Hey Josh, these are great questions. SDIRA's are covered in great detail here on the board and many of the industry's professionals are paying attention to BP these days. Here are my responses to your questions without regard to what others have already said. I look forward to connecting more.
1. Who are typically custodians of the Self Directed IRAs ? Do Credit Unions administer these types of IRAs ?
In seeking out an SDIRA provider, you'll find that traditional banks and brokerage houses rarely have the systems in place to facilitate non-traditional assets. Not all IRA providers are required to service real estate as an asset and the accounting systems (and features) are highly customized that those who do choose to allow such investments. I can't refer anyone for obvious reasons but I can say that it's important you look for the actual procedures, forms and ease of use before choosing a provider. If you perform some due diligence, you will quickly see who's organized and efficient and who is not. Features like online bill pay, digital signatures, and online rent pay for tenants are all a few features that should be standard.
2. Can you take out a HELOC on a home bought with a Self Directed IRA in order to purchase another home?
I have yet to see a non-recourse lender issue an actual HELOC to an IRA but it wouldn't certainly make things more interesting for investors. Because IRA's can only utilize non-recourse financing (no personal guarantees), the lending pool is much smaller with stricter terms.
I have commonly seen investors refinance out of their first purchase in order to acquire subsequent properties.
Financing a property in an SDIRA is very common but should be researched thoroughly to understand all considerations. Be sure to understand UBIT and the strategies available to your IRA. Also learn about cash flow management in an IRA and how expenses are serviced. Cash buffers become important, especially as you reach 70.5 years of age (RMDs).
3. What is the annual limit on how much you can put into a SDIRA?
SDIRA's are no different than ordinary retirement plans, in fact they are the same structures. Traditional IRAs, Roth, SEP, SIMPLE, even HSAs can be self-directed with their respective tax advantages.
4. Is there a minimum amount that I need to start a SDIRA ?
Most providers won't have a minimum. The key is finding a provider that doesn't have an annual fee for un-invested cash. This might save you from fees while you're working to build a balance. Some people will utilize a brokerage IRA provider while building their IRA balances before transferring to an SDIRA provider.
I hope this this information helps you get started. Please feel free to ask follow-up questions. Happy Monday!
