SDIRA custodians in KS? Also quick ? on the rules of lending?

[Shane H.]

Hi all - I'm a relative novice on the subject of using an IRA to invest in Real Estate and am familiar with the basics.

I am in partnership with my father in "XYZ" LLC. Our LLC presently owns 4 properties (1 duplex, 1 single family home and 2 vacant lots - set to build a new construction duplex this fall on one).

My dad is 64 and I think is finally coming around after 10 years of us being in this partnership (we each have around $25k of our own initial capital invested -- Properties are worth around $350k total - when we build the duplex the # will go up to $487.5k with one duplex built and $650 w 2 built. -- Our LLC will be in partnership with another individual who will help me complete the build and I'm assuming 50/50 splits on the new const builds.

So to get to my question - I have been pitching the idea to him that he could use funds in his 401k/IRA accounts to invest in additional real estate (If you read my other posts and my profile I've been focusing on a niche of renting to college kids here and want to expand that as I have been getting the word out amongst students thats what I do).

Heres my scenario -- We are 50/50 partners in "XYZ LLC" -- can he set up an IRA to lend funds to the "XYZ LLC" (ie either a cash transaction for a property where we use funds to act quickly to purchase and then refinance later, or use the funds as a 20% down payment coupled with traditional financing etc)

The mortgage on the property would be in "XYZ LLC's" name and the mortgage would either be tied to his IRA, or bank if we get traditional financing/however we end up purchasing.

He is a completely passive member of the LLC as I am active and handle day to day and he also lives in a separate city if that matters. So as far as the test of not being active in the property or any of the activities he will pass that.

Also second scenario - he lives in city A -- wants to move back to City B where I live and they've picked out a property to buy already which will be a private sale without a RE agent. Is there anyway to minimize the tax liability of pulling out 401k/IRA funds for the downpayment on property in City B? He was thinking about purchasing property in City B with all cash but was worried about the income tax bill he'd get - I'm thinking it's wiser to just pull out 20% for the downpayment then get a mortgage for the rest and pull the money needed for the payment out of the IRA/401k as needed.

Thanks for reading my long post and hoping to learn more about this subject.  My whole goal is to get my parents set up (as well as myself eventually) where the business I am trying to build will help them out on their income through the cash flow or me eventually buying out their stake later etc.  They do not have a large nest egg in my opinion to set them up like they need in their golden years so trying to help how I can.  I'm hoping he listens to me as well and gets most of his stuff out of items tied to the stock market now before the election - I see a correction ahead and it's probably not good for him to have his money allocated in a risky way at this point in their lives.

If anyone has a suggestion on an IRA custodian in the fine state of KS or somewhere close - Oklahoma City, Wichita or in the Kansas City area it would be greatly appreciated. Look forward to the replies.