All Forum Posts by: Sandy Uhlmann

I am just trying to figure out if I am better off tax wise by going the LLC route and occurring UBIT taxes vs borrowing funds from an individual and (I assume) being subject to UDFI? I just want to know the pro's and cons of each.

I would like to purchase a lower value performing note within my SDIRA but would like to partner with a fellow investor who does not have an IRA. Example: Performing note, $15,000 paying 15% interest only then paying remaining balance after 1 year. My fellow investor is OK with a 9% return and will invest $10,000, I will invest $5000. I will get 15% interest only payment for the $5000 that I invested returned to my SDIRA and my investor will get 9% interest only for their $10,000 and I will keep the remaining 6% interest on their $10,000 for finding the deal.

What is the best way to structure this deal within my IRA? Am I better off borrowing the $10,000 from my investor and paying them back at 9% interest only then paying off their $10,000 at the end of the year when the note pays off or am I better creating a JV situation? LLC? What are the pros and cons of each? Is there a better way to structure the deal so I am not paying UBIT or debt financing within my SDIRA?

Thanks for the help!

I thought the book was great.  Lots of examples of how to get all the deductions you deserve.  I do have to say that I was disappointed that when I called to try to talk to someone in the office to set up a consultation, I was forced to leave a voice message.  I never got a return phone call.  I guess that is what to expect during tax season.

@Dmitriy Fomichenko @George Blower

Thank you both for the responses.  I appreciate your input.

I did consider some tax lien investing for him but since a lot of the tax lien sales are online, this requires a checkbook IRA which he does not have because his CESA is with a custodian that does not allow checkbook control. I know that he could probably use his IRA money as a consideration fee if he wholesaled houses but that would certainly generate UBIT. These lots are priced well within what he has in his IRA and he could offer an option to the owner for a small consideration fee in order to tie up the property then find an end buyer to sell it to outright (bumping up the price/charging a fee for the option itself) then assigning the option to the end buyer or perhaps exercising the option himself then selling it on payments over several years (owner financing it) so it wouldn't be considered an active investment.

Unfortunately, his is 19 and I am not allowed to add any more money to his CESA. I just want to make the best of the situation. I may just need to partner with him in my own IRA.

My son has a CESA with a small (under $3000) amount of money in it that I converted into a self directed account for him.  Since the amount is so small, I am struggling to find investments for him.  It is not checkbook controlled so that even limits options further.

I am considering helping him do some real estate option deals where he would use a small amount of money ($25-$50) to get an option on some vacant land.  Any proceeds he makes once the option is exercised would go back into his CESA account.  My question is, what is the implications of these quick flips within his SDIRA/CESA? Does it become a taxable event?  UBIT?  Is there any way to avoid the "quick flip" status?  Would selling to an end buyer on payments/land contract/contract for deed avoid this?

Thanks for the input!

Michael,

Love your ambition. You seem like an intelligent kid. I assume that if you have any earned income at all that you have set up a Roth IRA so you can start saving? If not, please look into it. Your parents can assist you with this often by setting it up at the same bank as you have your checking account at or online with places like TD Ameritrade or many other sites. You are never to young to learn to handle money. As your money grows, you may eventually want to transfer your Roth IRA to a custodian so you can self direct your Roth IRA so you can invest money from your Roth IRA into real estate deals and put the profits that you generate back into your IRA. It would be ideal if you could do a self directed Roth IRA from the onset but sometimes the fees that custodians charge are not cost effective until you build up more money into your account.

Find some Real Estate Investment Meetings in your area and see if your parents would accompany you. 

Good Luck!

Kansas and Washington and perhaps  Mississippi.

I don't know if you are talking about firsts or seconds but I do know that for non-performing seconds I used to pay $30 and recently the fees have been increased to $45/month vs $40 for FCI. If you have a lot of notes this might be something to consider because over time these fees add up.  I have notes at both FCI as well as Madison.  I have heard that if you need workouts, Madison is good.  I like the FCI login and portal.

@Jay Hinrichs @Victor Nelson;

Thanks for the great info.  I know a lot of people that own seconds and get wiped that don't take the next step and get a judgement.  Situations can change over time and years from now the defaulted borrower may be in a much better financial situation.  

I spoke to someone yesterday that has been in collections for 15 years tell me that when you get a judgement you need to be sure to renew it every 4 years.  She said there was a very small to do this.  

I plan to run a background check on some of the defaulted borrower.  Finding where/if they work would be a huge step towards collecting.

If anyone from BP has had good success with a collections firm I would love some recommendations.  I have a firm working on one of my defaulted notes now. It was not wiped out.  I decided to go the collections route rather than face the high cost of FC in NY. It is on contingency but I had to pay filing fees/court costs.  That was about $700 but perhaps that was high because it was a NY note???  We have a judgement but collecting is another matter.  Seems like some of these firms are not too aggressive about finding ways to collect.  

I have a couple of wiped out seconds that I am exploring the possibility of getting a judgement on.  Does anyone have any experience with a good collections Law Firm that they can recommend? I understand that there is a time limit after your loan gets wiped out that you have to file for a judgement against the borrowers.