All Forum Posts by: Daniel Dietz

@Suzanne Lee, they can help walk you through what all needs to be done and it is not as hard as what it sounds like. The custodian on a SDIRA, to my knowledge, actually has no 'liability for lack of a better word to making sure you do things right. One of the things I have liked about Sense is that they let you know what you need to be doing every step of the way.

As to the partnering with your SOLO, or SDIRA..... that is a VERY touchy situation. @Dmitriy Fomichenko takes what I would say is a 'conservative apporach', and albeit a safe one. I *was* involved in similar but different situation with a 'disqualified person', as you would be to your own plan. I used a very reputable law firm that specialized in setting those types of deals up. What I *didn't know* was that once that LLC was set up, we could never make additional contributions, make new purchases etc.... a 'one and done' so to speak. We exited outof it once we realized how complex it was.

As far as qualifying for one or the other those guidelines are pretty clear. I would talk to one of the guys I mentioned above, not just a sales person at a larger firm, and get clarification. If you are just planning on rolling funds over and not making large yearly contribution that what you can fit into a SDIRA maybe you dont need the SOLO? One reason I like the SOLOs is easier borrowing in them paperwork wise, and one reason I like the SDIRA is because it is the only kind that I could roll my ROTH IRA to.

Dan Dietz

I and my partners used @Dmitriy Fomichenko at Sense Financial for our SOLO401Ks. How I chose was calling or emailing people like him, @Brian Eastman, @Carl Fischer and a few other here on BP as well as a few of the 'Big Boys' so to speak.

What I found was much better responsiveness, guidance, and patience from ALL of the guys on here compared to the larger firms.

I cant imagine, for my needs, why I would NOT want to be the 'custodian of my own account. We also use SDIRAs and do those with checkbook control also. We did have a slight delay on a transaction with those, but that was mostly due to ME not taking the time to call and clarify some paperwork/legal stuff.

Between my 3 partners and I we have 7 accounts that invest in two different LLCs (one for SDIRA and one for SOLOs) and on their own also. Feel free to ask as much as you need help with from the end user perspective.... I know others helped me understand it and I am glad to do the same.

I *think* I am finding a pretty good rate in my market right now. I am just finishing up my own home refinance, and when that is done going to be hopefully doing a couple of 30 year fixed on a pair of 4 plexes. 

My DTI before the rental loans is hoovering around 46-48%. Sucks that I can not count my fiances income but so be it. Credit scores of 710-750, 25% down. Afterwords that DTI will hopefully be under 40%.

I am being quoted a 3.875% rate with 3 points. I am planning on hold these for at least 15 years, and likely indefinetly (they are hard to find in my smallish town). 

How does that sound to the rest  out there?

I would second what @Joe Villeneuve & @Shiloh Lundahl are leaning towards. The BRRRRs are great for those with not much funds but time on their hands to do the work IMHO.

We have a few dozen rentals and are tapped out of our own cash (a lot of them are in SDIRAs and SOLO401Ks so we cant use cash flow yet) and are starting to invest with 'Private Money Partners', not lenders. Our basic set up is that they provide the 20-25% down payments, we do all the work from finding to managing rehab and finding and managing tenants. We are only a couple years into this but it should conservatively return 10-12% on the original investment for EACH of us. Not 'home runs' but nice steady returns for them at low risk and a return for us of 5-8 times what we would make if we were 'just the PM company'. We share both cash flow and equity growth. 

Our issue right now is finding enough properties to purchase for the number of people of want to do this with us! :-) Word spreads fast.

Dan Dietz

@Basit Siddiqi thank you for the great concise answers!

Can you elaborate what terms or how I would find more information on what you mean by;

"However, there are greater rules to follow if you want to be able to utilize losses from a partnership that owns real estate instead of owning real estate directly."

Thanks, Dan Dietz

@Adam Scheetz I use @Dmitriy Fomichenko for my SOLO401K, and I would second what @Brian Eastman says about contacting a few and see who would be a good fit your you. I can say that if I were looking again for a provider that ALL of these guys and a few others who contribute here on BP were MUCH more patient and gave me the time to understand things and how we could be a 'fit' more than the 'big national companies' that I contacted.

Also, personally I would not even think of doing rentals (that is ALL we do at this point) without having checkbook control. 

Dan Dietz

To understand the part about moving into a property after an exchange, am I understanding this right.

Say I 1031ed a gain of say 300K  on a property I bought for 300K, depreciated 100K and it appreciated up to 500K into a new property. 

The new property is 500K. I rent if for a 3 years and then live in it for 3 years. It is still worth 500K for simplicity. I now sell after having lived in it for '2 (or more) of the last 5 years'. 

So half or 150k of the gain would would fall under the primary residence exclusion, and half would be subject to the same taxes as any other rental would when sold?

Thanks, Dan Dietz

Hello All, 

I have been reading up a lot on Passive Losses lately as we have been looking at some larger properties and considering using Cost Segregation along with that. These purchases would be through LLCs that vary from 2-4 members each.

My *understanding* is that a 'taxpayer' can deduct up to 25K of passive losses IF there income is below 100K and then phased out up to 150K.

Questions are;

 1) Is that 100K level for single or married filers? Seems hard to find a clear-cut answer on that. 

2) In an LLC of say 3 Members where the Operating Agreement states all Member share equally in depreciation proportionate to their shares of the LLC, does that mean *each* member could take up to a 25K loss as long as all members are under that 100K limit and participate in the management? This is an LLC that use's K-1s to pass income to individuals. So if the LLC as a whole has had a 60K loss, could *each* of us take a 20K deduction

3) If 2 of the 3 of us qualified but one did not of having under 100K would that limit the first two from using the deduction?

4) I assume if we sold a *different* property that had a large capital gain that would need to be added to our 'day job' income and put together we would still need to be under the 100K limit to qualify?

5) If our income did grow enough that we were over the 150K limit and those losses were 'carried forward' I *think* those would come into play when we sell the property? Can those be applied to Depreciation Recapture and Capital Gains both? What happens to those suspended losses if we do a 1031 Exchange?

My thought is if we used seller financing to eventually sell and had say 100K of suspended losses could those be applied to the 'recapture tax' first since that would be due in year 1 and the capital gains would be spread out over the term of the seller financing?

Thanks for any help in organizing these thoughts!

Dan Dietz

The Offer to Purchase MUST be in the name of the SDIRA, or in a non-disqualified persons name who can 'assign it to your SDIRA'.... NOT yours! Been there done that :-(

Any thoughts out there? I have zero experience with Trusts and wondered if that could somehow help?

Thanks, Dan Dietz