All Forum Posts by: John Cava

Thanks Brian - very helpful.  Agreed on the in-kind not being the best way to fly, but it was necessary for at least a couple of years - RMD's exceeded rental income and selling wasn't an option.  But selling in a couple years so this won't go on much longer.  Thanks again.   

Hi everyone,

I'm getting conflicting information from supposedly knowledgeable sources on this, so I wondered if anyone has been down this road and can direct me to a reliable info source.

I'm taking in-kind distributions from a SDIRA which is all in just one SF home. The question is this (numbers are just round for ease of calculation): Suppose the home is valued at $500K, and I took a $50,000 (10%) distribution last year, including what was owed for taxes. So then the house is 10% owned by The Person, and 90% owned by The LLC (income and expenses shared accordingly).

Now this year say I want to take the same percentage (10%) - and say it's a flat market and the house is still appraised at $500,000.  

When I report the value of the asset that I am taking the Distribution from, is it still $500,000, as per the current appraisal and receive $50,000? Or do I disregard the 10% portion owned by Me The Person, so I would take 10% of $450,000? In either case, The Person would now own 20% of the asset and the LLC would own 80%.

I've had authorities (not the IRS - that's my last resort) tell me both. Using the LLC asset only makes more sense to me, but I've heard it from tax attorneys for example that the appraised value is what's used each year, until The Person owns 100%, then it's game over.

If anyone has direct knowledge or first hand experience or can point me to a specific reference document (IRS perhaps?), I would greatly appreciate it!

Thanks,

John in Portland
 

Thank you!  Will follow up for sure.

Hi - I have a single family house owned mostly by an Inherited SDIRA & a small percentage by myself as an in-kind distribution.  Overall behind in the process by about a year - just catching up now & could use some (paid) advice on how best to navigate the complications -Probably an hour or two's consulting, at the most. The attorneys who might be appropriate are in the $500-600/hour range which is a little steep for me at the moment (I'll be lucky to cover past debts), especially as they're not certain they'll be of use.  If anyone has a person or firm in mind that I could reach out to, I'd be grateful.  Does not have to be local, since these are mostly general issues, not State (I've used advisors in other states but for other issues).  Thanks, John

Hi - I'm transferring assets into and changing the beneficiary of various other assets into a Revocable Living Trust. Divorced with 2 smallish kids at the moment and the idea is to have the Beneficiary Trustee manage the trust in the best interests of the kids. A bit complex, but pretty smooth sailing (done online with a great service) except when I get to my Self-Directed IRA, a checkbook LLC with just one rental property, which is itself an "inherited IRA" so it has its own subset of rules (!). Especially with the passage of the Secure Act which further complicates things. So...2 questions:

1) Anyone have recent experience with something like this?  Ideally, it would pass into the Trust (upon my demise or incapacitation), whereupon the Trustee would manage it, even if subject to the 5 or 10 year rule.  But it's very unclear how to do this and whether there's a better way (set up a different type of Trust for this asset).

2) In the event I'm stumped or worried I don't have it right, anyone have an Oregon estate planner/attorney who might specialize in the IRA world?

Thanks!   John

Thanks Darren - I'll start up that paperwork!  Banks seemed about half that.  Much appreciated.

Hi - We own one SF rental home free and clear in a self-directed IRA, and are purchasing another on contract from the owner. It's under way and going well, but to make our first payment we need to either sell the first home (rather not), or get a 5 year loan on it. We are provisionally approved for a non-recourse loan from one of the couple of national banks that do this - last year it was 5% but the fees were pretty high. We were going to ask some folks who might be interested in a private loan, but I wondered what an attractive rate/terms were. They would be in first position on the first house, which will appraise in the $475-525K range and the loan is about $150K for 5 year max (that's our balloon date max.). 5%, 6%, more? Thanks in advance for any thoughts! John in Portland

Thanks Mike and Jessica;   Great comments.  Will double check on sewer and oil....and that's a great point to ask him what he needs.... On the price, it's technically slated to be zoned for 2 units, so I think a more adventurous developer might be inclined to pay around 300, but not sure.   Small (but new) townhomes nearby are in the 475 range.   It's an area with some movement in it, and normally in that price range west of 82nd (for the locals reading this) we're competing with cash.   So fingers crossed.  Thanks again!

Hi all;

We're talking with an owner who seems willing to sell us a small home on contract here in Portland. This is perfect for us, as a conventional loan would be difficult (if not impossible) and it would allow us a little cash for the fix-up.  Using it as a rental, numbers are fine.   Seller doesn't appear to be cash-poor and is happy to have someone maintaining the home instead of tearing it down for the lot.  We hope to toss an offer his way this week.

Question is:  What are reasonable terms, that keep the initial payments down for us without being stingy?  This includes what's a realistic minimal down payment to offer (on $325 sales price), interest rate (we were going to base it on 30 yr), balloon time frame, etc.

We have a good RE attorney, so not worried about the legal end, but for the informal offer, I wondered what people thought the standards were. It's Portland, OR so a pretty hot seller's market and we consider ourselves fortunate to have a shot at this pre-MLS (no realtor involved either side).

Left on my own, I'd probably see if I could get away with $50-60 down (15- 18%), 5% interest rate, 7-10 year balloon (we'd hopefully refi then, though rates will certainly be higher).  As an aside, we think the price is just a bit high - it might be closer to about $325 actual, though he's had realtors tell him $350 (maybe to get the listing, not sure).   But we think $335 is not unreasonable, given the market, location, seller-finance, etc.

Thanks in advance to everyone.   Great site, with lots of common sense good info.  John

Hi - quick newbie question for the Forum. Renting out a 3 bedroom single family house in Portland, OR with 3 roommates - I know the parents of one quite well, but not the other two and there is uncertainty about one of the roommates.

Is it best to have a lease (1 yr) with all 3 of them on the lease, or should I ask for just one of them to be on the lease? Same with collecting rent - ask for a single check or accept 3?

Thanks in advance for your thoughts. john