All Forum Posts by: Account Closed

Originally posted by @Will Barnard:

Originally posted by @Account Closed:

This thread concerns self-directed IRA's with a custodian and allows investment in alternative vehicles free from any early withdrawal penalties.

Since 50k doesn't really move the needle for me given my real-estate investing goals I would propose something outside the box. I realize this is a real-estate investing forum so please excuse me if this doesn't add much to the thread by proposing something non RE related.  I would spend $10,000 on "reproductive matter" (for lack of a better term) from a championship show horse, spend another $10,000 on a old mare (female) that was sent out to pasture but from a championship bloodline. The in vitro would cost another $10,000 approximately. I would then spend about $10,000/year for the next two years to board and train the horse. At this point I am 50K all-in and would begin to show the horse and hope it wasn't a dud and could compete at the national level. If the horse won some national shows it could be worth in excess of $250k!!! Not a bad "investment".

Your first sentence is incorrect. Self directed or not, the rules of the IRS still apply and any early withdrawal WOULD result in the 10% additional fee on top of the taxes.

As to your next scenario, I am not 100% sure if that can be done! but if so, it would be an investment into a business which would incur UBIT. Secondly, on the flip side, you could end up with a horse with little to no value. Not a very safe investment with retirement funds in my opinion. I'd rather buy into a proven franchise business and take the UBIT hits so long as the end result returns were good enough.

gotcha- 10 percent penalty still applies I agree. I was just pointing out to the poster the concept of investing inside an SD-IRA; no withdrawal is required to invest as the holder can direct the custodian to make permitted investments.

Show horses are risky I agree. It would be hard to quantify the odds of success. My tolerance for risk is probably higher than most.

A walkable community with a great master plan, great programming in design, excellent use of placemaking, and in the path of growth. Top public and private schools Safety (low crime) A profitable place to invest in SFR for buy and hold and also new construction. Opportunities for mixed use developments.

Originally posted by @Adam Hershman:

Just something I wanted to clear up. There's a lot of talk about how it might be worth taking funds out of a qualified account (IRA 401k 403b etc) and leveraging it to purchase RE. While its true that most people expect that their taxes will be high in the future, its not as simple as pay now or pay then. First of all because qualified funds are tax exempt you have more funds to use, like someone mentioned above $50k after tax and possible 10% early withdrawal, would really net you a little over half, depending on your individual tax situation. The idea is then to leverage those funds. Well this sounds all well and good but if you were to invest $50k from an IRA you're investing $50k with no interest and any income is still tax deferred. Compare that to taking $50k out of an IRA cutting it down to around $30k with taxes and then say 2-1 the cash at a bank to invest, this means your paying interest to someone else and any income is not tax deferred, so while you're paying down the loan with the bank, you're also paying taxes on the income your generating.

Seems to me that as long as you aren't looking to generate income, then a qualified account seems like the clear winner. 

This thread concerns self-directed IRA's with a custodian and allows investment in alternative vehicles free from any early withdrawal penalties.

Since 50k doesn't really move the needle for me given my real-estate investing goals I would propose something outside the box. I realize this is a real-estate investing forum so please excuse me if this doesn't add much to the thread by proposing something non RE related.  I would spend $10,000 on "reproductive matter" (for lack of a better term) from a championship show horse, spend another $10,000 on a old mare (female) that was sent out to pasture but from a championship bloodline. The in vitro would cost another $10,000 approximately. I would then spend about $10,000/year for the next two years to board and train the horse. At this point I am 50K all-in and would begin to show the horse and hope it wasn't a dud and could compete at the national level. If the horse won some national shows it could be worth in excess of $250k!!! Not a bad "investment".

The previous buyer that bailed was able to get HUD grant money for almost 1/3 of the total project costs. Federal and State money availability is deteriorating but still widely available. I have seen similar applications in Detroit where mixed use developments in excess of $20m were able to obtain a combination of brownfield tax credits, state and federal matching grants, and state revitalization funding. In these cases the partners personally guarantee very little if anything. There may be hope for this project after all!

I would buy 20,000 barrels of oil at $50/barrel and find a partner to help me store it in an offshore oil tanker for a small equity stake. Second option- arbitrage in the Forex markets.

I don't think 1 buy and hold SFR is really all that technical and probably doesn't require a brilliant CPA. As your business grows you may find the need for more tax planning compared to preparation. Generally speaking my experience tells me the larger the firm and higher the bill rate the more competent the accountant. The bigger firms (think Big 4) devote massive amounts of resources into training their employees and as national firms devote time to thought leadership in the industry. Also, the accountants tend to be more well educated (more likely to have obtained a masters in acctg) compared to middle size firms as these jobs are highly selective and recruit from top universities. You can expect to pay anywhere from 300/hr for newer staff (under supervision of a partner) or as much as 1,000/hr for direct access to a partner. That being said there are many sole proprietors that are ex Big-4 and may serve you well for less cost. I am probably biased coming from Big-4 but have worked with tons of accountants in the entire vertical of big and small firms and those are my general observations.

@Account Closed Thanks! I hadn't thought about that- I suppose I could just get a title agency to do the search gratis or pay a few hundred if needed. Better than spending hours searching aimlessly or having an attorney research at an hourly rate.

If any of the developers out there have any better ideas please let me know.

Yes it would equal a bad investment. You have generated passive activity losses from a real estate investing activity. There has been a lot of misinformation in this thread and several people have suggested that earning 150k limits your ability to depreciate a rental property to arrive at taxable income. This isn't true-- only in the event you have a crummy RE investment that is generating losses would the 150k wage earner limit their ability to offset those real estate investing losses (passive activity) from their ordinary income (w-2). 

I am working on a project for a RE development class in b-school but have interest from several developers to possibly sponsor and syndicate a deal. I am reluctant to contact an attorney since it's just a term project at this stage. None of the students on my team, which include a law student, architectural student, and urban planning student know how get things off the ground; including researching historical preservation acts that protect the property and air rights which would prevent building up.

Anyone know how to research air rights assigned (if at all) on a commercial property? Short of going to a city register of deeds and looking for a recording instrument (are these rights recorded?). Looking for an online resource-- a national database on city records. I cant seem to find anything online for a nearby city