I am looking for (or looking to create) a spreadsheet to make financial projections on use of SDIRA funds -- does anyone know where I might start...here is my general thoughts / situation but I'd like to find/create a spreadsheet to model different alternatives:
I have $200k which can be moved to a SDIRA, although I need to do additional research I think I can get non-recourse finding for 50% ltv. I have about 14 years before I am forced to make withdraws.
For my illustration here I would assume to purchase 4 single family homes ~$100k each. Back of the napkin calculation let's just say these would produce $5,000 a month gross and $3,800 NOI, loan payments ~$1,300 leaving $2,500 cash flow to the IRA monthly. That is a 15% return, I know using the rule of 72 in 4.8 years my 200 and now 400, then if re-invested @15% my $400k becomes $800k in about 9.5 years and the $800 becomes nearly $1.6 M by the time I need to withdraw funds.
This is what I want to model to determine the best current alternative + to keep the money working I'd need to add another investment every two years or so.
In addition to the $1.6 million you would have the loan pay down and any appreciation which after 14 years could easily add another 15-20% (blended).
I've tried to keep the example above simple but also realize the spreadsheet model would need to accurately account for:
Cost to purchase, cost to sell, UBIT, management, etc., etc. -- for me I am not terribly concerned about UBIT as I think worrying about that is like stepping over dollars to pick up pennies, although maybe it changes my return from 15% to something a little less.
On a similar note, this might be a great BiggerPockets calculator with a couple of tweaks it could be used for IRA investor or a standard business modeling tool if all monies are remain in the business / not withdrawn to pay personal living expenses.
I can create this spreadsheet but I am not particularly good at making things like this user friendly....appreciate any direction others might have for something currently available or something that could be used as a starting point.
We have a property calculator that includes UDFI cost for debt-financed properties in an IRA.
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One note In your calculation - you note NOi of 3,800 and 1,300 in loan payments for $2500 to your IRA. I believe That is incorrect. Whatever percentage of ownership your SDIRA has is the amount that flows back to it. If you borrowed 50% then 50% flows into SDIRA. I would check with someone on that
@Bernie Huckestein is making the correct basic assumption. When an IRA borrows, 100% of the income generated by the IRA's investment must flow to the IRA.
The IRA is the borrower, not the IRA account holder.
If the NOI is $3,800 and there is $1,300 in loan payments, then $2,500 does flow to the IRA as pre-tax income.
While not a direct correlation, that $2500 will be partially taxable to the IRA per UDFI taxation. The way it actually is calculated is not on the net income, however. 50% of the gross income is taxable, and this taxable income is offset by 50% of the allowable deductions such as depreciation, interest on the note, etc. (assuming 50% debt-financing ratio as in Bernie's illustration). That net income is then run through the trust tax table and tax due is paid by the IRA using form 990-T.
@Brian Eastman - thank you for the clarification