Ok, so the best tool for someone to take control of their retirement funds is to use a Self-Directed IRA LLC (SDIRALLC) to buy Real Estate Investments.
once it is set & ready to go i can purchase a property thru the SDIRALLC & lease it out to say myself or in-laws or joe public, correct?
What are the pros & cons of this?..again if possible.
Careful- No you can’t have your Self-directed IRA buy a property and then lease it to yourself. You can not personally benefit in anyway, all benefits need to go to your IRA account only. There are a number of prohibited transactions to be aware of.
One of my concerns with check book controlled IRA’s is that many people don’t know the prohibited transactions and can easily violate one without knowing it which puts the funds in the IRA at risk of penalties, interest, etc if you get caught.
Jim
[QUOTE=pmrr10;884175]Ok, so the best tool for someone to take control of their retirement funds is to use a Self-Directed IRA LLC (SDIRALLC) to buy Real Estate Investments.
once it is set & ready to go i can purchase a property thru the SDIRALLC & lease it out to say myself or in-laws or joe public, correct?
What are the pros & cons of this?..again if possible.[/QUOTE]
Jim nailed the big issue.
More philosophy…
Being in control does not mean you would be directly benefiting. You can decide what the IRA buys. You might find the best way to invest your IRA funds is a commercial property rented to the post office or some other agency where you know the rent will arrive as agreed. Or you could use your IRA to buy options on properties where there is a likely future sale so the option will be in the money.
Think of the IRA funds as a partner’s funds and not your own funds.
Options are a great way to go, not sure if our government can support post offices in the future ha ha.
Thanks to all for your input…I was just confirming what i already knew…I can rent to family as long I do not directly benefit (only my SD IRA LLC can actually “benefit”!)
Thanks again!!
I would think renting to close family would be a prohibited transaction. Check with your CPA for sure, but here’s a link:
–Natalie
The other drawback is that you won’t get any tax benefits. Since your LLC or IRA is getting the loan, you can’t take advantage of any depreciation on the property. Other than that, its not a bad way to go. It sure beats what your IRA is doing in the stock market.
[QUOTE=aristotle;884381]The other drawback is that you won’t get any tax benefits. Since your LLC or IRA is getting the loan, you can’t take advantage of any depreciation on the property. Other than that, its not a bad way to go. It sure beats what your IRA is doing in the stock market.[/QUOTE]
Not to change the direction of the thread to much, but have you actually looked at the stock market lately ? Seems like suddenly everyone is pounding the table about real estate and the S&P 500 is up 11.4% YTD, the Nasdaq 100 is up 17.8 %. Many semi pro traders are up 20-30% YTD, and at least one PD trader 
is up 33% YTD. Its only march. I seroiusly doubt the RE folks will be catching the PDTraders this year.
The people I am networking with are still seriously concerned with the stock market. It has had a great rally that has covered a lot of losses for sure, but is it really sustainable and where will it be a year from now? Who knows.
I personally prefer to invest in local real estate rather than corporate wall street. I know how to generate tremendous returns leveraging on today’s real estate market so that is where I am staying for sure
Jim
[QUOTE=jimingersoll;884485]The people I am networking with are still seriously concerned with the stock market. It has had a great rally that has covered a lot of losses for sure, but is it really sustainable and where will it be a year from now? Who knows.
I personally prefer to invest in local real estate rather than corporate wall street. I know how to generate tremendous returns leveraging on today’s real estate market so that is where I am staying for sure
Jim[/QUOTE]
I think pretty much everyone that visits this site would agree with you.
I also will point out that any schmuck with a pulse can open a margin account without even a credit check. Using 3to1 margin leverage and the $NDX being up 17%, its possible to have made 50% already in 2012, and thats fast money no matter what investing discipline you pursue.
[QUOTE=AmotoXracer;884487]I think pretty much everyone that visits this site would agree with you.
I also will point out that any schmuck with a pulse can open a margin account without even a credit check. Using 3to1 margin leverage and the $NDX being up 17%, its possible to have made 50% already in 2012, and thats fast money no matter what investing discipline you pursue.[/QUOTE]
If we are talking about schmucks, we are focusing on folks who have little to no competence. They are along for the ride and might not know their own incompetence could be an issue.
After the market crashed folks who had been long the stock market figured out that they had a zero return over 10 years. Not very appealing. Just because the market is up over 6-12 months does not confirm that the average person is going to be successful.
I think people should expect to have to study to be competent in a particular sector. That they need to broadly stick to what they are good at and stop looking at other markets where they would be competing at a disadvantage. Unless you have the skills to play the game well likely do worse than the professionals. Speaking of professionals, most fund managers do worse than the index so thinking an individual who is in real estate can successfully make the leap to the stock market is a very big stretch. A few will do fine for a period so it seems like it is possible. You just have to ask yourself if you are one of the minority who will succeed. 2/3 of the Wall Street professionals are not in the group so a RE investors with limited training is going to find it a bit hard to compete.
John Corey, you described me to a tee. I’m a dirt guy, and would be shark bait trading the public markets. I don’t have the passion, therefore lack the patience, to become competent.
My hat is off to those who can straddle more than one asset class. I know several folks (not a third though) that alternate between sectors, and do very well, depending on the direction of respective markets.
As a side note, I do find cross-discipline study worthwhile. I can learn from strategies used in any area of investing (and other businesses as well). If I were to invest in stocks, etc. I’d be a long-term value investor in the Benjamin Graham school. