All Forum Posts by: Ricky A.

@Mariah Pierce The "better" option between Roth vs Traditional for your SDIRA will be subjective and situational.  Two things that I would consider are 1) what type(s) of investments do you plan acquire (including return expectations and any investment minimums) and 2) the particulars of your SDIRA platform.

For example, if you plan to invest only in "financial-type" assets such as mortgage notes, private or hard-money lending, and maybe even syndications (basically just dollars out-and-in from your perspective), Roth vs Traditional may not matter much (outside the obvious tax differences when it comes to withdrawing). However, if you plan for the IRA to own real estate directly, I would personally lean toward having that in a Roth. Why? I know this would be a ways away, but Traditional would be subject to RMDs which could cause a forced sale of real estate at that time (if there isn't a large enough cash balance to cover the RMDs). In general, the Roth has way more flexibility due to this one fact. Also, if you knock it out the park with your investments, the Roth should be more efficient in passing the assets to your heirs.

Investment minimums should also be considered.  Many syndications and private funds may have minimums that are higher than $25K. With only 25K in the Roth, you may not have enough to invest in some of these funds right now. Moving the Traditional may give you more options.  This may not matter if you have investment options that have lower requirements or if you're going to write your own notes and the $25K range makes sense.  Also, there is the option of converting some or all of the Traditional to Roth to give you a bigger Roth balance to work with.

Thinking about the SDIRA platform, I wouldn't move money until I am reasonably ready to put that money into investments.  My SDIRA platform doesn't currently have direct access to traditional market investments (e.g., to stock/bond trading accounts), so any uninvested cash I have will just sit there not earning anything.  Some platforms may have direct access to stock/bond/money market accounts where you could park idle cash (but even then, there may be additional fees as money moves back and forth).  Perhaps having checkbook control could be a way around this, but I haven't been bold enough (or had the need) to explore this yet.  Instead, I've just transferred amounts out of my non-SD Roth into my SD Roth as needed to fund my upcoming investments.

HTH

@Michael Plaks - I curious as to why SDIRA would use Trust instead of IRA (found under View Additional Types). Also, if someone (say, me) created the EIN as IRA, does that person (say, me) need to try to correct it?

You buy something for 100 and sell it for 200, your gain on that asset is 100. Simple as that. It doesn't matter how you finance it.

Follow the money:

- Say your starting bank account balance is 60K.

- You borrow 40K. Now your balance is 100K.

- You buy a property for 100K. Now your balance is 0.

- You sell the property for 200K. Now your balance is 200K.

- You pay back the 40K loan, and your final bank account balance is 160K.

You bank account increased by 100K reflecting the 100K profit you made on the flip.  The loan principal doesn't matter.

@Jonathan Faltot

I agree with what @Dominic Mazzarella is saying...you might be getting played, but it still might be worth it to do.  

I've never had this situation, so take this for what it's worth, but a couple things to consider:

- Don't agree to the $$$ too easily.  At least feign a negotiation.  Start low and make him work you up to his number.  If you agree to the 5K too easily, he might get greedy and go for more.  Hey, you might even save a few dollars.

- I wouldn't hand over any money until he leaves.  

- If you need to formalize an agreement, I would have it drafted/reviewed by an attorney.  He doesn't have any rights to the property, and you don't want to draft something that inadvertently may be construed as him having some type of property rights.

Simply report your accurate rents and expenses which you should be tracking as well and not simply relying on your property management company and their reporting. 

I think the downsides far outweigh the upside.  If a family with kids values D+ then the probably already have it, so providing smart TVs where they can log into their subscription is sufficient.  For families with kids that don't have D+, providing it likely doesn't move the needle because it's not important enough for them to already be subscribed.

I think providing streaming services (that require login) can have huge downsides if the service gets logged out.  Do you provide the login credentials upfront in case the service gets logged out?  Do people take those credentials home with them and continue using your account.  Or do you provide the credentials when they call to complain that the service is logged out?  Does that inconvenience cause them to ding you when they leave a review?  Do you need to update your credentials once they check out so they don't continue to use your account? 

To me, it's a lot of downside with very little upside.  I suggest having smart TVs and let them log into their own accounts, preferably with a guest mode so they auto-log out after a certain number of days.

For catering to families, I would concentrate on providing amenities like puzzles and games.  Depending on the location and properties, consider having a game room.

I guess my procrastination skills are slipping!  I just did all but one of mine on Monday.  I had purposefully waited as long as I could in case it was blocked, but I figured chances were slim at this point.  Oh well.

However, if it does come back, what I found was that creating the optional "Individual" FinCEN ID makes things a lot easier.  Instead of having to enter personal info and upload an image of your driver's license for each Reporting Company, the Individual FinCEN ID allows you to input your personal data once and then link the Individual ID to your various Reporting Companies.  If your personal info changes in the future, you just update it for the one Individual ID versus having to update it in each of your Reporting Companies.  Also makes it easy for each individual to maintain their own info in multi-owner scenarios.

@Patricia Andriolo-Bull, not sure if they've iterated the system since you did yours, but now there's a button for downloading the filing transcript (a PDF containing all the info that you submitted).  But I wouldn't worry as long as your filings said successful.  

I need to dig into how TPG values AmEx points at 2%.  The way I've traditionally used them (i.e., simply transferring from AmEx to Delta SkyMiles), they're only worth 1%...well maybe a bit over 1.15% because I also have a personal Delta AmEx which makes mileage tickets come at a 15% discount.  Definitely some work to do because if I can get 2% out of those points, like you say, it makes those purchase points worth 4% versus the 2.5% cost.

@Nathan Gesner - Can you share the name of the book you read about points stacking?

@Andrew Steffens - I've got a lot to learn!  I've been pretty pedestrian just collecting AmEx points and moving them to Delta.  At my day job (non-RE), we have a recurring vendor that charges us about $150K/month.  For the longest, they allowed us to pay via CC without an upcharge.  AmEx Platinum gives 2x points for charges over $5K, so were were getting 300K points EVERY MONTH from this one vendor!  They started charging a 2.5% surcharge last month, so now we pay by check...man, I was bummed!

@Richard Nguyen

I just set up my first SDIRA a month or so ago, so I haven't had enough time to speak too much about experience, but the company I'm using (recommended by my CPA) doesn't charge AUM type fees.  They use more of a flat fee approach.  They have an option for a smaller flat fee with per-transaction fees, and then they have a slightly larger flat fee with unlimited transactions.  At 2 transactions per year, the unlimited becomes cheaper.  

Note, even though you may have a per-transaction fee or unlimited transactions, it looks like pretty much each transaction will still have some additional associated fees for things such as AHC/wire or expediting docs, but they seem reasonable.

When I was setting mine up, I was told that the flat fee isn't charged until your first transaction.  So, you could set it up, fund it, but then decide not to use it, and you'd never get hit with the annual flat fee.  There is a % fee for withdrawing and/or closing, but that fee is capped at $250, so overall the fee structure seems reasonable to me.

I'm not sure if I'm allowed to post the company's name here, so DM me and I can give you the name.