21 Unit Deal w/ SDIRA and Joint Venture

[Jermaine Williams]

I recently transferred my Traditional IRA to a SD IRA Custodian. I haven't invested with it yet and this would be my first deal under IRA. I have an opportunity to go into a J/V on a 21 Unit apartment deal. The numbers are great, the deal is great, and business partner has great terms on the financing through his solid bank relationships. My 50% investment into property would be 50% of down payment for the Mortgage. I'm looking for clarity and feedback in the following areas and I know Custodian can answer some but would appreciate the thoughts of the BP community:

-Do I need a LLC for this?

-How to form the J/V agreement to protect myself and IRA from any disqualified actions? (such as my involvement in the management of the property)

-Has anyone done something similar and what was your strategy.

[Loren Whitney]

Technically an LLC is not required to make the investment. An SDIRA can invest directly and take equity in a J/V. You'll have to speak with your attorney regarding the pros/cons.

If your SDIRA is being used for a portion of the downpayment, the loan will most likely need to be non-recourse. You personally cannot guarantee a loan the IRA is involved in.

Iif you're investing as a limited partner and the gerneral partner is personally guaranteeing the entire loan, then normal financing is acceptable.

Remember that you as the IRA holder cannot provide goods or services to the plan (direct or indirect). If you're providing services for the J/V, that could create trouble for you. Be sure to review this in detail with your attorney.