All Forum Posts by: Daniel Dietz

Thanks for the responses to my other questions in this forum so far as I start my Real Estate Journey.

What I am specifcally wondering about today is "Percentage Ownership" and if it can change with the same LLC over time.

Assumption is a 3 way Partnership with a 'starting split' of 1/3 each. This would be for one property to start, and likely add more in the near future.

Fast forward a few years. Partner # 3 would either like to sell their 1/3 stake to the 2 other investors, or a third party. (The 3 original investors ARE disqualified parties - my understanding is that this is OK IF done from the start) Can partner #3 do this, which would then create a 1/2 - 1/2 Partnership?

On one final question, if original LLC is 1/3 each, and partners #1 & #2 want to add a new property, but partner # 3 does NOT, can #1 & #2 do this new 50-50 property within the same LLC, or would we need to start a new LLC?

Thanks, Dan Dietz

Hello,

I am in the process of setting up a SDIRA to purchase my first rental property. I am still trying to decide whether to buy it outright with the SDIRA funds or leverage it by borrowing about 50%.

As I have been reading up on the UBIT, I think I understand it, but not completely. I will be talking to both the SDIRA Custodian and my accountant both in the next day or two, but thought I would get some feedback here too.

My financial projections are as follows; 15,400 income, 5450 Expenses, 2096 of Interest (at 50% leverage), and 3548 of Depreciation for a 'Taxable Income' of 4305.

I am 'assuming' this means the UBIT would apply to 50% of of the Income - 50% of the Expenses - 50% of the Depreciation = 3201. Then deduct the Interest of 2096 for a Taxable Income of 1105 ?

My questions are;

1) Is Depreciation indeed deducted from the 'Leveraged' side before the UBIT is figured?

2) Is Depreciation NOT figured in on the non-leveraged side since there is no yearly 'taxable event'?

3) The Interest would be figured in full on the leveraged side since it does not apply to the non-leveraged side at all?

4) Where does the UBIT 'flow though' to on a personal tax basis?

Thanks, Dan Dietz

Hello,
I am going to be setting up a SDIRA this week to purchase my first rental property. Currently I invest in mostly stocks within my ROTH IRA, which I will be rolling over into the SDIRA.

My question is this;

1) I will likely have some 'left over funds' in the SDIRA after purchasing my rental. Will I be able to invest the 'left over funds' the way I have in the past? If so, how does that actually happen, as in what Brokerage would I use, etc....

2) If it is easier to keep the 'left over funds' NOT in the SDIRA, can these 'roll both ways'? Meaning if I sell a property, could I roll the funds back into a 'regular IRA'?

Hope this makes sense.

Thanks,

Dan Dietz

Hello,
I have a BUNCH of questions about SDIRAs! I will put them under a couple different titles to keep things easier and clearer within the threads.

I have acquired the right to but a great older immaculately maintained duplex only a few minutes from my house. I am leaning heavily towards purchasing it within a SDIRA that I am going to be setting up this week. My other thoughts are to finance it conventionally outside the SDIRA, or possibly doing it on a land contract (the owners are thinking that over right now).

Questions are;

1) With these thoughts in mind, what are all of your thoughts on 'Partnering' on this (and likely other future projects) with either *myself* (outside of the SDIRA) say 50% SDIRA and 50% personal funds, or other people? IF with others, and done from the start, can those others be 'disqualified' persons such as father or child? I have read conflicting things about 'partnering with yourself' and am looking for some clarification on this.

2)If purchased solely with my SDIRA funds, can I sell a % interest (say 50%) to a non disqualified person in the future? I am assume IF that can happen, those funds would return to my SDIRA to be used on future purchases.

Thanks,

Dan Dietz

Dennis,

Thanks for the quick reply. I think I might not have made it clear on that question what I meant.

I am NOT saying can *I* (as individual) do a HELOC and mix it with the SDIRA property.

I will elaborate on what I AM wondering; 1)Assume that my SDIRA is funded with 100K, and buys property 1 outright for 80K cash at the original closing.

2) In the future (maybe a few months to a few years), I find property # 2 and want to buy that one also with my SDIRA, but I only have 20K left in there.

