Questions about our SDIRA account

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Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
10mo
Quote from @Whitney Huestis:

My husband and I have our SDIRA account in a local bank and want to start utilizing it. Looking for advice on what we can do. Thanks!

No way to answer your question without knowing your overall financial situation, your goals and so on. 

You can invest your SDIRA money into almost anything - from crypto to buying a business. You are asking in a real estate forum, and everybody here uses their SDIRAs for real estate investments. Your bank SDIRA account is not suitable for real estate though, you would need to transfer this account to a company specializing in SDIRAs.

But first decide on your plan. You can contact some of the Bigger Pockets experts who operate companies that help investors with real estate transactions in SDIRAs:  @Bernard Reisz,  @Dmitriy Fomichenko, @Brian Eastman

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  • Nate Monson
    Real Estate Agent · Albany, NY · Member since 2017 · 309 posts · 149 votes
    10mo

    Hi @Whitney Huestis, my recommendation to people in your situation is to sit down and figure out your long term goals. As it relates to real estate there are a lot of ways to get involved but you can put yourself in tricky situations if you don't know what why you're doing what you're doing. 

    If you're looking for a way to increase your return long term but don't want too many headaches and lower risk, single family homes with a manager could be a route. 

    Or if you are ok taking on some short term risk and have reserves to do so, doing some small multifamily homes that need some light rehab could be something to get into. 

    Maybe you want to try your hand at a flip and build out a small company. 

    There are some options in the capital region in NY if you ever wanted to discuss this area feel free to reach out!

    0Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    10mo
    Quote from @Whitney Huestis:

    My husband and I have our SDIRA account in a local bank and want to start utilizing it. Looking for advice on what we can do. Thanks!

    No way to answer your question without knowing your overall financial situation, your goals and so on. 

    You can invest your SDIRA money into almost anything - from crypto to buying a business. You are asking in a real estate forum, and everybody here uses their SDIRAs for real estate investments. Your bank SDIRA account is not suitable for real estate though, you would need to transfer this account to a company specializing in SDIRAs.

    But first decide on your plan. You can contact some of the Bigger Pockets experts who operate companies that help investors with real estate transactions in SDIRAs:  @Bernard Reisz,  @Dmitriy Fomichenko, @Brian Eastman

    2Reply
  • Bernard ReiszPro Member
    CPA delivering RE Tax Tools: 1031 Exchange, SDIRA, 401(k), Cost Seg · New York City, NY · Member since 2017 · 581 posts · 563 votes
    10mo

    @Whitney Huestis The term "Self-Directed" connotes different things, depending on the context. When a bank or brokerage calls an account "self directed," it means that the account holder is free to invest in whatever assets are available on their platform, as opposed to being in a "managed account." 

    The same terminology, "self directed" is also used to describe IRA accounts that are not associated with a banking/brokerage platform and that allow you to invest in nearly any asset allowed by the Tax Code for IRAs - truly "BYOD" ("Bring your own deal"). It is this kind of SDIRA that allows nearly all forms of real estate investing.

    @Michael Plaks (can't seem to tag you... hopefully, you see this) - Thanks for the honorable mention!

    [email protected]
    1Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 902 votes
    10mo

    Hi Whitney, great question. When you start putting your SDIRA funds to work, it's really important to understand the IRS rules around what you can and cannot do. The IRS wants the account to be used solely for retirement purposes, so personal benefit isn't allowed. Examples of prohibited transactions include personally using a property the SDIRA owns, selling property you already own to your SDIRA, or doing your own repairs or improvements on the investment property. All income and expenses must flow directly through the IRA without mixing personal funds. Also, if the SDIRA invests in a property with a mortgage or other debt, you may be subject to Unrelated Business Income Tax, and that tax rate can go as high as 37%. A SDIRA can be a powerful tool, just make sure you have the right structure and guidance before moving forward.

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