All Forum Posts by: Daniel Dietz

@Account Closed as far as the signing for a Checkbook Control Account goes it is not that hard but it IS very specific... My SDIRA is in a 3 way LLC that actually has the 'checkbook control' and one of the other members in the signer, but it has to be something like "John Doe, Managing Member on behalf of 3D Properties LLC" of something like that. The point is to make clear that you are signing on BEHALF OF the LLC, not as yourself.

Dan Dietz

There are a lot of different ways of looking at 'private money'. There are people out to make a 'good return' (what I would be doing if *I* were the lender) who are looking for that 8-12% that John mentioned above.

My only experience so far is in the 'hybrid' area.... I am in construction for my 'day job' and bought a 're-flip' from an Professional Flipper that I do work for since he had to many at one time to handle himself. He bought it for 85K and sold to me for 95K and financed it for 6 months at 6% interest. He borrows his funds at 3% from his relatives that are happy to make more than .5% in CDs. For my fix up funds, instead of draining my cash reserves, I approached a family friend that I new had quite a bit of money in CDs at under 1% return. I suggested 6%for 6 months for him too to see what he thought. He came back the next day and said he'll only take 3%, and I can have it for up to 3 years too! He saw it as 'locking in a good return' for him in an almost zero risk venture. I shared with him that I what my IRA and house equity were (300K+) in case he had to foreclose on me, so he was comfortable.

Since then I have been working on finding private lenders to do more deals within my SDIRA for buy and hold rentals. I have a few (including the one mentioned above) people interested in anywhere from 3 year up to 15 year loans at 3% - 8% rates. Most of them have a portion of their assets in CDs or other low yield funds and like the idea of making a better return that is still safe.

Good Luck, Dan Dietz

Hello All,

This seemed like the most logical place in the forums to ask about this. Even though it is not real estate related, it IS SDIRA related.

I am almost done with figuring out my divorce settlement and wrap things up soon. We are doing as much as we can ourselves, although I am going to run the final paperwork past my lawyer. One thing we need to figure out is our retirement assets which consist of regular IRAs, ROTH IRAs, and a SDIRA. We have agreed to split these assets '50-50' as we are in a marital property state. 

What I am wondering is 'the future value' of the different kinds of accounts. Save I have a choice of taking 100K in ROTH accounts vs 100K in a Traditional IRA. If either one would grow to say 400K in 15 years (10% aprox. return), and then the ROTH would be *worth* 400K as no taxes are due. The traditional might be *worth* say 300K if in the 25% tax bracket.

Am I missing something in thinking that the ROTH is more valuable down the road on a 'dollar to dollar basis'?

The only 'extra value' that I would see in the Traditional IRA is that it could be converted into a Solo401K for the benefit of 'leveraged investing' and avoiding some of the potential tax liabilities of leveraging my ROTH within my SDIRA.

Thanks, Dan Dietz

@Dmitriy Fomichenko I know this has been covered before, but I forget the answer and am now in more need of it. 

What kind of retirement vehicles can be 'rolled into' a Solo401K? I am specifically interested in Regular IRA and ROTH IRA eligibility for such a move.

My understanding of the Solo401K is that you must have self employment income, and even if that income is small, say 10K and you put 2K into a Solo401K, you can still roll over a much larger amount from an existing qualified plan. Is that correct?

Thanks, Dan Dietz

Great discussion. 

One thing I did not see in the tread (I 'speed' read it) is in regards to the 'labor' for flipping in a SDIRA. Disclaimer - I DONT do flips in my SDIRA because of my understanding of what I am about to say, I do buy-n-hold rentals.

In a SDIRA, there can not be any 'self dealing' which in short means benefiting you or any lineal relatives... kids, parents, spouse, grandkids, etc... (this is the simplified version). So IF you were planning on doing the labor yourself, or having a son, grandson, father, etc... do any of that, it is a big no-no, as YOU personally would be 'benefiting' your SDIRA (which is a separate entity from you personally). Think of it as if 'you' did the labor and profited 50K, that would be the same as making a 50K 'contribution'.... big no-no.

In my case, if I do a flip, *I* would want to do at least part of the labor as I am in the  construction business for my 'day job', which is why I would choose to do it outside on my SDIRA.

Dan Dietz

Brian summed it up pretty well there. Think of it exactly the same as a regular IRA... you CAN access it, but the same big penalties and taxes would be due.

Just wondering, do you see that as any different than a traditional or ROTH IRA? Or is it that your goal was to create 'current income' through your real estate purchases?

Dan Dietz

Kevin,

I am only one rental in, so have no advice yet about HELOC on rentals but I am sure others will chime in on that.

I DO have experience with SDIRA (I think you can search my past posts on here) and personally think it is a GREAT way to go. Like you, I had more liquid assets in my IRAs than as 'cash', so it really made sense. There ARE a lot of rules to follow, but it is pretty easy to learn too. Basically no 'self dealing' (no benefit between you and your SDIRA) and no benefiting a 'direct lineal descendant' - meaning can rent, buy from, sell to etc.. and parent, kid, etc....

I used UDirect IRA Services out of California as the Custodian and Mark Kohler Law Office (google him on youtube) for the legal work. Pretty simple IF you follow the laws.

Dan Dietz

@Brandon Turner,

When you say that your partner provides the 'down payment', is it the partner, you, or both of you on the mortgage then? Are there any tips for the 'how and why' of whatever your method is for that?

Thanks, Dan Dietz

@Rohan J.,

I am just starting to dig into this too. I am much more interested in buy-n-hold rentals than flips for the most part. So far my rentals are in my SDIRA, and what I am looking for there is a better return than stocks and more stability over the long run, and also just the diversity of keeping some of my IRA in stocks and some in real estate.

I have been talking to a few different people that are somewhat interested in working together in some way. They range from

1) someone who is mostly interested in making non-recourse loans, a 'lender' if you will, for a fixed rate so I can leverage my SDIRA. They would have a known return and would be pretty safe as they would be the First Position Lender at no more than 75% LTV with my SDIRA being the rest.

2) Someone that is more interested in 'investing', who cash and also the ability to borrow if needed. We are still in the early stages of talking (he is also a very close friend as in your case) and thinking of something like this; he would be putting up cash or borrowing funds for maybe 75%, I would be in for say 25%. I would find the properties and do or hire the PM. He would essentially be a 'silent partner'. The split of returns of the profit would be 50-50 with me doing the PM. In other words, he has more money than time, and I have more time  than money :) 

3) I am also talking to 2 current property owners of paid for 6-8 unit buildings. This is in the early stages, but essentially they both know how I run my 'day business' and are willing to talk about how I can purchase their places with as little of my own cash (actually my SDIRA's cash) in exchange for paying them a full market value price (vs looking for a discounted building)

Hope that helps a little, 

Dan Dietz

@Rohan J.,

Would this be a partnership for Fix-n-Flips / Short term projects, or Buy-n-Hold rentals? 

Dan Dietz