All Forum Posts by: Bryan Scrivener

Unfortunately most of those strategies do not work in self directed IRA scenarios so I'm going to have to be a bit creative. Not looking too hard at it just yet, trying to get through closing on this one first.

You might look into NASB, they are local and do oddball stuff like non-recourse loans for SD-IRA people like me. I suspect you'll only get 50 - 60% LTV though.

Getting ready to close on my first property, a duplex in northern independence. Investing out of a self directed IRA. That makes things difficult as any leverage has to be a non-recourse loan, meaning 50 - 60% LTV max. So now I have one property but it'll be like 10 years before the revenue adds up to enough to buy another one. So, I've got to figure out a way to add some capital and accelerate my portfolio growth. I'd like to be retiring in 10 years instead of just then shopping for my second property.

Yeah I really wish I had set up the LLC before making the property purchase. Live and learn...

I'm closing on my first property in a couple of weeks and sorting out options for making the payments on a non-recourse loan. I was hoping the property manager would handle that before sending any profits back to the IRA but that is not a service they typically offer.

If I have to direct the custodian to pay it every month that will get very expensive fee-wise, not to mention be a pain in the rear. I know forming an LLC so I can do it myself is an option, but that too will add some expense.

I'm curious how people typically handle this?

Pretty sure the answer is no. It isn't a transaction at all really. And, if it were a transaction, it would only be prohibited if it involved a prohibited person. If he's loaned money to a prohibited person the account is already subject to voiding regardless of the 1098.

Definitely consider borrowing half the purchase price though. You can get a non-recourse loan for up to 60% of the purchase price. I like 50%. Basically, if you have $100k, instead of buying one $100k property, you can put a $50k down payment on 2 properties and let the tenants pay the mortgage. Having more doors will not only help you accrue revenue faster, but will lessen your exposure to vacant units. In the case of duplexes, if I lose a tenant, I'd rather be at 75% occupancy than 50%. 

Carl will know way more about this than I, but what I did was roll my 401k over into a self directed IRA, which I am now investing in property. This way you aren't dispersing the funds to yourself, it's still in a protected retirement account, so there are no taxes or penalties.

The catch of course, is that you can't benefit from the investments directly until you reach retirement age and start dispersing them to yourself. So if your goal is to build wealth for retirement (while you keep your day job) it's a great option. If you are wanting to use that money to generate income now, it won't work. 

I just went through this process and for me, it took close to 3 months from conception to actually being able to invest the money. There always seems to be another step, another form, another fee. I went through a financial adviser and that added some layers of time and expense that aren't necessarily required but, if you aren't an expert, are probably a good idea. There are a lot of rules you need to be aware of to protect yourself from prohibited transactions. The consequences of which are your IRA being declared no longer an IRA so you get to pay taxes and early withdrawal penalties on the entire value of the account.

If there is a way for a novice to get this done in a day I'd sure like to see that in action. 

Thanks. I'll have to read up a bit on that, it's a pretty foreign concept to me. I doubt I have enough equity to pull it off. (~20k).