accounting and excess funds go to the IRA. The property is in another state, so there's no question about my making any contribution whatsoever to the management or repairs.
SDIRA #2: My husband makes loans to real estate investors out of his SDIRA. The IRA custodian wires the money, and when the deal gets paid off the money gets wired back into the SDIRA account. DH never touches it.
What Brad said is true: loaning money is a lot easier and "cleaner." But owning rental property within your SDIRA can be done as well, and it's not that hard. --204.210.xxx.xxx |
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 21, 2018 4:55 PM Message:
Thanks Robin --107.2.xx.xxx |
Self Directed IRA (by MMIT [VA]) Posted on: Jan 22, 2018 9:43 AM Message:
I suggest you attend the SDIRA workshop put on by John Hyre the first weekend in February in Tampa. This is a 2 day workshop.
Good luck! --67.45.xxx.xxx |
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 22, 2018 5:53 PM Message:
Thanks MMIT, I would have LOVED to go to that workshop and would have if we didn't have 2 out of state relatives visiting then. Been talking and reading info on Equity Trust website about SDIRA, very interesting but we're not going to rush in. --107.2.xx.xxx |
Self Directed IRA (by BRAD 20,000 [IN]) Posted on: Jan 22, 2018 11:18 PM Message:
My experience with Equity Trust has been absolutely horrible.
BRAD --68.51.xx.xxx |
Self Directed IRA (by Sallylee [AZ]) Posted on: Jan 23, 2018 8:00 AM Message:
THAT is exactly the kind of feedback I was hoping for Brad. A lot of info on their site, but just one resource we are studying. Will scratch them off the list of possibilities for handling the SDIRA for us. Who have some of you used with success besides the one already mentioned above? --107.2.xx.xxx |
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