All Forum Posts by: Kyle Kursim

Thanks to the recommendation of a fellow BP investor, I have found a local lender that seems promising- no lower loan limits, 30 year fixed, 75% LTV based on appraisal, 6 month seasoning, and reasonable rates and closing costs. I am going to pursue that option and will try to remember to revisit this thread with my experience. Thanks for your input!

Do you mind sharing with us who that lender is? I'm going to be in the same situation shortly.

Thanks in advance!

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Cincinnati, Ohio

@George Blower

I can see where this gets muddy. The person in question would be my father-in-law. Technically related through marriage. As you mentioned, I would want to read the specifics or work with an attorney for the proper interpretation.

I keep finding information meant for those that want to use their own IRA money to invest themselves, but I don't find nearly as much for those that want to take their IRA and passively use it to invest with others. In this case, my father-in-law would use his IRA to fund or partially fund a purchase/rehab. Seems simple on paper, but when I begin reading it seems to become very cumbersome.

1 Vote

This is very helpful. I'm curious as to the possibilities of using IRA/Roth IRA funds from others as a source of investment in my company. Meaning if I have someone who wants to partner with me, can I use my cash and combine it with their IRA? In short, the answer to me would likely be no due to the complications it brings as percentage of ownership etc.

Originally posted by @George Blower:

@Stefan Shirley

Here are some general considerations regarding investing retirement funds in real estate (whether through a self-directed 401k or self-directed IRA):

General Considerations Re Investing Retirement Funds in Real Estate:

1. If you purchase via an IRA (as opposed to a 401k), you will need to open an IRA account at a specialty trust company which allows for investments in real estate. Unless you invest via an LLC owned by the IRA, you will not have checkbook control over the funds which means you need to run transactions (e.g. income, expenses, etc.) through the trust company who will need time to process the transactions and generally charge fees for each transaction. On the other hand, keep in mind that there are costs associated with maintaining an LLC (such as the $800 annual franchise tax in California).

2. If you are self-employed with no full-time employees, you can set up a Solo 401k through a 401k provider which allows for investing in real estate. In that case, you can simply have the account at a bank or brokerage where you will have direct checkbook control.

3. In either case, all of the income and expenses will need to flow in and out of the retirement account.

4. In either case and if you will you debt to acquire the real estate, it must be non-recourse financing. See more at the following link: https://www.biggerpockets.com/blogs/9552/70408-ira... If debt-financed real estate is acquired via an IRA, any income attributable to such investment will generally be subject to unrelated debt finance income tax.

5. In either case, you can't live on the property or otherwise use it for personal use.

6. In either case, you can't work on the property as it must be a passive investment (e.g. you must hire someone to fix the toilet and can't pay the expense with non-retirement funds).

7. In either case, you must purchase/sell real estate from/to an unrelated person and the real estate can't be titled in your name personally (e.g. in the case of the 401k, it would be titled in the name of the 401k and you would sign as trustee of the 401k).

8. In either case, you should verify that you are eligible to transfer the funds from your existing retirement account (e.g. if the funds are in your current employer 401k, you will likely not be able to transfer until you quit your job).

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Long time listener of the podcast, and finally ready to take the plunge. I have researched to the point where I have possibly confused myself further I'm afraid. I recently read an article talking about a potential bad deal that was avoided. A new investor attended a sheriff sale in hopes of buying a property, and at the auction nobody was bidding against this investor. Come to find out one of the other attendees saved this new investor from a nightmare being that there was a large first mortgage tied to the property. I believe the HOA was the plaintiff in this case.

In my case, the house that I want to purchase also has a lien/first mortgage from what I can tell (I researched the county recorder's records) to find the plaintiff's assignment that is taking this to auction. I've also ordered a title search which I will have shortly, but I believe I've found the lien and likely paid for a title search to tell me the same thing.

The point of confusion for me is the stories I've read about liens causing nightmares. Is that the case because in the above example the HOA was the lien holder, but there was also a secondary concern of the first mortgage? I assume I will show up at this Sheriff sale and also be bidding against the primary mortgage holder. If this is the case, and I get the property for less than the balance of the primary mortgage am I going to be stuck paying it off? If so, then obviously I should walk away. If it's more of a settlement - they let this property go for less than is owed- then obviously there is a deal to be had.

Any help is appreciated, and I hope to someday share the same help with those in need.

Thanks!

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All Forum Posts by: Kyle Kursim

Kyle Kursim has started 1 posts and replied 4 times.

Post: BRRR Financing Recommendations?

Post: Self-Directed IRA for Real Estate Investments

Post: Self-Directed IRA for Real Estate Investments

Post: Sheriff Sale - Property with lien