All Forum Posts by: Jorge Caceres

@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.

1 Vote

Quote from @Dmitriy Fomichenko:

@Jorge Caceres,

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I put this list together a few years ago and some of their terms might be outdated so you would need to contact each lender directly and inquire about the programs they offer.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.

0 Votes

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.

0 Votes

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.

1 Vote

Quote from @Dmitriy Fomichenko:

@Heather Taylor,

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.

0 Votes

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.

2 Votes

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.

0 Votes

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.

0 Votes

Chicago, Illinois

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.

0 Votes

Gainesville, Florida

Quote from @Maranda Tucker:

Quote from @Jorge Caceres:

Zillow is good platform for taking applications and for posting your listing. Applicants pay a one-time application fee, which is valid for 30 days, allowing them to apply to multiple properties within that period using the same fee. As a landlord, Zillow provides you with a background check, credit score, and a well-formatted application for each applicant. Your property is also listed in multiple sites owned by Zillow, and is free! Depending on your property's location, setting a minimum FICO score is advisable. A FICO score requirement of 650 or higher, along with at least three years of consistent income that's 3X the monthly rent, are also a good ideas. These are just guidelines and may need to be adjusted based on your property's location and class. While these criteria work well for Class A and B properties, they might not be suitable for Class C. Personally, I believe it's preferable to have stricter requirements and wait for a qualified tenant. The payoff is worth it in the long run with reliable, on-time rent payments and tenants who are more likely to stay long-term, and take care of your property.

I want to throw caution to the zillow applications. In our market (Charlotte,NC), the RE Attorney we work with mentioned that the majority of the evictions he saw in 2024 were from zillow applications!

Good to know @Maranda Tucker. I've been lucky so far in Northern California. However, you should never just trust information provided by either any platform or the applicant directly. Remember: "Trust, but verify." Do your due diligence and call references, contact employers, meet the applicant, etc.

0 Votes

All Forum Posts by: Jorge Caceres

Jorge Caceres has started 6 posts and replied 45 times.

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Combining Solo 401K funds with Selfdirect IRA funds for an investment

Post: Tenants asking for rent reduction due to Maintenance issues

Post: rent your property to a problematic tenant

Post: Water Softner for rental property ($3000 versus Budget friendly Home depot models)

Post: New Landlord: How to Screen Tenants & Attract More Applications