IRA Custodian recommendation

IRA Custodian recommendation

Investor · Long Island, NY · Member since 2010 · 99 posts · 23 votes

I have decided to open a self-directed IRA to invest in rental property. I was wondering if anyone could recommend an IRA custodian that I could use. I'd like one that is easy to work with and has reasonable fees. I noticed some have transaction fees while some have flat fees but I'm not sure which is better. It seems like transaction fees can get pretty high if you have multiple leveraged properties in the IRA. I have done some searching on this forum and see some have used UDirect or Equity Trust, are those my best options? Who do you recommend and why?

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Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
12y

All of these companies will hold your IRA money, disburse it into deals at your request, and administer the paperwork for you. In theory, they will help protect you from making a dumb mistake and violating retirement plan laws. Most of them provide education and can become reliable resources to answer your questions. Some charge by the number of deals you do, some by the total value of your account, and some by both.

After you’ve narrowed down your selection to those with great service and the education you need, you ought to do a spreadsheet trade to determine the lowest cost solution. That is, if you intend to do a few low value deals then pick a company that charges by the value of your account. If you have a lot of money but few deals, you might pick one that charges by the deal, etc.

I personally used IRA Services and can't recommend them more highly. I wouldn't say their education was great, at the time, but their cost and service was outstanding for my needs. (Be careful taking recommendations from those who haven't personally used a particular custodian. Knowing or hearing about someone is not the same as using a specific company with your hard earned cash.)

All of these companies will kill you over checks written, disbursement fees, signatures, wire transfers, and so on. After a while, once you’re comfortable and understand the rules – which are relatively simple, you might consider setting up a self-directed 401k. This is what Tony Spandrio hinted at above (I think).

You don't need an LLC for a SD401k and you really can contribute roughly $50k to these instead of the max $6k or so to an IRA. There are a thousand posts about SD401k's here on BP so if you're interested, do a search. Many here rolled our IRA's into these and no longer need a custodian. I suggest you learn to crawl before you walk, however, Daniel, so using a IRA custodian makes sense at first.

One strong warning I'd give first-off is to rethink using an IRA for rentals. You'll get no benefit of depreciation and can only use the funds on-hand in your account toward the purchase and operations. Borrowing will require a non-recourse loan and can subject what you think is a tax-deferred or tax-free account to annual taxes (called UBIT).

In my opinion, retirement funds are great for notes, tax liens, and other forms of paper (non-depreciable items subject to interest income -- sorry to get technical). There are too many benefits to rental income that you can’t take advantage in a retirement account and way too many drawbacks. Again, do a search here.

Jeff

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  • Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    @Karen Margrave 

    tnx Karen re Udirect. Does Udirect allow ACH of rent checks from renters direct into the IRA? How about scanning checks? No deal for me if neither. I'm finding that with alot of rentals you get killed with the paper work if the custodian is completely manual (paper).

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @Dmitriy Fomichenko also is very helpful on IRA's, you can private message him.

  • Real Estate Investor · Sebastian, FL · Member since 2014 · 812 posts · 432 votes
    12y
    Originally posted by @Karen Margrave:

    @Dmitriy Fomichenko also is very helpful on IRA's, you can private message him.

     I agree. He helped me set up my solo 401K, and was very helpful. I was quite happy with the service I got from Sense Financial.

  • San Diego, CA · Member since 2014 · 8 posts · 1 vote
    12y

    I also agree. Dmitriy and his team helped me set up my IRA LLC (Checkbook IRA). They were very helpful and knowledgable. I'm more than happy with the service I received from Sense Financial.

  • Daniel DietzPro Member
    Rental Property Investor · Reedsburg, WI · Member since 2011 · 1k+ posts · 857 votes
    12y

    Hello,

    Just want to put a plug in for UDirect mentioned above. My two partners and myself all used them to set up our SDIRAs and were more than happy with the service. Not sure on the electronic features the OP was asking about as we do the checkbook IRA method.

    As far as annual contributions..... I asked specifically about this in our 3 way LLC WITH disqualified parties and my understanding is that we each CAN make whatever annual contributions (or rollovers) to our individual SDIRA accounts. Where it gets tricky is that no matter the amount of assets or contributions in our SDIRAs, we must keep any transfers INTO our 3 way LLC in the EXACT proportions that we started with, which was 33.33% in our case.

    So if we want to buy another property for say 90K, we each need to but in 30K. One of us might have 5K left in our SDIRA, one 50K etc... but what is put into the LLC is what is important. Just wanted to clarify that for any readers thinking how this all works.

    Dan Dietz

  • Residential Real Estate Agent · Livermore, CA · Member since 2010 · 140 posts · 28 votes
    12y

    Sense Financial, Dmitiry has been very helpful with my questions.  I signed up with a different company but I plan to switch to Sense Financial once the current plan year ends. 

  • Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    It occurred to us that moving from Equity trust might be darn difficult.  We own 9 houses in our account.  IE they are on title.

    Anyone move to a different custodian owning property in your account?

  • Investor · North Idaho · Member since 2011 · 332 posts · 107 votes
    12y
    If you ever plan to leave Equity Trust, be sure to prepare a quit claim deed to your new custodian and send it WITH transfer paperwork. They will not prepare anything for you. It takes 4-6 weeks on average to transfer something in-kind out of ETC. They'll admit that it takes that long right now. I just finished someone transfer property in-kind and it was a long process with lots of follow-up.
  • Rental Property Investor · Mars, PA · Member since 2014 · 92 posts · 36 votes
    12y

    @Daniel Guillermo did you end up opening up a self directed IRA? If so, please share your experience with the custodian you chose. This is a very educational thread for people looking to open one up. Thanks for starting it!

  • Rental Property Investor · Mars, PA · Member since 2014 · 92 posts · 36 votes
    12y

    @Wendell De Guzman i'm calling you out on this post because of our conversation yesterday about self-directed IRAs. This is great information.

  • Rental Property Investor · Mars, PA · Member since 2014 · 92 posts · 36 votes
    12y

    Hey folks, I found a great video from the owner of Udirect on YouTube: http://youtu.be/z15aanCJ4sA

    Very helpful foundational knowledge on the whole concept.

  • Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    Thanks @Danny Duran ! I will look into this.

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