Do you prefer a Self Directed IRA custodian or a LLC for flipping houses?

Question

Greetings,

This is my first post.

When the sale of the power plant I work in is final the old owners will give me my portable pension. I plan to roll that cash into a self directed IRA. I will roll my 401k into a rollover plan. I want to diversify our investment portfolio so my wife and I are looking at flipping houses with the money in the self directed IRA.

I know that we can use a custodian like Equity Trust or form an LLC. I like the idea of the checkbook IRA because it appears to be more convient than having to go through the custodian for checks. I know that like anything else there are pros and cons.

I am looking for feedback from people that switched between an LLC and custodian and why.

Thanks, Tom Elam

Thomas Elam · Answer

For example let's say I hire the kid next door to mow the lawn of the flip house. With the LLC I can cut him a check that day it's mowed and the deal is done. Otherwise they have to wait for the money which they may not be willing to do.

Shari Posey · Answer

It's extremely easy to use Equity Trust to issue checks for payments. It's an online form and they just send out the check within 3 days at no cost (other than the annual maintenance fee).

Eric M. · Answer

There are issues that make flipping with IRA money hazardous. PLease research more before you take that route. Before you choose to be your own custodian/trustee you should be very familiar with all the rules. I worked with Equity Trust for 3 years before being my own custodian and I don't think that was long enough. I still have plenty to learn. Checkbook control makes is VERY easy to cut corners on the rules and puts you in jeopardy of being penalized.

Do you prefer a Self Directed IRA custodian or a LLC for flipping houses?

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