I have an IRA/LLC. A normal IRA is usually held at some investment bank like Charles Schwab (an IRA "custodian") and they only let you invest in certain things like stocks. The self-directed IRA lets you own other types of investments like rental houses, but you can't get this at Schwab, you need to find another custodian.These SD custodians are smaller entities that usually specialize in SDIRAs.
With a SDIRA your IRA can own the property directly. You ask the custodian to purchase the house and you pay the custodian a bunch of fees for each transaction (paper signing etc). It sounds like you want to avoid this. So what you do is create an LLC which you direct your custodian to buy. The IRA now directly owns the LLC. You make yourself the manager of that LLC, you move the money from the IRA custodian account into some business checking account, and you, as the manager of the LLC, have a checkbook and debit card etc. for the LLC account. You personally as manager then go buy the house and do all the transactions without needing the custodian to do anything. So the structure looks like this: The custodian holds your IRA (despite no money actually being there), the IRA owns the LLC, and the LLC owns the house. The LLC is an asset just like owing stock is an asset, but in this case you happen to manage that LLC.
A couple of drawbacks: If you live in California, but your rental property is in another state (and the LLC is set-up in another state) you still have to pay CA tax (min $800 per year). This is because CA considers you to be doing business in CA. If you make phone calls to your contractor, real estate agent, have checks mailed to you here in CA, then you are doing business here and need to pay that tax.
Also, the reason folks like Schwab don't want to be in the business of SD-IRAs is that when you have checkbook control of the LLC, you can very easily make a prohibited transaction and the IRA will void the IRA and you will pay all the tax on it at once. You can't in any way mix the IRA/LLC with your personal stuff. So if your IRA/LLC owns a rental property and you want to save a few bucks by painting it yourself, that is a prohibited transaction and the IRS could void the entire IRA (not just the part in the LLC). You have to pay someone else to basically do everything. You can't buy or sell anything to the LLC (so you can't sell your own house to your LLC). There are a lot of these rules so read up on them thoroughly.
