Entity, SDIRAs, Lawyers, and CPAs (and maybe a mentor)

[Ryan Sweeney]

The background:  I once lived in San Antonio and My wife is from Austin.  We moved to rural Kentucky about 4 years ago and were forced to buy a house/wanted to.  This sparked my interest in RE as it was a bad decision.  My industry has been hit hard by COVID and we are pending heavy layoffs, which is fine and may free us up to move back to Texas since we had a child here and need support.

It turns out I have a friend investing heavily in Wisconsin and another in South Carolina.  As I sit and wait the corporate job situation, I want to get into the game and have explored a SDIRA to invest in my partnerships. Then after layoffs, roll my 401k into a ROBS or Solo 401k and start investing myself in rentals in SA.

I analyze things and haven't yet jumped into the game. I want to, but also want to do it right. After talking to IRA finance group, the advise was potentially starting LLC a in those other locations and partnering with my SDIRA and then when I move creating a C Corp to umbrella them.

I think I may be over Complicating the process, but I don’t want to get hit with taxes and want to protect myself and use some of my retirement investments to get going and play with my cash simultaneously Incase I can li find employment and this thing turns truly full time (tracking notes, liens, getting my broker license, etc). 

Request: given the above, I could use advice and mentors in the CenTex market as well as growing my connections, getting feedback on possible structures, tax implications and perhaps finding a good CPA and lawyer to help guide me.

Thank you so very much and all the best

Ryan

[Linda Weygant]

You've got a couple things going on here and they don't all play well together.

ROBS - If you go this route, you'll want an Active business to mesh this with, such as flipping.  Your 401k can invest in your flipping business.

SDIRA - If you go this route, you'll want to stay out of active businesses due to UBIT and you'll want to go towards purely passive investments such as note investing or rentals. Your SDIRA canNOT invest in your flipping business, partnership or any other entity in which you are participating or pulling funds from. If you invest with your SDIRA, all income/profits go back to the IRA account, not to you.

A C-Corp to umbrella a SDIRA?  This sounds fishy to me.  Remember, you cannot personally benefit from business with your SDIRA, so I'm not sure what this structure looks like or how you'd avoid that, but maybe I'm missing something here.

You've got a lot of options and ways you can go, so you should figure out what interest you/you'll be good at, pick a goal and go for it rather than getting too scattered.

However, one thing I will advise you - it's generally a bad idea to invest (rentals, flipping, notes, etc) with your family's next meal.  Investing is gambling.  Gambling with some calculated risk to be sure, but it's still gambling.  Never invest with money that you can't afford to lose.