How to pay expenses / renovate home owned by self directed IRA?

[Jay G.]

... if the IRA runs out of funds to cover those expenses or pay for required repairs, etc.

Example:

IRA starting: $200,000

Purchase property: $180,000

IRA remaining: $20,000

Repairs needed before being able to rent/lease property: $60,000

What are legitimate (IRA-tax-status preserving) ways to get the work done? Assume I have personal cash for the difference, or the credit to get it. There's no issue with getting the extra money required, it's more about what process to use to get the work done when it would exceed available funds in IRA.

I'm not actually in this situation yet, but just trying to think of all the scenarios that could pop up after making a purchase with IRA funds & IRA owning property.

[Rick Pozos]

YOu could say, Hey Rick, can my IRA borrow 40k to do a rehab?? My IRA is paying cash for the purchase and needs 40k to do the rehab. I can give you a first lien position. We would come up with the terms that are good for both of us. (This is NOT a solicitation to lend money)

You could have that conversation with friends and some family members (check the disqualified people). I think most people would be quite at ease with their loan only being at about 20% to 25% of loan value. They are very secure.

You might even only put down 100k and borrow the other 140k that way you could do another deal while the first one is underway.