How Should I Best Use A Self-Directed Roth IRA
I work in a 3 person partnership in NC and have no retirement vehicle. I'm interested in the Self Directed ROTH IRA, but cant figure out exactly how to use it.
We acquire about 2-3 homes a month, and either sell them, rent them, rent and sell them, or lease option.
Any thoughts on how best to use a SD ROTH IRA?
Depending on how much cash you have in roth. a lot of cash, buy homes for cash pay for improvments, sell and take profit in roth, little cash in roth, do it with options,
Use $ from your IRA to put an option on a property. it doesn't have to be a lot ...$1, $10, $100?
Sell (Flip) the property. The profit goes back to your IRA.
For more info and strategies, check out:
http://www.trustetc.com/links/realestate.html
While a SDIRA can be used for nearly any kind of RE deal, it's NOT usable in deals where there's a loan and IRA would sign note as debtor...that would destroy the IRA and the entirety would be immediately taxable. (IRA cannot be pledged or used as security)
As another reply noted, options work great, as do any other kinds of cash deals. (as I discuss in some detail in my Special Report on How to Use IRA for RE, etc....for sale on this site)
When you visualize how well a particular investment might work, just remember that every expense in, or on, an IRA owned property, has to be paid by the IRA Custodian...so you wouldn't want any investment that's going to require lots of checks to be written, and lots of extra work by the Custodian...or they'd have to charge YOU more for their service.
I just helped a client do a MH purchase & resale in his SDIRA. It was an all-cash purchase, with simultaneous resale on note, with note payments to be made to the SDIRA custodian.
Because all the Custodian has to do is oversee & account for the note payments as they're mailed to the SDIRA Custodian, it's a simple deal, and relatively inexpensive in fees for the SDIRA owner...and the IRA is earning about 40% per year on its investment, so it's coming out OK!