Seeking for Recommendation of a Self Directed IRA Company

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Seeking for Recommendation of a Self Directed IRA Company

THU NGUYEN
Investor · Sugar Land, TX · Member since 2016 · 109 posts · 46 votes

I am looking to transfer money from Roller Over IRA to a Self Directed IRA Company to either buy properties, or do private lending, or syndication to MFU deals....Anybody has any recommendations with a company that offer low fees and good service? In Houston we have Quest IRA but $300 a year just to hold the account there plus $125 per transaction...Are those fees good/resealable/high according your experiences? This would be my first time doing self directed ira...Looking for advice.

TIA.
 

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David Ginn
Real Estate Consultant · Houston, TX · Member since 2020 · 206 posts · 944 votes
6y

@THU NGUYEN


I personally prefer a self-directed IRA with checkbook control. I work in North Carolina, where the American IRA is based out of, and also work in Texas where Quest Trust is based. I personally prefer to go with the local IRA/401K administrator just because you can get local service. For example, Quest Trust is constantly putting on educational workshops and venues to get their clients educated and networked. I also use their Meetup space in Houston on a regular basis at no cost. They are big on community and helping you succeed, so the value is definitely there. One thing that I have not liked about Quest is that they are not supportive of the self-directed IRA/401K with checkbook control. With American IRA, they are very supportive of this feature. So there are pros and cons to most providers.

The reason I like checkbook control is that many times in real estate investing you need your money quickly. If your money is “Administered” it means that each time you do a deal, you have to send in the deal to that Administrator and they will check the prongs of your deal to make sure you are investing properly so as to not expose your IRA/401K. This is based on someone who may make a mistake and violate the law and expose their full retirement account.

Each time you do a deal you will need to fill out the paperwork and then send it into your administrator. This takes time and costs money. They will all tell you that they will get back to you, in most cases within 24 hours, but the truth of the matter is that it normally takes days because you are tied up with the bureaucracy. I have seen deals lost because of the time it takes to jump through all of their hoops.

On the other hand, if you have checkbook control, you control every financial transaction - from writing a check to wiring funds. Very fast and easy. The question you need to ask yourself is - “How well do I know what I can or cannot do with the IRA/401K?”
In our case, in order to avoid complications, most of my clients just lend funds to an investor/flipper. Because they fund only, this makes any 401k questions obsolete. Most of the buyers we have in our group pay 12% and 3.75 points to the lenders. This is a solid way to make money. Remember here, the key is to make sure you know what you are doing. If you do, then you are safe. Many of the people I work with have IRA’s/401K’s. They all know the rules pretty well. They all network with each other and normally choose to operate on the safe side of things.

In the end, I think most IRA/401K companies are created equal. Their fees are about the same. They all claim to do it better than the other guy. What I have seen is that they all administer at about the same pace with similar fee structures. The thing that makes the difference to me is the one that will set you up in the self-directed checkbook control situation, but you must be a savvy IRA/401K investor or have people around you that know what they are doing.

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  • Bill Krenz
    Fairbanks, AK · Member since 2017 · 21 posts · 8 votes
    6y

    I’ve heard good things about quest like easy to work with. I use equity trust company right now. I have a self directed hsa account with them and bought a house with my account.  We also own a triplex that we bought with on a loan from anther persons self directed Ira at equity trust. So I seen both sides.  I think it’s great for both parties.  Feel free to shoot me a message if you have more questions  

    1Reply
  • Jeff S.
    Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    6y

    For IRA's, @THU NGUYEN, there are custodians and there are administrators. By law, all IRA funds must be held by a custodian. Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, and possibly the FDIC, State Banking Commissioner, and the Comptroller of the Currency. Administrators are not subject any to such scrutiny and are really just middleman.

    An administrator will pass your funds to a custodian, provide statements, and hopefully help you stay within the law when you invest your IRA funds. Custodians do exactly the same thing but with the added regulatory and financial scrutiny. Why would you place your money with an administrator?

    Maybe not perfect, but you can tell if you are dealing with a custodian rather than an administrator because they will usually have the word "Trust" in their name or they will be a bank or brokerage. If it's not clear to you, then ask. And if you don't think that it matters, take a look at what happened to those that placed their IRA funds with American Pension Services, an administrator.

    Then there are fees, which is how these firms make their money. Some IRA custodians charge by the transaction, some charge by the total value of your account, and some by both. All publish their fees so you can use a spreadsheet to determine the lowest cost solution. This will obviously be personal and depend on your available cash and investment strategy.

