Best SDIRA administrator?

[Brad Hales]

Hey BP community. I currently is a local SDIRA company but their fees seem really high. Looking for recommendation on the best SDIRA for my retirement assets in RE. Thanks!

[Savannah Wallace]

Hi Brad, 

I have a lot of clients who utilize their SDIRAs to invest in real estate, and this is generally the advice I provide when they are first starting out.

I've found IRA Club to be a good resource for my clients to assist in setting up their SDIRA.

As far as structuring real estate investments with your SDIRA, I recommend setting up an LLC under your SDIRA—often called a "checkbook control" LLC. This structure offers several advantages including asset protection, privacy (your IRA isn't listed on the deed as the owner) and faster transactions as you don't have to wait for custodian approval. Note that the SDIRA must own 100% of the LLC. You cannot personally own or benefit from the LLC, and all income/expenses must go through the SDIRA.

If you will be obtaining financing, you'll need to obtain a non-recourse loan when using your SDIRA to invest in real estate, otherwise, you'll generate UBIT as a result of UDFI (Unrelated debt-financed income). Another strategy to consider in the future is using a Solo 401(k) instead of an IRA, as Solo 401(k)s are generally exempt from UDFI on real estate investments.

We know that the IRS has strict rules regarding prohibited transactions and self-dealing. You cannot buy, sell, or lease the property to or from your SDIRA, nor can you personally use the property. You cannot take a salary, directly handle negotiations, or provide services (like repairs or management) to the property. All work must be performed by third parties, and all payments must come from the SDIRA. All income generated by the property must go back into the SDIRA, and all expenses must be paid from the SDIRA

Good luck with your investments!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.