All Forum Posts by: Thos. A.

Thanks for your reply. The SDIRA is already a Roth. But I've been led to believe that all IRAs are subject to UDFI, but not Solo 401ks, due to some fine print in the tax code. Can you cite sources or offer links?

Months later...Josh Cantwell, "rementor", (a guru) claims to be using this effectively in a short sale context, and claims in 70% of cases, a recorded memo of options satisfies title seasoning requirements too, as long as it takes 3+ months to get the SS approved/closed, not unusual at all.

It makes sense, but he's also selling a program which I've seen, this sort of thing is never easy until you've got a system in place like he does. In a back-to-back close, he uses hard money to close himself, then resells to his final buyer a few minutes later. For straight wholesaling, this might be tougher, as there's not much time for seasoning to occur; you're limited to cash buyers then.

I've been in REI and done most kinds of deals, from tax liens to Sub2s to Short Sales, but haven't used options much. I just set up a Self-directed Roth IRA with checkbook control via an LLC (custodian is Sunwest Trust). I'm looking into setting up a Solo Roth 401k as well, contributing to it based on the flipping income from an LLC I have that I plan to designate to have taxed as an S corp.

I want to keep things simple (from this point on, anyway), and I want to divert as much $$ from the better RE deals I find into my Roth retirement accounts, then rinse and repeat. I'd incur UDFI from buying on low-down leverage/terms in the SDIRA; but apparently the Solo (Roth or not) 401ks are not subject to UDFI/UBTI, which opens up some good possibilities there.

I've heard some people are optioning RE from their SDIRAs and Solo 401ks, since options don't trigger UDFI. A post I read recently spoke of buying an option (strike price $375k) for $100, then finding a buyer for the optioned property for $525k, netting a cool $150k into the SDIRA, a massive return on a hundred bucks.

This is an esp. juicy example, but you get the idea. Have you done options into a retirement account? What are the challenges?

I also wonder about the mechanics of an option transaction. How exactly in the closing and on the HUD-1 does the optioning SDIRA get paid? If the final buyer is using bank financing, would they be OK with this? Is it simply paid like any other recorded encumbrance at closing? Thanks for any insights.