    For example, if you are flipping houses and have a lot of relatively small dollar transactions, then pick a company that charges by the value of your account. If you expect to do relatively few higher dollar transactions, such as lending money, you might pick one that charges by the deal, etc. Similarly, and a bit off-topic, but you might also consider an IRA LLC through your custodian to maintain a bit more control and maybe save some money. What works for me, might not work for you, so be careful when others here recommend a specific company or strategy.

    Note too, that since these firms are federally regulated, it doesn't matter what state they are in. You don't need anyone local since you will never visit your IRA custodian

    Last is service, which really only comes from experience and reputation. After you’ve narrowed your search, you might post a few names here asking about their service. Also, ask around at some of your local real estate clubs.

    Choosing an SD IRA custodian is not difficult and it should not be agonizing. It involves a bit more work however, than simply asking for a recommendation.

    Best of luck to you, Thu.

    3Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    6y

    There are several options for paying the fees, as I recall.  Maybe it depends on the amounts of funds you put in your account.

    1Reply
  • Ethan G.
    Attorney · Katy, TX · Member since 2014 · 397 posts · 215 votes
    6y

    Solera

    1Reply
  • Courtney King
    Real Estate Broker · Houston, TX · Member since 2016 · 159 posts · 86 votes
    6y

    @THU NGUYEN I have a really good IRA connect that has helped many of my clients. I will PM you his info.

    1Reply
  • THU NGUYEN
    OP
    Investor · Sugar Land, TX · Member since 2016 · 109 posts · 46 votes
    6y

    Thank you much 

    0Reply
  • THU NGUYEN
    OP
    Investor · Sugar Land, TX · Member since 2016 · 109 posts · 46 votes
    6y
    Originally posted by @Bill Krenz:

    I’ve heard good things about quest like easy to work with. I use equity trust company right now. I have a self directed hsa account with them and bought a house with my account.  We also own a triplex that we bought with on a loan from anther persons self directed Ira at equity trust. So I seen both sides.  I think it’s great for both parties.  Feel free to shoot me a message if you have more questions  

    Let me look at Equity Trust and compare to Quest Trust IRA. Thanks

    0Reply
  • Teri Feeney Styers
    Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    6y

    @THU NGUYEN I used New Direction IRA in Louisville, Colorado with good results. Their website shows their fees.

    https://ndtco.com/home

    0Reply
  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    Hello @THU NGUYEN. There are many custodians and administrators out there. BiggerPockets provides a list of self-directed IRA custodians for you to reference on this site. You can check out that list here.  @Jeff S. makes a great point: there are things you should carefully consider when choosing a SD IRA custodian, and it is important to do your due diligence as an investor when evaluating your options. Researching custodians, reaching out to investors to see what they say about a custodian's service, and gathering as much information as possible will aid you in your search, as well as help you gain knowledge that will help you as an investor. Factors such as customer service, knowledge, accessibility, experience, and processing speeds will be integral to ensuring that the investments you have chosen to self-direct are facilitated efficiently. It also comes down to what you are trying to invest in, and how a custodian can assist you with making those investments safely and securely. Many investors have found success through investing in alternative assets with their self-directed IRA, including in real estate. I have been investing in real estate with my self-directed IRA and Roth IRA for years. I have found it to be a very beneficial way to diversify and grow my retirement accounts. Once you find the custodian that is right for you, you can make investments in alternative assets to grow your future retirement savings through ways that utilize your personal knowledge and expertise. I would be happy to connect if you have further questions.

    [email protected]215-283-2868
    2Reply
  • Logan Krutsch
    Member since 2019 · 16 posts · 16 votes
    6y

    @THU NGUYEN

    I have used both midland IRA and Directed IRA. Their fees are nowhere near the fees you are currently suffering. I would check either of those out. Directed IRA was recently created by Matt Sorensen. He is the author of the self directed Ira handbook which I would recommend reading

    0Reply
  • Jennifer PetrilloPro Member
    Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
    6y

    I used this guy, he is on BP: Justin Windham

    Rolled over an old 401K and purchased a property out of the Solo 401K account with Solera Bank. Good experience, great option for using retirement funds for RE.

    2Reply
  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @THU NGUYEN
    I think quest would be good for you if you like their service. They have a lot of good education and are close by if you need to go to the office.  The price is competitive to most companies and insignificant overall if you use self direction correctly. Don’t be penny wise and pound foolish. You can always change later if you want to go to another company- but learn self directed strategies first. 

