Joint Venture & Self-Directed IRA's

[Mike Lowery]

Hello BP!

I am interested in exploring more of the options for receiving financing through a joint venture with a Self-directed IRA. I think this is a really great way to find and attract capital to your business, while creating cash flow and helping other achieve their retirement goals. I understand the majority of the logic behind it, however, I am getting hung up on one thing. From what I have read is the investor (catalyst) will go out find and manage the deal from start to finish while the partner will finance the flip, rental, etc. through their Self-Directed IRA. If you do a 50/50 JV agreement, the cash flow, initial investment and gain from the property much flow back into the IRA, correct? If so, does the cash flow and gain flow to the investor (catalyst) as cash? Is this something that you spell out in the JV agreement?

Secondly, If you have a person IRA, can you change that to a Self-Directed IRA and invest in a rental property that you are also living in?

Any help would be greatly appreciated!

[Dmitriy Fomichenko]

@Mike Lowery 

the details and terms of the JV will depend on who the partner is and the agreement between the two of you.

If you have a conventional IRA yes you can transfer it into a self-directed IRA.

The retirement funds can be used only for investing, living in the property is not allowed since you are considered to be a 'Disqualified Person" to your IRA and therefore not allowed to receive any personal benefits from the investment.