Borrowing money from my brother

4 Replies

If I'm borrowing money from my brother's self directed IRA and paying back with interest for my first fix and flip, do I need to open a LLC or can I do it as a personal investment? My accountant told me I don't need to open a LLC and that it could be more difficult to sell the property from a LLC. He also told me to do a simple mortgage between me and my brother and that I don't need to report the deed if it's a flip. Does this sound like sound advise? He is a CPA, I've been using him for my home improvements business for over 17 years and in my opinion is very good at what he does. Thanks, Nick

You never *need* an entity.  You can always do everything in your personal name. Many people use entities to add a layer of shielding from potential legal and credit problems.

All an LLC with do is add a layer of protection like @Neil Aggarwal said you can use use your name like many do but you have to ask yourself, if the brown stuff hits the fan do you want the IRA account or anyone else to come after you personally or an LLC that has protection on its side.

Originally posted by @Nick Stango :

If I'm borrowing money from my brother's self directed IRA and paying back with interest for my first fix and flip, do I need to open a LLC or can I do it as a personal investment? My accountant told me I don't need to open a LLC and that it could be more difficult to sell the property from a LLC. He also told me to do a simple mortgage between me and my brother and that I don't need to report the deed if it's a flip. Does this sound like sound advise? He is a CPA, I've been using him for my home improvements business for over 17 years and in my opinion is very good at what he does. Thanks, Nick

Nick, you can borrow from your brother's IRA personally or through an LLC. The reason you would want to use an LLC is for the liability protection. Since you are using private loan it should have no effect on your ability to borrow.

Hey guys, thanks for the replies but I understand how an LLC protects me personally, what I meant to ask was, Is it more difficult to sell the property if it's held in a LLC, and also I was listening to one of the Rich Dad Poor Dad audio books and I heard something about, if your accountant tells you that you don't need a LLC, get another accountant. I do have a home with an umbrella insurance policy and I own a home improvements business with general liability insurance and inland marine coverage.

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