All Forum Posts by: Daniel Dietz

One way to do this, I *think*, if the invstor is interested in having an ongoing stream of income is to have his SDIRA buy anohter property INSIDE of the SDIRA, which can THEN be sold on contract.

Say his SDIRA has 100K, he buys a property with the cash in the account in the NAME OF THE ACCOUNT. He THEN can sell it on contract through his SDIRA. 

To you experts on here, if that is wrong please speak up! Just my understanding of it, I have NOT done it that way yet.

Hope that makes sense, Dan Dietz

Hello All, 

My response is not so much about 'how to hold title' but to do with the split. What we are doing is setting up an LLC for each Private Investor being 50% down and our existing LLC being 50% owner.

What we are doing is that Private Investorbring the down payment of 20-25%, and we do ALL of the work. This is for buy-n-hold rentals. We then split 'cash flow'  and yearly 'tax losses' 50-50 which is not a huge number. The 'equity gain', either loan paydown or appreciation, is split 50-50 at the time of any cash out refinances or when we eventually sell. 

In my mind the Private Investor should EITHER (not both) get a 'yearly % ROI' (he is then a lender and not an investor) OR a portion of any yearly positive or negative cash flow and eventual equity upside. THEN they are an investor and not a lender.

Dan Dietz

Just wanted to throw in there that we have used the BP Calculator Reports for both our Portfolio Lender and Private Lenders, and they all LOVE it. They see it as a great 'summary' of things all in one place without all the un-needed fluf and words. 

Ours is for rentals, not flips, but the same concept. 

Dan Dietz

@Brian Eastman gave a spot on answer, from my perspective as a account holder side of things. 

My own thought is why would you put ANY of it into a Company 401K instead of a Traditional or Self Directed IRA? IF they allowed you to 'roll it back out' if you wanted then it might be OK, but even then, I would think the fees in that program would far outweigh having an IRA, and you would have more flexibility too.

A friend of mine rolled his into a SDIRA, and DOES do his new companies 401K with NEW contributions since they match those at up to 6% of his salary. A side benefit of doing ANY level of new contributions is that you then get the 'company recommendations' on funds which you can mirror with your IRA if you desire, at a lower cost.

Dan Dietz

You are getting some good advice here.

I have both SDIRA that is in a ROTH account which rolled over from a regualr ROTH IRA, and a SOLO401K Tradtional account that was funded by roll overs and additional contributions.

The one thing I was surpried at is that there is NO way to roll a regualr ROTH IRA over to a ROTH SOLO401K. It seems to be one of the few/only conversions you CANT make.

Dan Dietz

We are working on similar deals to this right now. We have several investors who want in at a 50-50 split with them bringing the down payment of 20-25% and us doing ALL of the finding, aquisition, rehab management, placing tenants, and ongoing business management and PM. 

Our history of our exisiting 25 rentals shows that there should be enough cash flow and equity growth to offer then and us EACH an 8-15% return on the cash invested. 

They would get their down payment back either; 1) as soon as their is enough equity growth (projections 5-7 years) to be able to cash then out 2) when there is enough equity for both of us to do a cash out refinance to both pay them back AND give each of us a ROE 3) or at eventual sale in 10-30 years. 

In our case, we have the track record in PM, finidng deals; above average business knowledge and skills. So we are doing our investors as "much as a favor" by giving them a great, safe, stable long term investment and they are by lending us the money to do the deals. A true "win-win" - always a good start to a business relationship!

Dan Dietz

When my kids were in college a few years back, my SDIRA owned property was NOT counted as a parental asset, just like other IRA valuations.

One other thing I learned is that 'Cash Value Life Insurance Values' are not counted either, presumably because that is not an easily available means of getting cash to pay for school. In my case, I had a 'pre 1985' policy which falls under different funding limits, allowing more cash to be put in than current plans. If I remember right, the name of that issue is MEC, meaning Modified Endowment Contract. It *might* be something to look into IF you are also in need of Life Insurance. In my case, we funded it enough to pay the premiums internally (meaning no out of pocket payments at all) and earned about a 5% rate of return too. 

