Crowdfunded/Syndicated Real Estate +/- Checkbook IRA

[Jim Dahle]

I'm not really interesting in buying, managing, or selling individual properties, even turnkey. Don't like it, not good at it, more profitable things to do with my time etc. But I recognize that real estate above and beyond publicly traded REITs can be useful in a portfolio so am gradually moving a small portion of my portfolio into real estate.

I've had some success with syndicated investments and anticipate doing more of it in the future. Thus far, I've done it all in a fully taxable, non-qualified account. That's fine for the equity investments as they have some tax advantages anyway, although the recapture of depreciation when the deal closes after 5-7 years is kind of a bummer and they're tough to exchange. But for the debt investments, it really blows to have them in a fully taxable account, especially in the top tax bracket. At a 10% return, I'm basically losing nearly 5% of it to taxes. So ideally I'd like to do that in a tax-protected (and in my state, asset-protected) account of some type.

I have an individual 401(k) for myself and my spouse for our business. It's at Vanguard invested in low cost mutual funds. Since real estate isn't going to be a huge part of my portfolio, I'd rather not use the individual/solo 401(k) for it. I certainly don't want to invest all of the 401(k) in real estate.

I would prefer to use part of my Roth IRA to do this. Maybe $50-100K initially and gradually more. I'll likely continue to have a significant portion of my real estate investments in non-qualified accounts.

I'm envisioning a dozen or two different investments total, with minimums of $5-50K for each individual investment. So here's my questions:

1) Is it worth bothering with the SDIRA at all? Should I just do it all with non-qualified money to keep it simple? Basically, will the hassles and fees eat up the tax advantages, especially when I'm losing those tax advantages on other assets that would have to be moved to a non-qualified account.

2) If so, would a checkbook IRA be the best way to keep costs as low as possible and facilitate crowdfunded investments? I have no issue opening an LLC, done it before and easy to do in my state.

3) If so, who is the best checkbook IRA company to go through? Broad Financial popped up first in the old Google search, but that might just mean they have the best SEO guy.

4) If I have a few hundred or a few thousand dollars sitting in the account (which I will as the investment pays out interest), but not enough to pour into another real estate investment, what are my options? Can I have the LLC open a brokerage account and buy ETFs until I'm ready to make another investment?

5) Any issues with frequent rollovers into or out of the account?

6) Finally, does UBIT tax (Unrelated Business Income Tax) apply at all to investments like this?

Thanks in advance for your help and especially anyone who has done something similar.