Creative Real Estate Financing
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Updated about 15 years ago,
Using IRA to fund RE Investments
I've posted before about self-directed IRAs and have continued to learn (but haven't bridged the gap yet).
There are a few companies out there that will help set up what is called a check-book IRA. It goes like this:
1) Set up a self-directed IRA with a company that acts as the custodian.
2) Create an LLC with yourself as the manager.
3) The LLC opens a business bank account.
4) Direct the custodian to buy shares of the LLC.
5) Buy assets in the name of the LLC.
The problem I see is that the custodian gets a cut, the company setting up the LLC gets a cut, the state gets a cut (California charges $800 min tax per year on LLCs). All this eats into the margin.
There's another company, NAFEP, who will do the same but instead of an LLC they set up a trust with you as the manager. The trust has a bank account and assets are purchased in the name of the trust. This eliminates some of the costs associated with the LLC.
The problem for me is I just don't know who to trust out there. Has anyone done business with NAFEP? Does this sound like a reasonable path to get my IRA available to fund Real Estate Investments?