Just food for thought, Dan Dietz

Hello all, 

I understand most of the SDIRA rules, but came across a potential deal that I have a verbal offer/accept on at this point. 

It would be what I beleive is called a 'subject to' deal. Current seller is willing to do this deal if I put 40K down on a 150K property. He owes about 100K on it on a 30 year note @ 3.75% and about 4 years into it. The loan terms are VERY apealling to me :-) 

The reason not to just do a non-recourse loan is that would be 60K down and I dont have quite that much right now. The property fits all of my other criteria for rental purchase as far as quality, location, rent to price ratio etc......

So the question is if we write up the subject to the right way as to be non recourse, is this a doable thing? There is a very high level of trust here as we have done other deals with each other and on a joint basis also. We are not disqualified parties to each other. 

Thanks, Dan Dietz

Thanks for the replies from all of you. 

@Brian Eastman you make a good point that 'moving' ROTH funds would 'use up' my 'yearly limits', therefore potentially not allowing me to put *additional* ROTH funds in, relative to what I already have (but sitting in a SDIRA, not the SOLO401K). In my case, at this time, I am pretty comfortable with the amount I have save up in retirement accounts, and the bulk of that is already in ROTHS. If someone was younger or looking to build up their funds this would be a big concern. 

@Dmitriy Fomichenko in regards to 'converting' traditional funds over that are already in my SOLO401K to the ROTH component, if those 'funds' are say a rental that I paid 100K for, do I need to get an official appraisal of that property to covert things? What happens if I want to maybe just 'convert over' 20K worth of per year, would I need a new appraisal every year?

@Carl Fischer I am of the understanding that I would  *not* have to pay any tax to do this. I would just be taking out the amount of my original contributions, which I thought were tax free since it is 'after tax' funds? Maybe I am misunderstanding that.

 I see your point about a SDIRA not being that hard to manage, but I am really liking using the leverage in my SOLO401K for higher returns, and less paperwork that if borrowing in the SDRIA. 

One of my other goals is to 'get all my retirement funds' in 'one plan' (meaning not a separate SDIRA & SOLO401K). My understanding is that it is not allowed for say my SDIRA & my SOLO401K plans to 'partner' of investments. By having all of the funds in one place, it seems like it would simply things if when I want to say sell some of my rentals and invest in something more passive like a Syndication. Does that make sense?

Thanks again for all the time that you all give to help us all understand what at times can be a confusing topic!

Dan Dietz

Hello all, 

I have been investing in both a ROTH SDIRA and a Traditional SOLO401K plan for a few years now and have things going pretty smoothly. Once I found out about SOLO401Ks, I stopped buying with my ROTH SDIRA due to the many simplifications of the SOLO401K, including easier book keeping when borrowing funds. 

One things I was disappointed to find out is that I can NOT roll ROTH IRA funds over and directly into a SOLO401K plan. My ultimate goal is to get most of my retirement funds into a SOLO401K ROTH accounts for tax free rental income in retirement.

I am currently 52 years old. I have over 100K of contributions in my ROTH IRA and have had it well over 5 years. 1) Could I take say a 30K withdrawl of those 'basis funds', which my understanding is that would be tax free since it was 'post tax' money when it went in? 2) Through my self employment income make 'new contributions' of 30K INTO my SOLO401K into the "ROTH part" of it?

It *seems* logical, but that usually means there is some catch I am not seeing ;-). 

As a side note, if I wanted to 'convert' some of the 'traditional funds' ALREADY in my SOLO401K over to the "ROTH part' of the SOLO401K, at what rate are the taxes figured, and can those be paid with funds from inside of the SOLO401K if I am not already retirement age, or would that be seen as an early withdrawl and taxed and penalized?

Thanks, Dan Dietz