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Updated over 2 years ago, 05/19/2022
SDIRA + Syndication Deal(s)
Wanting to move a good portion ($500-800k) of my IRA into an SDIRA to invest in a coupe of Syndication deals.
First question is, it appears there are a lot of custodians that can do this, with a ton of varying fee's - looking for guidance on a good custodian to minimize fee structure, who do you recommend?
Also, I'm very interested in Syndication deals that seasoned investors may have upcoming (Complexes and commercial). Let me first say, I am NOT interested in a first time syndicator- rather a seasoned group with a verifiable track record of performance and deal structure. Let's connect if you're raising for great IRR deals with 3-7 year horizon's.
Thanks all, Bill
Fees are one thing - UBTI/UDFI and UBIT are another big thing to be aware of. Before you dive in, understand what they are and locate a tax professional who understands & can help you with the prep.
I have an SDIRA custodian who I have not been pleased with. I have posted the name on BP in the past but then they reached out to me, displeased. So I don't do that anymore.
@Bill Muchow Advanta IRA is one we partnered with and recommend. There are a lot to choose from! Recommend having an intro call with a few and see which meet your criteria for success.
I have used Forge Trust (formerly IRA Services) for years. They have always done right by me especially when it comes to the ease of investing in non-traditional assets such as real estate, notes/private lending or private equity/syndications. Do be aware however, as commented in this post, UDFI and UBTI are significant problems for IRAs and all types of self-directed retirement accounts. UDFI is triggered when leverage is used, i.e. owning real estate with a non-recourse loan or investing in syndication that uses leverage. I believe a Solo 401k is exempt here... UBTI can be triggered even when no leverage is used but perhaps the income is considered active trade/business income. I don't believe a Solo 401k is exempt here... Note, I'm no CPA so seek tax advice but as a professional in this space for many years, I've only recently come into the know about UBTI without leverage. Here is an article someone recently sent my way in this regard:
@Bill Muchow avoid UBIT in an IRA by opening a Solo401k. You can transfer existing IRA monies to a Solo401k.
Avoid syndication deals if you want the freedom to control your RE.
Many professional retirement fund investors use their Solo401k to buy a property ( short term vacation rental or self storage for example)that a Property Management Company will NNN lease from them at a rate allowing them to lock in a fixed 20-25% annual ROI.
Quote from @Bill Muchow:
Wanting to move a good portion ($500-800k) of my IRA into an SDIRA to invest in a coupe of Syndication deals.
First question is, it appears there are a lot of custodians that can do this, with a ton of varying fee's - looking for guidance on a good custodian to minimize fee structure, who do you recommend?
Also, I'm very interested in Syndication deals that seasoned investors may have upcoming (Complexes and commercial). Let me first say, I am NOT interested in a first time syndicator- rather a seasoned group with a verifiable track record of performance and deal structure. Let's connect if you're raising for great IRR deals with 3-7 year horizon's.
Thanks all, Bill
We love using Advanta personally we find they are responsive and have experience investing in private offerings so nothing takes them by surprise. With our audited 12 year IRR of 31% they love sending clients our way
@Todd Goedeke You have my attention, that's a very creative play. Any suggestions on where I can gain more info?
Quote from @Bill Muchow:
@Todd Goedeke You have my attention, that's a very creative play. Any suggestions on where I can gain more info?
Yes, that’d be helpful.
@Bill Muchow@Bryan Mitchell I trust IRA Financial Group to get sound, reliable information about Solo 401ks. They have an office in Miami. They have been around 15 years and can set up a Solo401k. Check out their You Tube channel for an abundance of investment strategies to be used in a Solo401k.
I have access to a builder building STVR duplexes in different vacation destinations across the US. All duplexes are 5 bedroom,4.5 baths per side with walkout basement/ lower level. FL locations are included. Cost of each side of build is between $275k-$300k. NNN Lease payments to owner/ Solo401k investor are at rate of 10% by Property Manager. ($275-300k x 10% = $27.5k - $30k/ year with lease adjustments for inflation every 5 years . With 20% down( property manager guarantees lease payments on non recourse RE) that increases ROI to between 20-25% per year. That return is in a passive investment requiring no experience with STVRs. By leasing the property you avoid UBIT since a STVR is a business. This is no different than a Solo401k owner buying a commercial building and triple net (NNN) leasing property to a Walgreens or Dollar General.
American IRA is who we use. They have a group that specializes in SDIRA into syndication deals.
Quote from @Todd Goedeke:
@Bill Muchow@Bryan Mitchell I trust IRA Financial Group to get sound, reliable information about Solo 401ks. They have an office in Miami. They have been around 15 years and can set up a Solo401k. Check out their You Tube channel for an abundance of investment strategies to be used in a Solo401k.
I have access to a builder building STVR duplexes in different vacation destinations across the US. All duplexes are 5 bedroom,4.5 baths per side with walkout basement/ lower level. FL locations are included. Cost of each side of build is between $275k-$300k. NNN Lease payments to owner/ Solo401k investor are at rate of 10% by Property Manager. ($275-300k x 10% = $27.5k - $30k/ year with lease adjustments for inflation every 5 years . With 20% down( property manager guarantees lease payments on non recourse RE) that increases ROI to between 20-25% per year. That return is in a passive investment requiring no experience with STVRs. By leasing the property you avoid UBIT since a STVR is a business. This is no different than a Solo401k owner buying a commercial building and triple net (NNN) leasing property to a Walgreens or Dollar General.
@Todd Goedeke, thanks for the info, LOTS to absorb in & learn from in your response. This is a very interesting and appealing concept - I'm working through the SD's now, should be good to go here in the next couple of weeks (contacting IRA Financial tomorrow - thanks again for that reccomendation). Would you be able to connect me with your builder/group doing the NNN on STVR's ? I'm new to this deal structure but LOVE the concept and would like to discuss in great detail to understand and gain comfort.
