All Forum Posts by: Dmitriy Fomichenko

With private lending, there is always a risk of default; therefore, take this option out of consideration. 

@Mitch Messer,

If the borrower defaults on one of the loans, then one lender would have to step in and interact with the other lender, which would be problematic for an IRA. No such risk if there is a single loan.

@Jay Hinrichs, yes, this is very simple, I've done this many times (as a lender). I don't like to co-invest with disqualified persons using my retirement funds b/c this can lead to a prohibited transaction, but I participated in a couple of dozen fractionalized Deeds of Trust with unrelated parties. The same can be done with two IRSs. 

Greg, the opposite of what you are saying is true. The only way to do this is to do a shared loan. Investing jointly with a disqualified person in and of itself is not considered comingling. It might lead to a prohibited transaction, but it is certainly possible if done correctly. 

@Mitch Messer,

Yes, this is possible, but it must be structured correctly to comply with the IRS rules.

A first and a second lien? ABSOLUTELY NOT! This will create a conflict of interest and will be considered a prohibited transaction. The only way to accommodate this is to have two lenders on a single loan. 

@Matt Devincenzo, ROBS is not my area of expertise; perhaps @Brian Eastman can assist. 

@Art Webb,

Use EIN of the LLC, but DO NOT USE YOUR SSN!

Who is your IRA custodian?

@Art Webb,

The proper way to fill out the W9 form is to enter the name of your IRA in line 1. Enter the name of the LLC in line 2. Select "Other" and enter "IRA Account" in 3. Use the exempt code 1 on line 4. Enter EIN of the custodian in Part 1. DO NOT ENTER YOUR SSN!!!

@Ned Carey,

The reason you MUST NOT use your SSN when investing IRA funds is that the income of IRA is tax-sheltered (deferred or tax-free with Roth) and you don't want to pay tax on this income. And you shouldn't!

Here is a simple example:

You buy a rental property inside your IRA and complete the W-9 form using your SSN. The property is rented for $2,000 per month. At the end of the year, your property manager issues a 1099 to YOU and YOUR SSN reporting $24,000 income, which you now must report on your tax return and pay taxes on. Good luck trying to provide to the IRS that this is not taxable income!

@Scott Trench,

Thanks for your leadership over the years! I'm glad to know that I will continue to hear your voice on BP Money! I share the same sentiments about the BP community. Many lives changed, including mine. It has been a journey, but the future is even better and brighter!