All Forum Posts by: Kaaren Hall

I actually did this once, successfully. But let me explain. I was in the middle of a home purchase and my commission check was delayed. What I did was withdrawal funds from my IRA to make up for the difference. The reason this was successful was because once the commission check arrived I replaced the IRA funds (within 60-days). In this way it was not taxable to me.

You cannot take out a proper "loan" from an IRA. You can take out a loan from a 401(k) - including the Solo 401(k) - or other employer plans. These loans are for the lesser of 50% of your account balance up to a maximum of $50,000.

Congratulations on setting up your Self-Directed IRA (SDIRA)! It's a powerful tool for diversifying your retirement portfolio beyond traditional stocks and bonds. Since you're interested in syndications and leveraging non-recourse financing, here are some key tips and opportunities to consider:

Regarding Syndicatinos, due diligence is key – Not all syndications are created equal. Research the sponsor's track record, past performance, and the market they’re investing in.

Understand UBIT/UDFI – If the syndication uses leverage, your SDIRA might be subject to Unrelated Business Income Tax (UBIT) on the leveraged portion of the income. Work with a CPA familiar with SDIRA tax implications to plan accordingly.

Private Placement Memorandum (PPM) review – Ensure the syndication allows for IRA participation and that the deal structure aligns with IRS rules.

Direct Purchases with Non-Recourse Financing

Lender requirements – SDIRAs can only use non-recourse loans, meaning the property secures the debt, and your IRA isn't personally liable. Lenders often require 30-40% down.

Cash flow considerations – Since all expenses must be paid from your IRA, maintain liquidity to cover unexpected costs like repairs and vacancies.

• Rental properties vs. commercial deals – Residential rentals and commercial properties can both be great options, but keep in mind management complexity and income stability.

Generally speaking, stay compliant – Avoid prohibited transactions, such as personally guaranteeing a loan, living in or personally managing a property, or transacting with disqualified persons (yourself, spouse, ascendants, or descendants).

• Diversify your portfolio – While syndications and real estate are great, consider mixing in other alternative assets like private lending, tax liens, or even notes for additional risk management.
• Work with the right custodian – Make sure your SDIRA custodian is well-versed in alternative investments and has experience handling syndications and non-recourse financing.

If you’re looking for specific lenders who offer non-recourse loans, I’d be happy to point you in the right direction. Let me know what markets or asset classes interest you most!

Was going for the best cost-of funds (lower rate)

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $325,000
Cash invested: $50,000

This time I acquired a property that needed little to no work. The sales price was $14k under the asking price. Cashflow is not extraordinary because I financed on a 15-year mortgage. Happy to let this property do what rental property does best- pay for itself.

What made you interested in investing in this type of deal?

This is my third SFR in this market. I like the market because of stable employment from hospitals and universities.

How did you find this deal and how did you negotiate it?

Found the deal when my local realtor referred it to me. We agreed it was a great deal and easy to bring to the rental market quickly.

How did you finance this deal?

15year fixed rate loan

How did you add value to the deal?

Doing general paint and carpet cleaning for this property along with some minor repairs, junk removal and fixed a couple small plumbing issues (mostly deferred maintenance). Offering a clean and beautiful home to some lucky renters.

What was the outcome?

The outcome is another SFR to add to my portfolio. It's nice to make one trip to see all.

Lessons learned? Challenges?

This property has not offered major challenges. Learning that I prefer money invested in real estate over money sitting in the bank... don't we all?!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Ryan Lindholm is my local realtor in CoMo

For smaller investment amounts, we often see investors providing private loans or notes to other investors for their projects, which can offer attractive returns with the right due diligence. Additionally, there's growing interest in cryptocurrency as an alternative asset class, though it comes with higher volatility and risk. Depending on your risk tolerance and investment goals, exploring short-term Treasury Bonds, high-yield savings accounts, or diversified alternative assets like private lending or REITs could also be worth considering.

Keep in mind this is a self-directed account and most are not.  

Fees:
The Set-Up Fee is $50
The IRA Annual Fee is $275 (flat fee regardless of the number of assets & regardless of the account value)
The Direction of Investment fee is $10**
The Wire Fee is $15
See our fee schedule for Crypto-currency fees
Please refer to the fee schedule to see metals storage costs.
Check fees are $10***
* When buying physical real estate, you must have a 10% cushion of the purchase price
**We waive the first 6 transaction review fees for the life of the account.
*** The first 12 incoming checks are free each year.

I am also a huge fan of real estate and for the past 50 years there's been a way to combine both.

By leveraging a Self-Directed IRA, real estate investors enjoy both the traditional advantages of property ownership and the additional tax benefits of retirement accounts, creating a powerful wealth-building strategy. Here's how using a Self-Directed IRA (SDIRA) to invest in real estate enhances these benefits, especially for those looking to diversify their retirement portfolio:

1. Tax-Advantaged Growth: Real estate investments inside a self-directed account grow tax-deferred (traditional SDIRA) or tax-free (Roth SDIRA), meaning rental income, appreciation, and even gains from selling the property stay shielded from taxes until withdrawal—or forever in the case of a Roth!
2. Cash Flow Potential: Rental income from real estate held in an SDIRA flows directly back into the account, allowing you to reinvest and compound your wealth tax-advantaged.
3. Depreciation Benefits via Leverage: While you can't claim depreciation personally on IRA-owned real estate, SDIRAs can use non-recourse loans to purchase property. This allows you to use leverage while still reaping the benefits of amplifying your gains inside the account.
4. Diversification Beyond the Stock Market: Real estate provides tangible, real-world value that helps hedge against market volatility—a crucial feature when building a resilient retirement portfolio.
5. Control and Flexibility: With an SDIRA, you're not limited to stocks, bonds, or mutual funds. You can invest in single-family homes, multifamily properties, land, commercial buildings, and even tax liens, creating opportunities tailored to your investing goals.
6. Tax-Free Exchanges: While 1031 exchanges aren't available to SDIRAs, the tax deferral within the account means you can sell property and reinvest proceeds into new opportunities without immediate tax consequences.
7. Generational Wealth: If your SDIRA invests in real estate, those assets can pass to your heirs, benefiting from the step-up in basis (outside the SDIRA) or continued tax-advantaged growth if inherited in a beneficiary IRA.

@Rene Hosman You can read about H.S.A. investing in my new BP book - Self-Directed IRA Investing: A BiggerPockets Guide - www.BiggerPockets.com/SDIRA