Investor · Kirkland, WA · Member since 2018 · 15 posts · 11 votes
Help - The Directory on BPs has ~60 SDIRA custodian companies?!?! Any recommendations on choosing a custodian and what are the typical set up costs and recurring/annual costs? How many of you have SDIRAs and how are they working out for you?
Rental Property Investor · Reedsburg, WI · Member since 2011 · 1k+ posts · 857 votes
7y
Brian Spring my personal theory after picking out a provider for both a SDIRA and a couple of years later for a SOLO401K is to take a HARD look at the providers here on BP who participate in these forums.
As @Carl Fischer pointed out above, the fees are fairly comparable. To me, the service, guidance, and responsiveness are what count the most.
I found HANDS DOWN that the ones here like Carl, @Dmitriy Fomichenko, @Brian Eastman, and other who are likely to chime in are more responsive to questions, helping you understand the benefits and rules and the like. At least that was my experience when I contacted them, compared to some of the 'big firms' out there.
They have worked out good for us (myself and three investing partners) so far. The biggest things to be aware of are 'prohibited transactions', the fact that you can not work on properties yourself, and if borrowing you need more like 40-50% down payments. We hold 9 of our 25 units this way.
Look at the fee sheets. Most are $50 to open and how much money or how much you use it increases annual fees. Fees are very close among a competitive market. I think SDIRAs are the greatest tool for tax free income for life. I warn you that I liked them so much we opened our own company- do look for others opinions to balance the scales.
Rental Property Investor · Reedsburg, WI · Member since 2011 · 1k+ posts · 857 votes
7y
Brian Spring my personal theory after picking out a provider for both a SDIRA and a couple of years later for a SOLO401K is to take a HARD look at the providers here on BP who participate in these forums.
As @Carl Fischer pointed out above, the fees are fairly comparable. To me, the service, guidance, and responsiveness are what count the most.
I found HANDS DOWN that the ones here like Carl, @Dmitriy Fomichenko, @Brian Eastman, and other who are likely to chime in are more responsive to questions, helping you understand the benefits and rules and the like. At least that was my experience when I contacted them, compared to some of the 'big firms' out there.
They have worked out good for us (myself and three investing partners) so far. The biggest things to be aware of are 'prohibited transactions', the fact that you can not work on properties yourself, and if borrowing you need more like 40-50% down payments. We hold 9 of our 25 units this way.
Houston, TX · Member since 2018 · 11 posts · 10 votes
7y
I agree with @Carl Fischer that fees are certainly an important factor in selecting a self-directed provider. However, I think an even more important consideration is the customer service that the company provides. Some strong characteristics to look out for include a fast processing time for investments, knowledgeable staff and free educational opportunities.
Specialist · Easton, PA · Member since 2018 · 136 posts · 48 votes
7y
@Brian Spring I've been happy with Cama Plan for several years. They are knowledgeable and they process transactions quickly. By coincidence, they are based about an hour from me, but I'd use them if they were across the country.
Specialist · PA · Member since 2018 · 85 posts · 122 votes
7y
@Brian Spring This is a great question that unfortunately doesn't have an easy answer. We in the industry like to say that self-directed IRAs don't limit you to stocks, bonds, mutual funds etc. But that is not to say that every SDIRA custodian or TPA will administer every kind of investment not prohibited by IRS regulations. Some will not administer single-member LLCs ("checkbook IRAs"). Some are focused on private equity and won't administer real estate. Some won't administer promissory notes.
You can get an idea of the types of investments administered by checking their website; if the investment you are contemplating isn't shown, it is likely not available through them.
A few years ago I also came across a rather interesting resource titled "The Ultimate List of Self Directed IRA Custodians & Administrators" available from a company called Innovative Wealth Management (I found it useful to evaluate competitor offerings!).
I don't know the firm or its principals, and I cannot vouch for the accuracy of the information... Certainly the information they have about the company I work for is outdated. But you might find it interesting to check out.
For a shorter answer to your question, I agree with @Daniel Dietz. The relationship you have with the IRA provider is invaluable. Plus, the ones that participate on Bigger Pockets the most have a true interest in real estate and are likely to administer the types of investments above that are of most interest to real estate investors.