Can I BRRRR with a Self-Directed IRA?

3 Replies

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

@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.

Hi Charlie, In this age of financial technology advancement, a checkbook control IRA is no longer the only option to cut multiple checks from your IRA economically. Each IRA custodian has different features. For instance, our IRA holders that are performing rehabs or development can use our free online bill pay to have checks sent to vendors.  We also allow other methods to streamline a project that requires numerous disbursements without you having to pay a "per check" fee.  That frees you up to make your decision about whether to create a checkbook control scenario or not based on risk tolerance, potential liability, etc.