Funding question

[Jesse O.]

Just starting out and have found a 2500 sq ft duplex in historic neighborhood. I can pay cash for the duplex, but needs upwards of $50k in rehab. Purchase and rehab is about $80k and should rent for 1500-1800 a month (both units). ARV looks to be about $110k. What's the best and easiest way to finance the rehab. I'd like to hold into the property and I have 3 other properties on mortgage and don't thing regular funding will work. Thoughts? Thanks Jesse

[Dmitriy Fomichenko]

Originally posted by @Bob Cash:

start a self-directed IRA, write yourself a check, and repay your IRA with the cash flow

Bob, I see couple issues with your suggestion:

• IRA funds can only be used for investing, you can not 'borrow' money from your IRA and then pay it back, there is no such thing as taking a loan from your IRA. If you take early distribution you can not repay it back and will have to pay taxes on the distribution. Participant Loan however is available with Solo 401k plan.
• With self-directed IRA the funds are held with a custodian, you can't just write the check, you have to go through the custodian to make any investments. Checkbook IRA (IRA owned LLC) would give the account holder an option to have checkbook control of his retirement funds, but like I mentioned earlier, it can only be used for investing. Under no circumstances you can simply write the check to yourself, this would be Prohibited Transaction.