Flipper/Rehabber · Berkeley Springs, WV · Member since 2017 · 164 posts · 103 votes
Hi BP,
I am looking to convert my SEP IRA to purchase a duplex or 2 SFH in Baltimore City. I'd be grateful for guidance on a custodian and agent in the city who has experience structuring this kind of deal. Any help would be most appreciated!
Landlord/Mentor · Baltimore, MD · Member since 2011 · 96 posts · 97 votes
9y
If you are from out of town and investing in Baltimore City- please take your time. As soon as "out of town investor" is mentioned it turns into a feeding frenzy. What might seem like an amazing deal to someone from out of town might be a BS deal to locals. (if someone has to go 500 miles to find someone to buy the deal- it probably isn't a good one or a local would have taken it) Before you get anything under contract make sure you do your own independent due diligence.
Accountant · Louisville, CO · Member since 2017 · 80 posts · 34 votes
9y
Hi Seb,
Any self directed IRA administrator can assist with the movement of your SEP IRA. I would encourage you to do some research and find the right one for you. BP has an extensive list available.
Please let me know if you have any questions regarding the rules, structure, etc. as it pertains to your IRA purchasing and owning property.
We are a SDIRA administrator, but out of respect for bigger pockets we don't want to blow our own horn. Below are 3 things to consider when selecting a custodian/administrator for a self-directed IRA.
1. Knowledge (They actually know what they are talking about)
2. Customer service (can you reach a person, how quickly?)
3. Ease of transactions
If you have any questions or would like to connect, please feel free to send me a message. I would be happy to share some links to you for our fee schedule.
Real Estate Agent · Baltimore, MD · Member since 2014 · 215 posts · 123 votes
9y
@Sebastian E. I know Brandon Hall moved to Baltimore just recently and has tons of resources for that as well. Let me know if you'd like me to put you guys in touch.
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
9y
Hi Sebastian, few more things for you to be aware of in addition to the advice you already received:
You should understand the difference between the custodian and the administrator, if you wish to have greater control with flexibility and fewer fees you may want to consider IRA owned LLC (aka Checkbook IRA). And finally if you are small business owner or have some self-employment activity you may be eligible for a truly self-directed Solo 401k plan, which is superior to all of the above.
The subject on self-directed investing is a frequent discussion in this forum category:
Landlord/Mentor · Baltimore, MD · Member since 2011 · 96 posts · 97 votes
9y
If you are from out of town and investing in Baltimore City- please take your time. As soon as "out of town investor" is mentioned it turns into a feeding frenzy. What might seem like an amazing deal to someone from out of town might be a BS deal to locals. (if someone has to go 500 miles to find someone to buy the deal- it probably isn't a good one or a local would have taken it) Before you get anything under contract make sure you do your own independent due diligence.
Flipper/Rehabber · Berkeley Springs, WV · Member since 2017 · 164 posts · 103 votes
9y
Thanks @Account Closed! I am based in DC and make it to Baltimore pretty frequently to look at properties. I feel confident in the my ability to make a deal work with my personal funds and leverage but I am still relatively uncertain about the self directed IRA. I know it's not the smartest thing to say but the stock market just has me nervous at the moment and i'd rather control my destiny on something that I understand like cash flow.
Landlord/Mentor · Baltimore, MD · Member since 2011 · 96 posts · 97 votes
9y
@Sebastian E. You said, "I know it's not the smartest thing to say but the stock market just has me nervous at the moment and i'd rather control my destiny on something that I understand like cash flow." My friend, that is one of THEE smartest things that I have ever read on BP! I understand your concern about the self directed IRA. I also understand that your nervousness about the stock market. That is what drove me into real estate. That was 15 years ago. I retired from regular work 5 years into it. My net worth has gone up 15-20x and I work 2 hours per day on average. That is what that nervousness did for me. You are on the right track.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
@Sebastian E. despite the hype, real estate is not the best use of a self directed IRA. Real Estate is already a tax advantaged investment. However in your IRA you get no benefit for the depreciation. If you borrow in order to buy real estate within you IRA, you pay UBIT tax which basically negates most of the advantage of the IRA.
My understanding is a 401K, as @Dmitriy Fomichenko mentions, is a far superior for retirement planing in general and for real estate investing.