Using a SDIRA to get into mobile home investing

[Sandy Uhlmann]

I would like to get into mobile home investing. With a lower price point of entry as compared to fixing and flipping brick and mortar homes it seems like it would be something that would be ideal for using a SDIRA. It seems like this would be much easier if I had a checkbook IRA but being that I have a custodian, Equity Trust, it seems like it does make things a bit more complicated.

Custodian has to approve purchase ahead of time, takes time to issue check to seller.

To move a home I would again have to request the funds to be sent to the mover and then again to the electrician, plumber and  handyman to pay them for the hook up of the home as well as for rehab of the home.

Additionally, I am not allowed to do any of the rehab myself so that is an additional cost to pay the handyman or other vendor.

Does anyone have any experience or advice in using a SDIRA to invest in mobile homes?

I guess another option is to be a money partner with someone who is already in the mobile home arena.  The drawback to that is that I really like to see the before/after rehabs first hand and it seems that getting your initial investment back seems slow.  The very real possibility of the tenant/buyer defaulting is ever present then we are back at square one with additional expense in cleaning up the mobile home, doing repairs in preparation for another tenant buyer.

Does anyone have an experience using their SDIRA to invest in mobile homes?  If so, I would like to hear your stories and advice.

Thanks,

Sandy

[Brian Eastman]

@Sandy Uhlmann

Investing in mobile homes is not really any different than investing in stick-built homes when it comes to the practical side of IRA mechanics. This is something that is allowable for IRA funds, with the same caveats against self-dealing as any other asset class.

The issue is one of execution, and working with a custodian is not optimal for any kind of investing where there are frequent and/or time sensitive transactions.  The paperwork, delay and processing costs associated with the 3rd party custodian will kill your deal.

Most investors wishing to invest as you are in flipping style transactions will look at a checkbook IRA LLC or Solo 401k if they qualify. These plans put you in control of the funds in a bank account of your choosing. This makes it much more efficient to deal with complex investments.

And, if you work with a quality firm, you will actually get meaningful guidance as to the rules, potential tax implications of business activities such as flipping, etc.  A custodian will not provide meaningful advise when it comes to tax matters, though you may get whatever the customer service person on the phone thinks will be helpful to you (accurate or not).