SDIRA -REI- Bank loans - LLC

[Anshuman Thakur]

Can someone please shed some light on how

- convert 401k to SD IRA

- how to use SDIRA to buy properties- how much down payment is typically required if we are using SDiRA to only fund downpayment on a multifamily CRE, and which banks typically work with SDIRAs

- how does LLC structure- property management and cash flow work in this situation? If we want to do cash out refinancing, custodian of the SDIRA LLc will have to make the call?

Appreciate any guidance.

Best regards 

[Brett Synicky]

Quote from @Anshuman Thakur:

Can someone please shed some light on how

- convert 401k to SD IRA

- how to use SDIRA to buy properties- how much down payment is typically required if we are using SDiRA to only fund downpayment on a multifamily CRE, and which banks typically work with SDIRAs

- how does LLC structure- property management and cash flow work in this situation? If we want to do cash out refinancing, custodian of the SDIRA LLc will have to make the call?

Appreciate any guidance.

Best regards 

There are a couple of types of SDIRAs. SDIRAs where you go through the custodian for all transactions and they're on title to all assets FBO your IRA. Depending on the fee schedule and activity this can cost significant transaction fees and always includes some red tape and extra processes to go through. If you're only doing a couple or so transactions per year probably ok.

On the other hand, you can have more control and eliminate the need to go through a custodian for investments by the use of checkbook IRA or Solo 401k. If you get a loan it must be non-recourse and will require about 30-50% down. See list of lenders here. If you have an IRA LLC the custodian is not involved in the IRA obtaining financing including a refi. You're the manager of the LLC of which the IRA is the only member so you control that.

Whether you have checkbook control or not, the rollover will go from custodian to custodian so you'll work with both to process the rollover. As the manager of the LLC, you can open a checking account where the funds rolled from your 401k. will land. The checking account can act as the home for the funds until you deploy the money into and investment, then all expenses and returns flow from and into that checking account that you control.

It may sound complicated but it's really not once it's all set up. Hope this helps.