    [email protected]215-283-2868
    0Reply
  • Ruth Lyons
    Investor · Colorado Springs · Member since 2016 · 234 posts · 150 votes
    6y

    I have used Sunwest Trust in Albuquerque New Mexico since 2015. Low fees, easy to work with and leave you alone for the most part. I just got a letter they've sold the company and my account will automatically transfer to the new company owner. Looks like their fees and policies are in line with those of Sunwest Trust.

    0Reply
  • Michael Gravallese
    Developer · Boca Raton, FL · Member since 2016 · 49 posts · 38 votes
    6y

    @THU NGUYEN Equity Trust Compay. No complaints whatsoever, and I’m a pain in the *** to them. They fail to disappoint

    0Reply
  • Tony Castronovo
    Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes
    6y

    Hi @THU NGUYEN. Exciting to hear what you've got planned. Let's chat this weekend or early next week. I'll give you my perspective on self-directed IRA custodians.

    0Reply
  • THU NGUYEN
    OP
    Investor · Sugar Land, TX · Member since 2016 · 109 posts · 46 votes
    6y

    Thank you all.   I have some home work todo before transfer.   Hope to catch some good investments with pretax dollars :) 

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    6y

    @THU NGUYEN

    Equity trust is awful - they kill so many deals because they are too slow to fund.

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    6y

    @THU NGUYEN

    You need to figure out what type of SDIRA you're planning/eligible to open first (Checkbook IRA, SDIRA with custodian, solo 401-k...) and then consider providers that offer such option.

    We used @Dmitriy Fomichenko and his company Sense Financial. The service was superb, we are very happy. 

    2Reply
  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    6y
    Originally posted by @Jennifer Petrillo:

    I used this guy, he is on BP: Justin Windham

    Rolled over an old 401K and purchased a property out of the Solo 401K account with Solera Bank. Good experience, great option for using retirement funds for RE.

    Thanks for the mention, Jennifer.

    0Reply
  • George Blower
    Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
    6y

    @THU NGUYEN

    Here are some issues to consider in choosing an Self-directed IRA provider:

    1. In order to have checkbook control, the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimum balance that applies to the IRA account.

    2. Confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.

    3. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).

    4. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).

    5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLC such as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a specialty trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.

    In addition, please note if you purchase debt-financed real estate with your IRA, unrelated debt finance income tax should apply to the income attributable to debt-financed real estate held by your IRA. Of course, you will want to review your specific situation with your tax advisor.

    0Reply
  • Jackie P.
    Investor · Golden CO · Member since 2010 · 77 posts · 12 votes
    6y

    I used to use Quest and started with them when they were Entrust.  Quest has very good educational programs and networking events, however, I had issues with their service.  I switched to Sunwest Trust in Albuquerque and was much happier.  Unfortunately, just like @Ruth Lyons, I received word that the accounts are being sold to Millenium Trust.  Based on the negative reviews I see on Millenium, I am currently shopping for a new custodian.

    Good luck to you. Feel free to PM me if you have additional questions. I've been investing in my Roth IRA for almost 10 years now.

    0Reply
  • Brian EastmanPro Member
    Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Jackie P.

    Kingdom Trust Co. is a good custodian and I believe they are offering some new account setup incentives to soften the blow of needing to transfer out of your current arrangement with Sunwest.

    If you are not utilizing Sunwest to hold a LLC, you may wish to take this opportunity to evaluate whether to stick with a custodian-managed account or switch to checkbook control, depending on the type of investments you are making.

    0Reply
  • Jackie P.
    Investor · Golden CO · Member since 2010 · 77 posts · 12 votes
    6y

    Thanks Brian,

    I am doing just that.  I will check out Kingdom Trust, also.

    0Reply
  • THU NGUYEN
    OP
    Investor · Sugar Land, TX · Member since 2016 · 109 posts · 46 votes
    6y

    @ George Blower

    What I am looking to do is transfer Roller IRA from Fidelity out ....That means I have to stay with some type of IRA...

    Solo 401K is something I would have to start fresh and cannot transfer Rollover IRA into it, correct?

    0Reply
  • Ruth Lyons
    Investor · Colorado Springs · Member since 2016 · 234 posts · 150 votes
    6y

    The customer reviews on Kingdom Trust don't look good...any other suggestions?

    0Reply
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