All Forum Posts by: Damian S.

@Ryan Luthi Not sure if they can officially claim to use the IRA as collateral since tax advantaged accounts may not be used for that purpose, hence you can only obtain non-recourse loans on behalf of those accounts

@Brian Eastman This sums it up really well! You have to compare apples to apples and too many people don't see it that way

@Ned Carey We all wish depreciation worked like that but there is also the concept of depreciation recapture and what is does to your capital gain.. 

Joe - If you have any other questions I'll gladly answer and you certainly PM me. Basic steps are similar with every custodian and they all might have specific requirements in each case, but also I currently work in the self directed space.

@Joe Archbold The individual who will be buying the note needs to establish the SD account since their account will be holding the investment. The borrower then turns over the original note to the custodian as collateral and the custodian then disburses the funds as  designated during the review process.

Like mentioned before unless you own the property outright it's a hassle due to the clause in the mortgage. Easier to just buy the property in the LLC but then the LTV on those loans is also much lower.

Joe - You will need to set up an account with a custodian that is able to hold individual promissory notes. I would have them review the draft copy prior to opening an account so that you will know that they are able to hold it on their books. Since it's not a secured note the review process is fairly straightforward. Once the custodian is in possession of the original note from the borrower and the account is funded, the funds are sent to the designated account or a check is mailed.

@Greg B. I mean you can do it, but it breaches the loan provisions and causes the due on sale clause to take effect. If everything goes as planned then everything is fine...it's just that it usually doesn't always happen

How can you record a deed to a new buyer when there is a lien encumbering the property? 

David - If you want to use an LLC to hold the property you would me missing out on the home sale tax exclusion of $250k/500k when you sell (individual/married) and homeowner exemptions. If you are set on using an LLC for liability purposes, you would most likely also need to come up with at least 25% down payment since its an investment property and FHA might not be a choice for that reason. You will need to do a whole ton of research on this before you pull the trigger. Three flat in West Loop will probably run you at least $600k so that's a huge commitment for a first investment.

Please at least do not use funds directly in the IRA to purchase a property that is intended for a disqualified person. This situation would automatically result in a prohibited transaction.