Good morning @Gary Onstad,
I'm pretty sure I've posted about this before, so for those of you who have read it, pardon me, but maybe this will help Gary.
I have a traditional IRA with a large brokerage firm that holds my stocks and mutual funds. About 3 years ago I was trying to buy a foreclosed condo that needed a LOT of repairs here in Alaska and went to every bank and credit union in the area trying to get a loan and they couldn't do it. Because I bought it on "auction.com" there was a deadline to get it closed of course. (My mistake was that I hadn't thought the mortgage needs through before I bid).
I had almost decided I would have to take funds from my brokerage IRA and pay a LOT in taxes and penalties, but while waiting to talk to a loan officer at one of the credit unions (and getting a rejection again), I overheard a woman discussing her IRA with a bank in Nevada that held real estate as an asset for her. I asked her about it and called them. Very long story short, I've been immensely pleased with their service. They walked me through buying it and transferring funds from my brokerage IRA, then doing the repairs/remodel with many transactions and lots of people to pay.
All of the transfers were done simply from one IRA to another, and I WAS NOT taking taxable distributions, so all of the money continues to be tax sheltered. I've read about the exorbitant fees others charge and find it hard to believe. Other than a reasonable account set up fee in the beginning, I think I only pay about $250 per year and they will cut as many checks as I need (there may be a very small check fee, I don't recall) and they receive deposits. I don't know if there is a set up fee each time you add another deed/property because I only have the one.
Some of the IRS rules governing these tax-sheltered accounts are: YOU must NOT touch the transactions. Neither you, nor your family, etc can do any repairs or fix ups. You cannot manage the property, a licensed, professional manager is required (I have one here in Alaska). You cannot lease, interview etc the potential tenants, in short, once you own it, you must stay out of it. I do have the right to approve big expenses, but I can't do them myself. Every dollar spent or received must come out of or back into the IRA account. These are IRS rules, not the bank's.
When I need them to pay a bill, I ask for a copy of it from the company who has provided something through email, and then I forward it to them with a brief statement from me, "...Please pay the attached bill for my condo at 1234 Main St, for $100.00 from Joe Smith, 456 Easy St, City, AK." They ALWAYS pay it that day if the mail hasn't gone or the next business day. I've never had anyone upset because there is a delay in paying them.
The great thing about holding the investment in an account like this is that I own an appreciating real estate asset in a tax-sheltered account that produces income every month (as long as the property manager does his job!) I think of it rather like a corporate bond producing income. Because the rent gets sent from the property manager to this account, it accumulates until I need it. If it don't take it out, it sits there and has been tax sheltered income.
The down side is that I have NO deductions on my personal tax return. Everything happens in this account and any expenses for the property don't decrease my other income.
Other than being a client of the bank, I have no affiliation with them and they won't even even send me a box of chocolates for this rah-rah of their exceptional services. They are: First Savings Bank and they have branches in: Arizona, Nebraska, Nevada, New Mexico, South Dakota, Texas. My account is with the Las Vegas, NV branch and their IRA department.
You do not have to pay huge fees to own real estate inside your SDIRA. You can PM me if you have more questions, I hope this has helped.
To those of you who already know about this, yes, I left out the fine details. He can get that by calling them.
