Best SDIRA Strategies

[Jonathan Moerdler]

What are the best strategies to use when using funds from a SDIRA

I changed jobs and have money in my company's 401k, but would like to use this money to begin my REI.

Which strategies work best with these types of funds and do any specifically not work.

For example, can you BRRRR with these funds? Anything else to look out for?

Thanks!

[Brian Eastman]

@Jonathan Moerdler

A self-directed IRA is a great tool for diversification. If you understand an asset class such as real estate and believe it will perform better than having your IRA exclusively in the stock market, a SDIRA provides the ability for the IRA to make such investments.

This is not a means for "you to begin your REI", however. You are not the investor. The IRA is the investor. All activities of an IRA must be done exclusively for the benefit of the IRA. You may not draw compensation from the IRA, nor may you add value to the IRA via the provision of goods or services. You are essentially a fund manager managing your own IRA portfolio.

An IRA is well suited for activities that are easily able to be conducted at arm's length and that produce passive income such as rents, interest, dividends & royalties. Trying to use an IRA for new home development or flipping, which are both considered to be business activities is not generally beneficial, as such business activities are taxable inside of an IRA.

Rentals, including with the BRRRR strategy of acquisition and refinancing work. Private lending is less demanding. Real estate syndications are also a very popular way to put such funds to work.