Using an IRA to purchase real estate using an LLC checking account

Detroit, Michigan
General Real Estate Investing
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Using an IRA to purchase real estate using an LLC checking account

Scott SuryanPro Member
Detroit, MI · Member since 2024 · 8 posts · 4 votes

Is there anybody out there currently using their IRA to purchase real estate? I have talked to a couple of groups and they are similar in nature. Looking like I would need to create a checkbook LLC and use a non-recourse loan if I was not buying the property as an all cash transaction. Any knowledge that you think would be beneficial would be appreciated. Tips or tricks and examples when it was a good or bad move on your end. I have read the blogs on BP that were recommend and have a meeting scheduled with another company later today.  Thanks in advance.

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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
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We've bought land, houses, condos, and notes in our IRA. We've never used the checkbook IRA LLC method, buy have borrowed money privietely by individuals or their IRA to fund these purchases with non-recourse terms. I forgot the exact figure but a custodian representative told me that something like a third to half the funds they hold for the IRA are not deployed in an active investment.

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  • AJ ExnerPro Member
    Lender · Springfield, MO · Member since 2023 · 654 posts · 315 votes
    1y

    Non-recourse SDIRA notes are really tricky to find, and even some of the programs I've seen that "offer" it still struggle with the legal-ese that backs it up.

    I do know of a group that just revamped their language and would do purchases at 70% leverage. Just shot a DM, would love to connect and help!

    [email protected]417-427-2612
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  • Brett SynickyPro Member
    Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 873 posts · 498 votes
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    Quote from @Scott Suryan:

    Is there anybody out there currently using their IRA to purchase real estate? I have talked to a couple of groups and they are similar in nature. Looking like I would need to create a checkbook LLC and use a non-recourse loan if I was not buying the property as an all cash transaction. Any knowledge that you think would be beneficial would be appreciated. Tips or tricks and examples when it was a good or bad move on your end. I have read the blogs on BP that were recommend and have a meeting scheduled with another company later today.  Thanks in advance.

    There’s a list of non-recourse lenders you can choose from  https://www.biggerpockets.com/member-blogs/2810/50272-list-o...
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  • Jamie DietzBusiness Member
    Lender · Pittsburgh, PA · Member since 2015 · 175 posts · 90 votes
    1y

    For what's it worth, I just set up a IRA LLC account with Equity Trust. They really handled the entire process including setting up the LLC, operating agreement and the bank account. It took a couple weeks and wasn't cheap but nice to have someone handle all the paperwork.

    Next Door Capital514 Reviews
    WebsiteView Page
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  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    1y

    We've bought land, houses, condos, and notes in our IRA. We've never used the checkbook IRA LLC method, buy have borrowed money privietely by individuals or their IRA to fund these purchases with non-recourse terms. I forgot the exact figure but a custodian representative told me that something like a third to half the funds they hold for the IRA are not deployed in an active investment.

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  • Savannah Wallace
    Attorney · Las Vegas, NV · Member since 2025 · 69 posts · 91 votes
    1y

    Hi Scott, 

    I have a lot of clients who utilize this very strategy and this is generally the advice I provide when they are first starting out.

    I recommend setting up an LLC under your SDIRA—often called a "checkbook control" LLC. This structure offers several advantages including asset protection, privacy (your IRA isn't listed on the deed as the owner) and faster transactions as you don't have to wait for custodian approval. Note that the SDIRA must own 100% of the LLC. You cannot personally own or benefit from the LLC, and all income/expenses must go through the SDIRA.

    If your SDIRA invests in real estate using a loan, be aware that this can generate UBIT as a result of UDFI (Unrelated debt-financed income). If you want to avoid UBIT on leveraged real estate, consider using a Solo 401(k) instead of an IRA, as Solo 401(k)s are generally exempt from UDFI on real estate investments. Or use only non-recourse loans.

    We know that the IRS has strict rules regarding prohibited transactions and self-dealing. You cannot buy, sell, or lease the property to or from your SDIRA, nor can you personally use the property. You cannot take a salary, directly handle negotiations, or provide services (like repairs or management) to the property. All work must be performed by third parties, and all payments must come from the SDIRA. All income generated by the property must go back into the SDIRA, and all expenses must be paid from the SDIRA

    Good luck with this investing strategy!



    Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

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