I joined this week and new to real estate investing - rental is the way I want to go. I found a 8 unit apartment building $400k and have about 40k to use. Learned at the webinar this week that I need 20% down - and will have to take another 40K in equity from my primary residence which makes me nervous. The numbers look good - net 2,000 after applying the 50% rule and then paying mortgage. Should I start small -a duplex, or take the leap with this property. Thanks for your advice!
Don’t be scared about starting with an 8 unit or making a stretch to get it, but you need to do better than just apply the 50% rule. You should be able to get a P&L statement from the previous owners, or recreate one. Call your insurance agent and get a quote. Call the City and find out what the taxes are. Talk to a local property manager about realistic rent and maintenance cost expectations. Get an inspection. I like multis this size, but take all the guess work out of it before you move forward.
There is no "getting around this"! Creating an LLC will not change the situation. You CAN NOT use IRA funds to pay for personal investment, regardless if you do it directly or through an LLC. Since you own the LLC - it will also be considered "disqualified".