Looking for a real estate attorney/CPA in Pittsburgh

5 Replies

Hi BP community,

I'm finalizing the details on purchasing a multi-family home in the area and have a private investor/partner who will be primarily funding the project. Because of this, we have some flexibilty in how we structure the funding. One idea I'd like to investigate further would be funding it from his IRA, but would like to find a local expert to hammer out the details and get a solid breakdown of the pros and cons of this method.

Any suggestions would be greatly appreciated!

Thank you,

Andrew

@Andrew Mercer ,

To do so your partner needs to setup a self-directed IRA in order to be able to invest in real estate. When it comes using an IRA to fund a multi-family investment it can be done in couple ways:

1. IRA simply acts as a bank and will finance the purchase. You must outline the loan terms in the promissory note and secure the investment with a deed of trust or a mortgage. Since IRA is a tax-deferred vehicle and the interest income is considered passive all income will be deferred from taxes or tax-free if done inside of a Roth.

2. If he decides to partner with you and take the ownership of the property then the IRA will be on the title. It can be structured as TIC or through an entity in which both of you will be partners.

You may need help of an attorney to help structure the deal, but it is really straight forward for you. Since this other party is using an IRA he should be the one looking for expert guidance to make sure he follows all the IRS rules to keep his IRA compliant.

@Andrew Mercer

From the perspective of the lender and the deal sponsor, using an IRA for private loans can be very attractive. Private lending is a passive, high yielding investment, that needs the tax shelter provided by an IRA.

The potential down-side would be encountered if your deal required additional funding and your "private lender" would want to supplement personal funds to those of the IRA.

The key compliance concept to be aware of when investing with an SDIRA are "prohibited transactions." Broadly speaking, the prohibited transaction rules require that the IRA-owner segregate IRA transactions from personal transactions. That is a bit of oversimplification, but if adhered to, will keep the IRA compliant.

@Andrew Mercer We use the attorneys at Scolieri Law Group - Phil Scolieri is terrific. As for accountants, we use Wilke and Associates. They’re a little pricey, but they know what they’re doing. PM me if you have any questions. Hope that helps!