All Forum Posts by: Kirk Chisholm

If you are new to the concept, then the P2P platform may be a good option to start with. I am not familiar with groundfloor, but there are a few P2P lenders that are familiar with the procedures involved with self-directed IRAs. You would need to find a Self-directed IRA custodian or administrator to administer and provide custody to your IRA. Some of them have already started working with these platforms and have an existing process that you can follow. While these companies cannot provide you with financial advice, they may be able to provide you with some names of platforms that they have worked with in the past. Alternatively, their websites may be able to provide you with some leads.

I hope this helps

Kirk

You asked about private lending companies that allow lending via an IRA. Are you referring to custodians, hard money lending companies, P2P lending platforms, or something else?

@Rob Cee there are 45 self directed IRA Custodians and administrators at the moment. Each one has pros and cons depending on what you are trying to do. One custodian may not be suitable for every investor or investment. Find one that meets your criteria and then speak to others on this forum that have used them before. I know it is a challenging process, but there are a number of resources available to make the best decision for you.

@Nick Stango

Thank you for the question.

You are using the word pension which can mean different things to different people. Is she working at the employer where she holds the pension? If so then you may not be able to use it. that will depend on her employer. If it is an old pension, you would need to find out if it is annuitized or "lump sum-able" (not a real word). Her employer will be able to answer those questions. If she can roll it to an IRA, then she could use it to invest in real estate.

It is probable that if she is still at her employer, she won't be able to use it.

Also if it is in her IRA, it will still be in her IRA, so unless she is 59.5yrs old, she would be penalized for taking money out to live on.

Does this answer your question?

I'm not clear on the question. Are you asking about comparing borrowing from your 401k to borrowing from a hard money lender?

Simple... risk.

If you borrow from yourself ( via a 401k loan) you are risking your own money. if you borrow from someone else they are taking on the risk in exchange for higher interest rate. You have to run the calculations about what is best for you, but I think most people would prefer to borrow hard money than use their own.

I hope this helps.

@Dennis Hertzler

 There are many things to address on this. 

First you have to ask yourself if you really want to use all your retirement funds to do flips. If you are an expert in this, then you will have a better idea what is reasonable in regards to risks. In general since you are close to retirement you don't want to take too much risk that you cannot recover from. just some friendly advice.

Second, you can do flips with your IRA. If you want to rollover your 403b and other 401k plans you may have into an IRA you could do this. However "sharing profits" is another matter. You can take distributions from your IRA anytime you want, but depending on your age you may have to pay penalties. There are some exceptions to this where you may not.

Third, there really isn't enough info in this question to provide the best advice. There are a number of ways to skin this cat.

Lastly, If you are going to embark on the process of trying to generate income for your retirement doing flips, you may want to consult a licensed attorney, CPA or financial advisor who can walk you through this. 

Innovative Advisory Group is an independent fee-only Registered Investment Advisor that specializes in self directed IRAs and 401ks. If you are looking to invest your IRA or 401k into real estate or real estate related investments, we can help. You can contact us directly through our website , or you can message me on my profile here at BP.

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The easiest solution is to rollover your IRA to your company 401k. This will give you 39k in your 401k. Then take out a loan from it of 50% or 19,500. You will be a bit shy of 20k (about $500), but it will remove you from the issue of figuring out whether you can do this project due to a prohibited transaction. BTW You may want to keep the rest of the 401k in cash, so it doesn't dip below the 50%.

I hope you found this helpful.

Kirk

@Dmitriy Fomichenko

thanks for the tip on the name. I didn't notice the box.

In regards to your last statement

That is a misleading answer. IRS makes determinations on a lot of things, but there are standards that apply even in the grey areas.

I would love to argue a case against you if you were trying to prove that flipping one wholesale property constituted an active business.

While the IRS could rule on anything they wish, I'm very confident that the 1-2 properties I mentioned is below the threshold that would be considered an "active  business".

@Dmitriy Fomichenko

Correct. Hence my reference to getting tax advice if using more than 1-2.

However you made reference to 1-2 flips in a 12 month period being an active business. I was wonder how you made that assumption.