looking for real-estate savvy CPA in Portland, OR area

13 Replies

Has anyone worked with a real estate savvy CPA in Portland, OR? I need a CPA to help with a tri-plex deal. Looking to convert traditional IRA to SD IRA to use for part of a down payment and rehab. Referrals appreciated....thanks!

@Emily Refi I use and recommend Kyle Pearson at Collective (formally Pearson Advisory) ilovecollective.com. He started his cpa career working for a large national syndicator, so he knows real estate very well. He also has the fun of trying to figure out our crazy acquisition and entity structure.....we're always putting him to the test so he's used to it.  

You may want to reach out to IRA Advantage out of Lake Oswego. David and Tom Moore are extremely knowledge in SD IRAs. I know quite a few people that have used them to set up their check book IRAs.

Just a quick heads up. SD IRAs are their own entities...."part of a downpayment" will have some very strict structuring guidelines in order to not break the IRA rules, as co mingling funds is not allowed. Dave and Tom can speak more to that though for sure.

@Emily Refi There are certain things to be aware of with respect to tax implications when investing via SDIRAs, specifically when financing purchases.

If you're open to working remotely with a real estate savvy CPA, there are a few of us here on BP. Speak to a couple and see if there's a good fit for you.

Best of luck!

@Emily Refi

We don't have enough details about your plans, but your phrase "...SD IRA to use for part of a down payment and rehab" is alarming. It may not be possible to do that.

I will tag our resident SDIRA experts @Dmitriy Fomichenko , @Carl Fischer and @Brian Eastman .

Meanwhile, please clarify what you have in mind.

@Mike Nuss thanks for the advice. I worked with Tom Moore on my 1031 - very happy with the results and good to know he does IRAs as well. And thanks for the head's up. I've never worked with SD IRAs, I just read about them and would like to see if it would be a good route for myself and/or a potential investor - 

Could you please explain the co mingling funds piece, does that mean that the SD IRA would fund the full down payment rather than part?

@Michael Plaks thanks for the head's up. I will need approx. 90K for down payment + rehab. I have been planning to use HELOC... however I just learned about the SD IRA so I want to learn more about how to work with it as an alternative.

My contractor is referring me to his neighbor who might be interested in investing ("cash provider") there is always the short term unsecured loan option; but as an option, maybe SD IRA would be beneficial so the earnings could be redeposited without tax exposure.

I'm also wondering if I can convert my traditional IRA to be self-directed to use on this, or future projects.

@Emily Refi

Generally, you cannot partner with your own SDIRA for your project - it is a violation of the IRS rules. In the IRS lingo, it is called a "prohibited transaction" and can cause a collapse of your entire IRA.

You may "borrow" your IRA funds for 60 days (there're rules to follow), but 2 months are usually two short to finish the rehab and sell the property - assuming it is a flip. Much less with a rental.

Yes, you can convert your IRA to SDIRA, which is not really a conversion but simply moving money from a traditional custodian to one of the SDIRA custodians, like the 3 people I tagged earlier.

All of this is really only pieces of a discussion which would be good to initiate with a tax expert specializing in REI.

@Emily Refi

Talk to an SDIRA expert , accountant, and probably an attorney . There are several things you need to be aware of such as UBIT, partnering with your IRA, rollovers, non recourse lending, possibly using a 401k instead of SDIRA , sweat equity, etc. hopefully they can help you do it the best way to meet your goals.

A CPA can advise you whether or not this a good idea, but they can't complete the transaction for you. What you need is a custodian which is a company that will administer the self-directed IRA. The custodian will handle the logistics of the roll-over.

(Please note I would never advocate that someone dump their retirement fund into a real estate deal.)

@Michael Plaks thanks for the mention!

@Emily Refi ,

If you want to stay out of trouble with IRS do not mix your personal finances with your IRA. If you decide to do this deal personally and are short on cash - look for lenders or partner with another investor (not your IRA). If you decide to convert your IRA into self-directed IRA - you can do so, the IRA then can buy the property, owner of the property would be IRA (not you), the IRA can also get a loan, however it must be non-recourse loan since you are not allowed to provide a personal guarantee for a loan to your IRA. Here is the list of lenders who offer such financing:


Your IRA can also partner with another investor, but you want to make sure that you and any other disqualified person are at 'arms length' from the transaction. You wan to make sure that you are working with a qualified professional who can provide you with the proper guidance, making a single mistake can cause you to lose your entire IRA balance to penalties and taxes. 

Also, you may want to consider truly self-directed Solo 401k plan as a better alternative to SDIRA, however to qualify for it you must be self-employed or own a small business without any full-time non-owner employees. 

@Emily Refi

Self-Directed Retirement Accounts, whether IRA-based or 401(k)-based, are tools that provide great opportunity for real estate investors. An "investment sponsor" can use their own self-directed account and/or others' self-directed retirement accounts to finance deals. However, any financing using these accounts must implemented within the guidelines outlined by the tax code.

The primary compliance concept to be aware of are prohibited transactions, which restrict tax-advantaged retirement accounts from transacting with the account-owners and other "disqualified persons." So, while your IRA can be invested in real estate under your direction, you may not borrow from the IRA to fund deals that you do in your own name; when your IRA invests in real estate, deals will be done in the name of the IRA. You may, however, get funding for your deals from the IRAs of non-disqualified persons.

Your IRA, may likewise, use leverage to invest. However, as you may not "extend credit" to your IRA as a disqualified person, you may not personally guarantee such a loan. Therefore, any leverage used by an IRA should be non-recourse to you.

Checkbook 401k is an alternative to the IRA and has many advantages. Among those is the ability for you to borrow money from the plan to use for your own deals (within the guidelines of the tax code), which would be a prohibited transaction for an IRA.

@Daniel Hyman Thanks for the mention!

@Emily Refi

The two common choices for investing retirement funds into real estate are the self-directed IRA and the Solo 401k.

The Solo 401k requires self-employment activity, but will allow you to take participant loans while the IRA does not.

A few other Solo 401k benefits:

  • Compared to an IRA, Solo 401k contributions limits are roughly ten times higher.
  • There is no custodial requirement for the 401k.
  • You don't need the additional expense and administration of an LLC to have checkbook control.
  • There is a built in-Roth component whereas IRAs are either traditional or Roth, not both.
  • A spouse can also participate in the same Solo 401k plan.
  • The Solo 401k has additional tax benefits over an IRA when investing into real estate using leverage.
  • The penalties for prohibited transactions are less severe, though it's best not to utilize this benefit :)

With either structure, it's generally recommended that you do not commingle retirement and non-retirement assets. Because of the prohibited transaction rules, doing so could be a violation of the rules, or at the very least, would limit your flexibility with the investment and increase the chances of a prohibited transaction occurring after the investment is made.

Here are some alternatives to commingling your assets:

  • using the Solo participant loan feature to do the deal outside of retirement funds
  • using non-recourse financing from a lender or private source in combination with retirement funds as the down payment
  • using your 401k or IRA and partnering with non-disqualified persons

I'd recommend you reach out to a few providers who regularly post here on BP to get a better understanding of your options.

Many thanks to all who have chimed in on the topic, I have learned a lot about SD IRAs- this group is amazing! 

I can safely eliminate the SD IRA option for myself for this particular project....however it could be a good "tool" to pull out of the toolbox if I'm working with private money in the future, in which case some of you might be hearing from me. :)