Self directed IRA

[Eric Marlow]

My question is when you buy real estate with a self directed IRA do you have the title of the property? Can you sell the property for a profit and put the total sale right back into your SDIRA? If you pass away do your heirs own the SDIRA and can they keep using it to invest in future real estate deals? Not sure how this works but I would like to know the ins and outs before I transfer my 401.

[Brian Eastman]

@Eric Galley

There are a handful of non-recourse lenders that specialize in working with IRA plans. North American Savings Bank and First Western Federal are the leaders in the field. Contact them for specifics.

What you can expect is something along the lines of the following:

• Down payment of at least 30%. Condos as high as 50%
• 10% – 15% cash reserves in the plan at the time of the loan
• Terms range from 5/1 arms to 25 year fixed rate loans
• Rates will generally be 1% – 1.5% higher than a typical investor loan with a personal guarantee. A range of 4.75% – 6.25% is common, depending on the loan terms.
• Clean, cash flow properties work well. Options are limited for properties requiring extensive repairs or raw land.

There are some other lenders - generally private funds - that will tackle more difficult to evaluate or risky projects such as flips, but the rates will go up in those scenarios.