Can I BRRRR with a Self-Directed IRA?

[Charlie Shew]

Can I BRRRR with a Self-Directed IRA? I know many will say ask an accountant and I plan to I have a CPA I plan to contact and a Self-Directed IRA company (The Entrust Group). Based on what I am learning this would be the best approach for me. Setting up LLC or C corp will not be a problem. I have read a past post about taking a loan from an IRA. I understand while working for a company I can do this but I have much more money in my IRA from past 401k's.

Has anyone used a Self-Directed IRA company they would recommend?

Thanks for any help or input,

Charlie

[Brian Eastman]

@Charlie Shew

An IRA may execute the BRRRR strategy. The IRA owns the property. The IRA is the borrower when the refinance step is achieved. The loan will need to be non-recourse, meaning no personal guarantee from you. This means your IRA will have a lower LTV and higher rates than you might experience personally. However, the whole concept of using this strategy to scale up your IRA savings is very effective.

If your IRA will be owning real property, performing rehab and using debt-financing, you definitely do not want to run that through a custodian managed IRA such as with the firm you mention. You will get killed on processing delays and per-transaction fees. You will be much better served with a checkbook IRA LLC.

There are several forum threads here on BP both on the concept of BRRRR in an IRA and using a checkbook IRA.