Getting started in REI with an IRA or Self-Directed IRA

[Michael Strobel]

My father and I are looking into getting into RE Investing. Our long term goal is to build a portfolio of rental properties that produce passive income both for his retirement and my long term wealth. As we contemplate our strategy for how we begin we have thought about using a large portion of his IRA to get started. He lost a HUGE chunk of it in the stock market when the market crashed and is currently only getting about 10-20k/yr added as the market has been growing. But it will not be even close enough for him to retire on in 7-12 years when he hits retirement age.

One of the things we considered was taking a HUGE chunk out of his IRA, paying the taxes and fees to pull the money out r possibly rolling it into a self directed IRA and buy a quadplex. We have found a couple quadplexes that will turn us about $1k per door in cash flow (again the property would be paid for in full). These quadplexs are in growing markets in our area and have good tenants already in place. And only need a few small capital expenditures to get started. Just having one of these quads would give us $48k cash flow per yr. We obviously want to take a yr or 2 and take that cash flow saved to buy another multifamily property and build our wealth that way.

We are both new at REI and am looking for advice on whether or not this is a good idea. Within a decade we hope to at least have 5 multifamily properties with at least owning 2 or 3 free and clear. Then he can start living off one or 2 of the properties and I can focus on growing our portfolio. Can anyone tell me what requirements there are if we would choose to self direct his IRA? Can we use that cash flow to purchase another property? When can we start pulling that cash flow out?

Just looking for advice. The stock market sucks and we are looking for ways to get started in REI. Thanks BP.