Using Self Directed IRA

[Michelle Martin]

Hello,

I'm sort of a newbie real estate investor. Currently, I own my primary residence and 1 rental property. My goal is to own another 30 rental properties in the next 3-5 years with a monthly net cash flow of $500 and cash on cash return of 15% or greater. Ultimately, I want to replace my current income from my J-O-B and focus on real estate investing full time and other things. My questions are - How can I use my self directed IRA to purchase an investment property? I have about 25k in the SDIRA account, can I at least use it for a downpayment? How about using 401k? I apologize in advance if these questions have been asked before but I'm trying to get a better understanding...

Thanking you in advance.

Best

Michelle

[Mike Hartzog]

As @Bob E. pointed out, SDIRA is a good vehicle for note investing and loan making.  Because notes don't have any built in tax advantages, holding them in an SDIRA makes a lot of sense.  Investing in RE with SDIRA is problematic due to the requirement that financing be non-recourse.  You also sort of waste the built in tax advantages that are inherent with a rental property, so in my view it is best to hold RE investments outside of the SDIRA.