Advantages of Custodian vs. Checkbook for RE Solo 401K

[David B.]

We are getting ready to purchase our first investment property, a single family house to rent, using a self-directed Solo 401 K.

At first I was leaning toward having checkbook control, but the cost for a custodian-managed account is reasonable, and I am thinking it might be good to have a custodian take some responsibility for paperwork and banking.

What are the disadvantages of using a custodian, other than the slightly higher annual cost? The one I'm considering does not charge per check, so that is not a concern. I assume I can get checks issued very quickly if I am making an offer on a house.

I appreciate any help or suggestions.

David

[Gautam Venkatesan]

@David B.  make sure you account for the time delay it takes for you to request the custodian to take action and it actually getting done. For example if you need to pay contractors for rehab work performed you will have to send a request to the custodian, they will have to process your request, mail out the check, it can take days/weeks. Now imagine if you were in a competitive bidding war for a property you would face similar waiting period whereas someone with their self-managed Solo 401k could write a check on the spot!