3)At that point in time, can my *SDIRA* do the Non-recourse Loan for say 50% of property #1 (50K), put that into the SDIRA pool of money (then 70K) so I had the funds to acquire property #2?

Does that make more sense, or is the answer still that it has to be done from the start? I DO understand that in no way can I mix my personal $$$ with the SDIRA dollars or use a 'Personal Guarantee

Thanks,

Dan Dietz

Hello,
I have a BUNCH of questions about SDIRAs! I will put them under a couple different titles to keep things easier and clearer within the threads.

I have acquired the right to but a great older immaculately maintained duplex only a few minutes from my house. I am leaning heavily towards purchasing it within a SDIRA that I am going to be setting up this week. My other thoughts are to finance it conventionally outside the SDIRA, or possibly doing it on a land contract (the owners are thinking that over right now).

My questions are;

1) I am leaning heavily towards either UDirect IRA out of California - I have read good things about them and had some good phone talks with them. Any comments either way as to their level of service?

2) Can the SDIRA enter into a Land Contract?

3) I would be leaning towards doing a Non-recourse loan within the SDIRA. Does this need to be done from the start, or can it work like a 'home equity loan' and be done at a latter date (assuming I paid cash to start and had 100% equity in the property)?

I think that is it for this tread. Thanks for any help!

Dan Dietz

Ned,

Thanks for the response. I have heard the term 'soft cost' that you mention as being 20% of the sale price (28K in this case) but do not really understand what all that would include. Could you elaborate on that please.

Thanks, Dan

Hello,

I have an opportunity to actually gets started instead of just thinking and planning!

A Professional Flipper who I am friends with that does maybe 6 or so houses a year has one that he is willing to work with me on as he already has 4 going at once, and has been looking to do a 'quick flip' for a while. I had already been looking at this place when he made the offer.

It is currently a 3/2, GREAT location backed up to a wetland/preserve in a very desirable area for its price range. It is assessed at 130K without a finished basement, in a neighborhood that ranges mostly 140K-175K with finished basements. He go it for 75K when they were asking 80K. He has a budget put together if I am not interested in doing it of about 20K to fix it up - roof, flooring, paint, drywall, and some pretties like shutters, a touch of brick, etc... This would also turn it into a 4/2 which is very desired in that area - lots of families with kids.

He is willing to sell it to me for 85K on a land contract at 5% for 6 months, and 8% for the next 6 months if needed. Interest only payments paid quarterly. I would need to fund the 20K of improvements.

I had been thinking of keeping it for a rental, but am also considering flipping it if the numbers work. If I kept it, I could get a permanent note for about 110K @ around 5% at 30 years. Payments and taxes and insurance would be about $850 month, and it would bring around $1100-$1300 in rent. He feels it would sell in a matter of weeks or months at 140K or so.

I am mostly looking at real-estate as a supplement to retirement income in15-20 years, but some current income would not be frowned on either ;).

So , what do you all think?

Thanks, Dan

Hello,
I have not been able to find this specific topic in the archives, so here goes.

Scenario; An individual purchases a house as a rental property within their SDIRA, AFTER they have turned 59 1/2. They then hold it for any number of years from 1 year to say 5 years. They then 'withdrawal' that property out of their SDIRA just like a monetary withdrawal. Once it is out of the SDIRA, is there a certain time limit before they can sell it to a 'prohibited party', such as a child or grand child?

A side question is can the actual property be taken as a withdrawal, as in moving ownership of it out of the SDIRA (after age 59 1/2), or does it need to be 'sold' while still owned by the SDIRA? It seems the second option would put a big hole in the idea of enjoying say a Lake Rental property you had for years when you retire.

Thanks,

Dan Dietz

I have not seen this addressed anywhere before, and just want to cover my bases ahead of time.

There is a property that a 'non disqualified' relative (uncle) is thinking of buying in his SDIRA. I would likely do work on the house for him through my 'day job' as a contractor.

There is a good chance I will be interested in buying this property from him in the not to distant future, likely within my SDIRA, but possibly not within my SDIRA.

Would there be any issue with me buying this from another person's SDIRA that I 'profited from'? It does not SEEM like this should be an issue, but just want to make sure.

Thanks, Dan