All Forum Posts by: Daniel Dietz

Good discussion so far! 

@Mike Bicho have you looked into doing a Non-recourse Loan yet? So far I have used just my Self Directed Roth IRA's cash for my projects, but I too really want to leverage what I have in there (similar in size to yours) There are only a limited number of big scale non-recourse lenders out there. If you ask around here you will get some recommendations.

You could also use Private Lenders - that is one of the things I am working on right now. It is not everyone's cup of tea though. One side benefit to the Solo401 is that tax wise is has so advantages if you are leveraging your funds over a SDIRA.

One other option is to partner with a non prohibited party, either with them using cash or retirement funds.

Back to the question of doing a 1031 Exchange within a Retirement account - @Dmitriy Fomichenko or @Brian Eastman , would there be any 'long term benefit' to doing that? I am thinking (in my case at least) 15 or more years down the road when I want to start drawing earnings out of my SDIRA, or even in the case of passing the SDIRA on to the next generation? 

In all honesty I have not thought that far ahead a lot yet since it is so far off. I hear about the term 'stepped up basis' but am not sure how all that fits in to the retirement side of things?

Thanks, Dan Dietz

Just to clarify a couple of questions as I am thinking about transferring some of my Traditional IRA into a 401K, along with the ROTH - SDIRA I already have.

• I believe you can have 'W-2 Income' AND also be Self Employed and still have a Solo401K, correct?
• Is it right that a person could transfer or roll -over any amount into a Solo401K, but 'direct yearly contributions' are limited to the amount you make at your Self Employment? Meaning if I make 100K at my W2 Job, but only 5K Net Profit at my Self Employment Job, I would be limited to the 5K for a yearly contribution?  

I like the idea of the simplicity of the of the Solo 401K (or ROTH Solo 4o1K) as far as borrowing/interest rules are concerned. I understand that I can not 'roll-over' from a ROTH IRA to a Solo401K plan due to IRS rules (I dont understand the 'WHY' of it though). Would the following at all be a legal way to work around that?

• Say I have either a ROTH IRA or a Self Directed ROTH IRA with a value of 300K, of which 100K is Principal Contributions. My understanding is that after the '5 year look back' (not sure if that is the right name) I can withdraw the Contributions ONLY, not the Earnings (so the 100K mentioned above and leaving the 200K Earnings in the ROTH)
• I could then use the withdrawn contributions to fund either a Solo401K or ROTH Solo401K.
• Obviously this would need to be done over a number of years to stay in within the yearly contribution limits.

Thoughts? Thanks, Dan Dietz

@Dmitriy Fomichenko,

It is hard to say what their thoughts were :-)

What I had in mind when I wrote that was that is it seems like occasionally I see people post things like "how can we 'get around' all these silly rules" - meaning having the intent from the start of things. Hopefully most of them figure out that that is not the best idea before they start.

Dan Dietz

Great example of how a well intended investor with no intent on 'skirting the rules' screwed up. Absolutely education is the #1 thing before using a Self Directed IRA or 401.

Dan Dietz

@Mackal Smith,

Just a couple more questions so I can give you 'an accurate scenario'. 

1) On the properties you are buying - what, on average, is the 'rent to price'? One measure that you will see a lot here at BP is 'The 2% Rule' (or whatever your percent is).  Meaning if you buy a place for say 100K and rent it for $1500 month, that would be 1.5% a month.

This can make a BIG difference on your returns. In my market, the average is probably about 1% (we have a lot of retired farmers and other folks who see this as 'better than CD returns'). I wait until I can get a great buy on a good property and shoot for at least a 1.5% return. 

2) About what percent are you putting down on average and at what % interest?

Dan Dietz

@Mackal Smith, 

you are getting some great advice as to looking for a better CPA if they are not helping you more than it sounds like they are, and about potentially borrowing against your stocks.

There might be a whole other way to look at this too, but I would need to know (if you dont mind sharing) ; 1) how old you are now 2) how long before you envision needing these funds for income 3) what is your approximate tax bracket on these stocks you are cashing in (assuming long term gains) which can vary by state too 4) what type of yearly return do you  expect over say the next 10 years if you leave your funds in those stocks ?

I have a local friend here who faces much the same situation. Luckily he has a very good financial advisor that is also a real estate investor himself which makes a BIG difference in how things are looked at.

Dan Dietz

@Dmitriy Fomichenko,

Your answer is 'spot on'. I am going to be doing the same thing in the next month or so to make some of my cash reserves (rents that are accumulating) to work until they build up enough to buy another property. 

I have the 'checkbook control' and LLC all taken care of. What IS the proper way to title ownership of the stock account with these funds? Something like "LLC Name, Dan Dietz member/manager or ?????

I actually have it on my list to call my SDIRA company about that this week, but though I'd post on here to for the benefit of others also.

Thanks, Dan Dietz

@Steven Markowitz there is a section for Estimated Repair Cost on the second screen, that can actually be 'expanded' to about 24 different line items. I am not sure if that is what you are looking for, or more of a second loan calaculator IF the terms were going to be different on the repair portion of the loan?

Dan Dietz

@Michael Clanton 

I am involved in a three way LLC that includes my brother and father. We were VERY careful in how we set this up. We used Jarom Bergeson at KKOS Lawyers http://kkoslawyers.com/lawyers/jarom-j-bergeson/ and were very happy with the level of knowledge and service.

As far as the deal you are in right now I think @Brian Eastman hits it on the head that the only way to get around the 3 check issue is to run things through a GC. We ran into a similar issue when a property came up at auction and was selling for about 50% ARV. What we did was have a friend submit the winning bid, put the earnest money down, and then had him 'assign it' to our LLC once we got that formed.

I would also recommend doing the 'checkbook control route' to simpliify things in the future for you.

Dan Dietz

I have mine through UDirect IRA Services as the custodian, and they led me to Mark Kohler Law Office for the legal work (google his name and SDIRA and you'll find them). I have been very happy with both of them. I know there are many SDIRA plan specialist on here too that can help you out. I was not aware of that when I set mine up or I would have likely used one of them. The BP Community has been a GREAT resource for me. Some times you need to make sure you are posting in the correct forum to get the best results.

Good Luck, Dan Dietz