All Forum Posts by: Brett Synicky

Quote from @Jesus Rodriguez:

Hi BP Community!

Apologies if this has been asked before. Im considering turning my Roth IRA into a Self directed IRA to fund an investment property to start my portfolio. I do not have a property in mind yet, but I was wondering if it is a good idea.

thanks!

 Lots of posts for sure but a fun topic to discuss. The two most common ways to self direct retirement are SDIRA or Solo 401k. 
You can have checkbook control or not. Easier to pay bills and such if you do. IRA will have UDFI (tax on the income from the mortgage) if it invests in leveraged real estate. Solo 401k is exempt from UDFI
Understand the disqualified parties and prohibited transaction rules. 

Quote from @Whitney Huestis:

My husband and I are in the process of setting up an LLC under our self-directed IRA. We are just now finding out that we will need a non-recourse loan, so I'm looking for someone who can offer that product or has any advice on this type of situation. Wanted to purchase a 2-4 (possibly 5) unit multi family. Thanks!

 Here’s a list of non-recourse lenders you can call through. Terms and such probably aren’t up to date so call and ask. https://www.biggerpockets.com/member-blogs/2810/50272-list-o...

@Marty Sprong @Philip Barr You actually can manage the property owned by your IRA or any other asset it owns for that matter. Generally speaking the easiest way to delineate the difference between what "services" a disqualified party can perform is white collar ok, blue collar bad. Is it best to use a 3rd party to manage rentals owned by your IRA/401k? Yes it's best but it's not a requirement. As an IRA owner I can advertise the property, screen tenants, even open the door for prospective tenants to view the property. What I should not do is, take the photos, perform repairs, or clean the home. I can walk through the home to make sure the work is getting done properly. If there's an eviction situation I would need to hire somebody to handle that. Again white collar ok, blue collar bad.

Quote from @Sam Katz:

Quote from @Brett Synicky:

@Sam Katz Can you provide a bit more info? Are you looking to roll in funds to a self directed IRA/401k that you intend to invest into a multi family offering? Is this a syndication? What makes you call it "shadow" and just a "line item"?

With a self directed account you as the owner are the fiduciary of the plan so your job is to invest the plan's money (it's not your money) wisely. I'm not sure what you're describing is a wise investment. "No yearly income is expected, but future returns are hopeful". 

What exactly are you trying to do?

 Brett,

Thanks for your note. My apologies for the confusion. I currently have two Limited Partnership investments that Bank Regulators at a Banks Trust department that I have other assets with, are instructing those two LP's to be moved to another Custodian. I don't want to pay a lot in fees for these two Line Item investments that must be custodied somewhere. As I mentioned, there is no income on a yearly basis, and I'M hopeful for a lump sum payment to be paid in the future to this IRA, i.e. for each line item LP. Do you know of a Custodian that will do this for my IRA, without charging significant custody fees? TY again, Sam

Thank you for the clarification. It sounds like you’re attempting to move a personal asset into a retirement account. Because you’re a disqualified person that would trigger a prohibited transaction and the penalty for that is hefty. Typically disqualification of the entire plan. Don’t do this. I don’t know of a custodian that will do what you’re asking even if it is legitimate. Google SDIRA custodians and call around. 

Quote from @Christopher Kadletz:

I am currently in the process of rolling over $30k from my Roth IRA into a SDIRA with Equity Trust (custodian). I have never invested in Real Estate but I have been wanting to for years and feel that investing in a syndication with my SDIRA could be a good way to get my feet wet. Anything in particular I should look out for? How should I go about calculating things like UBIT? Would it be better to invest in a debt fund/ notes? Any/all insights greatly appreciated!

P.S - My day job is with a Real Estate Investment Management software provider and I talk to GPs all day so there is no shortage of deal exposure on my end... I'd like to leverage these relationships if possible. 

Understand the UDFI tax implication. Probably won’t be a factor for the first couple or so years in a syndication on account of cost seg but check with your tax advisor to understand what kind of tax the IRA may have to pay. 

Investing in a fund can be a more passive and no UDFI tax way to invest using an SDIRA.

Don't be afraid to run a background check on the GP’s. They shouldn’t be bother by any of your questions. 

Quote from @Kaushik Sarkar:

Hi,

I am looking for lenders who would finance non recourse loan for buying single family rentals as i plan to use self directed IRA funds for downpayment. Any recommendations.

 Here’s a list of non recourse lenders you can call through. Some of the info might be dated but yeah plan on at least 30-50% down. Gotta cash flow and 6 months reserves. 

https://www.biggerpockets.com/member-blogs/2810/50272-list-o...

@Sam Katz Can you provide a bit more info? Are you looking to roll in funds to a self directed IRA/401k that you intend to invest into a multi family offering? Is this a syndication? What makes you call it "shadow" and just a "line item"?

With a self directed account you as the owner are the fiduciary of the plan so your job is to invest the plan's money (it's not your money) wisely. I'm not sure what you're describing is a wise investment. "No yearly income is expected, but future returns are hopeful". 

What exactly are you trying to do?

Quote from @Mariah Pierce:

I would like to move some of my retirement money to a SDIRA account. I have about $25K in Roth and $80K in traditional. Is Roth or traditional better to move? I know the market is starting to drop and wondering if it is even the right time to move. Thanks in advance!

Hi @Mariah Pierce this is a common theme right now. This is not financial advice but it seems like a Checkbook IRA/SDIRA or Solo 401k is the only way to truly diversify your retirement savings.

You're a disqualified party to your retirement accounts so using your IRA to transact with you and something you own is a prohibited transaction and will result in a distribution of the entire IRA.

Self directing is a very powerful way to invest for retirement, but just like driving your car down the street. There are some rules to be aware of. 

See the following articles

https://www.biggerpockets.com/member-blogs/2810/44738-prohib...

https://www.biggerpockets.com/member-blogs/2810/47960-disqua...

Quote from @Henrry Novas:

Hey everyone,

I'm looking to learn how investors raise private capital from Self-Directed IRAs (SDIRAs) or HSAs for real estate deals. I know custodians like Equity Trust, Quest Trust, and Advanta IRA allow this, but I'd love insights from those who've done it.

- Best way to approach potential lenders?

- Key things to present the opportunity properly?

- Common hurdles when working with SDIRA lenders?

- Any recommended books, courses, or experts to learn from?

I’m raising funds for new construction projects and want to fully understand the process before talking to lenders. If you’ve structured deals this way, I’d love to connect. Appreciate any insights!

As @Chris Seveney said, lead with education  I’ll add that you could partner up with providers or self directed retirement accounts and do collaborative webinars/podcasts etc. Offer to host them and drive traffic to the educational webinar so everybody has the opportunity to get more business. Later the script can be flipped and the provider can host you with their audience. 

Be creative with what you present on these. Maybe it’s an offering but that needs to be a small portion of the talk. Maybe go through due diligence and some past deal examples. Just be careful cause this can be a dry topic if you run through too many numbers.