$30,000 in a Roth IRA wanting to invest in RE. What would you do?

[John Humphries]

Hi BP SDIRA experts. I'm looking for some advice and opinions. Here's the scenario:

$30,000 in a Roth IRA - I'm tired of investing in the stock market and excited about real estate investing. I'd love to use this money to get started with some buy and hold rentals, but how?

1. As I am 40 years old and would be using the $ to buy investment properties, if I cash out of my Roth, I will take a 10% penalty. Not the end of the world as it would allow me more flexibility with my funds for investing.

2. I could roll my Roth into a SDIRA but with only $30,000 in the account, I would not be able to buy any properties (that I would want, at least) with cash. In researching buying rentals with SDIRA money, financing is complicated, as I would need to get a non-recourse loan and probably a partner in order to have enough capital to buy something. Also need to make sure there are reserves in cash in the SDIRA to account for expenses. I also learned quite a bit today about expenses involved with custodians.

As an aside here, I've been living in Canada for the last 10 years with no US income so I am no longer able to contribute to my Roth in it's current state.

[Beka Shea]

I work with a bunch of private lenders who help fund my deals, and quite a few of them lend money from their self-directed IRA - especially in these amounts (not quite enough to fully fund a solid property but still a good chunk). If the purpose of getting a rental is to get a good annual return, and you can get a similar return with less headache, consider private lending. If my lenders want a security stake, I'll give them a second place mortgage on a property I'm working on (which means that you'll have to redo the paperwork every 4-6 months), or if they know and trust my work, they are willing to do a unsecured loan for a year at a time with a fixed return, using a Promissory Note and a Personal Guarantee. (If I went too far down the rabbit hole here, sorry!) If you want to know more, just let me know. I also lend out my own SDIRA to other rehabbers I know and trust, so I can explain both sides of it (and then point you to an SDIRA rep who can answer the nitty gritties).