Financing investment properties with self-directed IRA

[Stephen Sawrie]

Is this possible?

[Daniel Dietz]

@Stephen Sawrie,

Do you mean can you use your SDIRA funds as a down payment and finance the rest of what you need to purchase vs. can you offer to finance OTHER peoples projects? 

The answer is yes to both. We are in the midst of that right now. Just made offers on a portfolio of 12 units of which 6, a fourplex and a duplex, we are planning on doing with our Self Directed Accounts. We currently own a duplex and a house in out SDIRAs that we paid "cash" for. We being a 3 way partnership. We are planning on doing the others with a mix of commercial portfolio loan and conventional (for one that I am going to hold by myself as a possible retirement home 10-15 years down the road). 

With the SDIRA, or Solo401k, there are restrictions of it being "non-recourse" meaning no personal guarantee from you, which make them hard to find through traditional lenders. There are a handful of big national lenders that do them. One of the pros in this field will hopefully chime in with that list. There is also the possibility of using a private lender for these, but it still must be non-recourse so it narrows down the pool quite a bit. The private lender we use is a family friend who has complete trust in us and vice versa. He however is not interested in lending longer than 10 years out and would prefer 5 years or less. We are planning on 'saving him' for when we might identify another porperty at say an auction where we need funds ASAP and can then refinance to pay it off.

The other restrictions that I have found from the big national guys is that  they dont like to lend under 50K, require 30-40% or more down, dont like building pre 1950s or so, and dont like houses that have been converted to multifamily - they in essnece want a property that is easy to sell if they have to foreclose since that one property is their only recourse.

Hope that helps a little. 

Dan Dietz