All Forum Posts by: Jorge Caceres
Jorge Caceres has started 6 posts and replied 46 times.
Post: company employer related 401k money company (public traded company)vs outside compan
- Posts 47
- Votes 22
If you're considering investing your 401K money into Real Estate you have other options. You can roll over the money from your existing 401K custodian into a Self-Directed IRA (SDIRA) account. Self-Directed IRAs are specifically designed to allow you to invest in a much wider range of non-traditional assets, including but not limited to Real Estate, private equity, and even precious metals.
Alternatively, if you prefer more traditional investment options but want more options than your previous employer's plan offered, you can also roll over your 401K money into a different more traditional custodian. There you can invest all sort of securities like stocks, bonds, mutual funds, and ETFs.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Quote from @Ashish Acharya:
@Jorge Caceres The key concern here is whether the transaction would violate the IRS rules regarding prohibited transactions for self-directed IRAs and Solo 401(k)s. These retirement accounts have specific guidelines regarding "disqualified persons," and engaging in certain transactions with them could lead to penalties or disqualification of the tax-advantaged status of the accounts.
Here’s a breakdown of the issues involved:
Disqualified Persons
Self-directed IRAs and Solo 401(k)s cannot engage in transactions with disqualified persons, such as the account holders, their spouses, parents, children, and entities they control. Involving any of these in the deal may violate prohibited transaction rules. Forming a
Syndication
You can invest your IRAs and Solo 401(k) in a syndication, but ensure no disqualified persons are involved in the management or decision-making, as this could trigger prohibited transaction rules.
Potential Issues
Self-dealing (personally benefiting) or indirect benefits to you or disqualified persons from the investment would violate the rules.
What You Can Do
Ensure the syndication investment doesn’t involve self-dealing, and no disqualified persons influence management or decisions to prevent personal gain outside the investment returns.
Key Recommendations
Consult with a tax professional or advisor experienced with self-directed accounts and real estate investments to avoid prohibited transactions.
@Ashish Acharya Thank you for your reply. I will definitely make sure that I don't break any of those rules.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Quote from @Dmitriy Fomichenko:
Getting financing for IRA-owned property is not difficult. What makes it unique is that you need a non-recourse loan. While it is true that most lenders won't be able to help you, there are few lenders who specialize in this space and can offer you the financing. Qualifiying is relatively easy as long as the property qualifies. Here is a list of lenders specializing in non-recourse loans to IRAs and 401Ks:
https://www.biggerpockets.com/member-blogs/2810/50272-list-o...
I put this list together a few years ago and some of their terms might be outdated so you would need to contact each lender directly and inquire about the programs they offer.
Here is the difficult part: if you buy the property joinly with your IRA - you can't use conventional financing (because you are not allowed to guarantee the loan since your IRA is part owner), and most non-recourse lenders won't be able to help you either.
Hope this provides you with some clarity!
It does! Thank you for that list @Dmitriy Fomichenko. The property I am considering, if I'm able to pull together the funds from the different IRAs, would be an all-cash purchase. This list is a good resource for the future, or if I am not able to work out this deal.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Thank you @Frank Calderaro and again @Dmitriy Fomichenko, very valuable points. I had the same experience, trying to get finance for SD IRA purchases is difficult. SD IRAs are not well known, just trying to explain it to bankers is difficult. I am looking for an investment where I can do it all cash. That's the impetus to combine the different IRAs.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Thank you @Frank Calderaro, that makes perfect sense. I am going to contact a RE attorney before I do this. The IRS penalties are hectic, so I don't want to take any risks. However, I'm considering depositing as much as possible into the self-directed IRAs, instead of using my personal savings. This way, I personally would not be part of the deal.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Quote from @Dmitriy Fomichenko:
He can't be a syndicator and use his IRA funds to invest in syndication because he is a disqualified person to his IRA.
Thank you both for your answers. There must be a way to structure a deal to do this. With your comments, I can see now that since I would be the syndicator, it would appear that the IRAs are funding my personal deal. I wonder if I could simply do a title split among the three entities, so it could be considered another real estate investment for the IRAs.
Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment
- Posts 47
- Votes 22
Hi BP Experts,
I currently hold funds in three different self-directed accounts: two self-directed IRAs (my wife's and my own) and a Solo 401(k). I am considering a new RE investment using the combined funds from those accounts, along with personal savings. Would it be considered an illegal transaction if I form a syndication in which all the entities are partners to purchase a new investment property?
Thank you for your answers.
Post: Tenants asking for rent reduction due to Maintenance issues
- Posts 47
- Votes 22
I also agree that $500 seems reasonable. I have given discounts in situations that have been truly inconvenient for the tenant and that I wasn't able to resolve in a timely manner. Just make sure you have proof that they are aware this is a one-time discount and for the reasons you stated.
Post: rent your property to a problematic tenant
- Posts 47
- Votes 22
I want to say an indisputable "No", like the others, but hopefully this isn't a case of the old landlord being upset about something else and trying to bad-mouth the woman, but I'm not sure how you could verify that. If everything else checks out (credit, talked to her employer, background check, etc), I would try to validate the story with the landlord. Perhaps the landlord can direct you to the video as evidence, or talk to a neighbor.
Post: Water Softner for rental property ($3000 versus Budget friendly Home depot models)
- Posts 47
- Votes 22
I replaced my old water softener with an AQUASURE from Home Depot, and it works just as well as the one I had before (which came with the house). Replacement is pretty straightforward; if you're handy, it's definitely an easy DIY project. I'd say go with the budget option.