Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 6 years ago on . Most recent reply

User Stats

2
Posts
0
Votes

Can I buy a rental with a relative through a self-directed IRA?

Alida Rwabalinda
Posted

Hello everyone!

I have been consuming all the great info from biggerpockets for 18months now but this is my very first post and I am excited to get insights, suggestions and particularly legal advice for my situation.

I recently got laid off from a company that I had been with for 6.5yrs (since right out of college) and then within a month, they offered me another role which is outside US so I am very excited about the change and new experience. I have a 401k balance of less than $100k that's still with the company but because my new role will be international, I won't be able to contribute to my 401k anymore. So my immediate thought is to rollover the balance to a self-directed IRA (between now and August when my new job starts) and buy a rental property. The kink in all of this is that I have $16k balance on a 401k loan that I am still repaying, that I took out to buy my primary residence two years ago. I have been looking into several strategies to pay it off and one of my first cousins (who is an international student in the US) has saved up $15k and would like to partner with me/ lend me the money to buy the rental.

My strategy was to use his money to pay off my 401k loan balance and then do the roll over into a self-directed IRA to buy the rental under my name so that he has the option to live in it (if it's a multi family) and rent the rest.

I have done a great deal of research and it looks like as long as I don't live in the rental and also make sure that all the transactions are done within the IRA, then it should be straightforward. But then again, since I will now be using some funds from my cousin, I want to be sure that there are no additional criteria or restrictions that I have to consider when structuring everything before moving forward with the plan to avoid penalties.

Thank you all in advance!

Alida

Loading replies...