Partnering as a self-directed IRA

[Gary Parilis]

I have an LLC under a self-directed IRA, and I would like to partner with another investor. Is this possible, and how would we structure it? The goal is to do BRRRRs and perhaps occasional flips. I would provide the capital through my SDIRA and the other party would provide the local market knowledge, would find the properties, oversee rehabs, manage rentals, etc. Among other things, I would want our partnership (in whatever form it exists) to be able to get ordinary (conventional or commercial) mortgages. A SDIRA is only permitted to get non-recourse loans, which are very restrictive, mostly importantly in terms of the LTV, which severely hampers BRRRRs.

One thing I'm wondering about is whether, instead of forming a partnership, if I can lend the purchase and rehab funds to the other party, with the contractual agreement that I'm entitled to my share of the cash flow and equity, even after the loan is paid off. Then he can refinance conventionally. It seems strange for this to be an indefinite arrangement, but is it doable?

I'll need legal guidance to make sure whatever we do is legit (and to write a contract), but for starters, I'm looking to you for clever solutions.

Note: If you're not well acquainted with SDIRAs, don't bother to make suggestions. I promise I've already considered the obvious things. :-)