Using Parents Roth IRA for funding?

[Ben Unger]

Hello BP,

I have read a few forum posts about using SDIRA as a means of private lending. I still am not sure how to go about doing this, and what would be the up front costs to me or the lender (I.e. my parents) if done so properly. I would like to compete with all cash buyers but only have a 20% down payment saved for a BRRR strategy. Could I use my parents Roth IRA and give them 12% interest only with and refi/ pay them back through conventional bank financing around 6-12 months later? I would structure the deal at something like 20% down payment to them amortized at say 20 yrs.

Any thoughts or major details that I am missing? Should I speak to a tax attorney or someone similar?

[Jason Huffman]

Greetings Ben, I have been reading up on SD IRA's and this sounds like a prohibited transaction. There are a few no no's with this type of money. Your parents cannot loan money to you or brothers and sisters, themselves, each other or your grandparents. But anyone's else they can.

I read the self directed IRA handbook by Mat Sorensen. Very informational and gives lots of examples of what people have done. And what they shouldn't do. Quick read. Check it out.

Good luck