All Forum Posts by: Mitch Kronowit

About $80-90k because in my area a $45k SFR is either a mobile home (minus the land) or in the midst of a drug turf war.

You and I both! I'm not exactly sure myself, but a call over to Kaaren or Christie at uDirect should answer that in a snap. My understanding is the custodian is a bank or trust company that's actually licensed to hold your dough. But they don't always want to handle the administrative paper-pushing of an IRA, so a 3rd party administrator, such as uDirect, handles all the minutia.

If memory serves, I had some funds "rolled over" from one custodian to my SDIRA custodian. Make sure you specify this is a "rollover" and provide your existing custodian the proper information so they can cut your check using the correct verbiage. For example, the check should be payable to "ABC Bank, FBO* Daniel Dietz IRA" or something like that. As I understand it, this wording is very important because it means YOU cannot personally cash the check and, therefore, avoid the wrath of the IRS (paying a penalty for early withdrawal). If you personally cash the funds, I think you still have 90 days to get them reinvested into a proper retirement vehicle, but why the headache? Just make the transfer directly from one custodian to another.

* "For the Benefit Of"

I didn't do this myself because all my properties are in California and an LLC in this state (or registering a foreign one here) costs $800/year. I'm already "feeding" one LLC in this socialist state and I don't need another. Paying $10 to uDirect for each check they write for me is much cheaper.

As to your other questions, set up is just a matter of days. I believe once your funds arrive at the custodian, they may be held for a few days before they are available for investing. After that, you're in business and your money sits poised and ready for your direction.

Purchasing property is a little involved because the custodian has to sign all documents (remember, it's your IRA making the purchase, not you). For me, it went down like this: Realtor drew up the purchase offer and e-mailed it to me. I checked it for accuracy and electrically annotated any changes/additions it needed, then forwarded the file (via e-mail again) to my administrator, uDirect. Along with the purchase offer, I had to include two documents. One was a Direction of Investment, which basically directed the custodian to cut a check for the earnest money deposit and mail it to the Realtor's office. The second was a Letter to Execute Documents, which directs the custodian to sign the papers for your purchase. Once signed, the documents simply reverse course, i.e., e-mailed back to uDirect, who then forwards to me who forwards to the Realtor. The check makes a direct path via mail.

It's normally a 24-48 hour turnaround on documents, but the last thing I had the custodian sign (approval of a bank's counter-offer), was returned to me within hours.

I use http://www.udirectira.com/ for my SDIRA. They're located very close to me here in SoCal and I have met the president, Kaaren (no, not Karen), on several occasions.

Just for clarity, uDirect is a 3rd Party Administrator. Your funds are actually held, and disbursed, by the custodian. Fees at uDirect are around $50 for set-up, then $275 or something annually for maintenance. The fees are flat regardless of the size of your account.

Look up Tony Alvarez. He lives and invests up in that area. Yes, he is regarded as a "guru" with a web site, courses, mentoring, etc. for sale, but I heard him speak for little more than the price of a lunch.

He has a small forum on his web site for questions. http://thereomentor.com/

Not all banks are that sophisticated Jim. :wink:

What's there to lose by placing it on the market when it's ready at a price that makes sense? You never know when that one buyer is going to cross your path. It'd be a shame to miss him just because you kept the property under wraps.

Simple. I buy under-valued properties during weak real estate markets and just let time do its thing.

Here in California, property values swing wildly. The key is avoid buying at the top and grabbing everything you can at the bottom. Cash flow is just something that helps me hold onto the property while I'm waiting for the market to recover. California RE investors make their money in long-term appreciation, not in collecting $100/door. :idea:

I'm too busy making money to attend cocktail parties. :wink:

Therein lies the rub Nathan. What exactly does one DO with this "rule"?

The "rule" is simply a tool and it must be understood and used properly to be beneficial. It's not much unlike a chainsaw, which used properly, can result in extreme productivity. However used foolishly or improperly, it can cause quite a bit of damage.

The 50% "rule" is supposed to estimate operating expenses, nothing more. It does NOT calculate total return or whether or not a rental is a good investment. Used properly, the "rule" should prevent one from going broke because they assumed Rent minus PITI is all they needed. Used improperly, the "rule" could encourage investors to buy properties that are very undesirable and difficult to make profitable even though the "numbers" say otherwise.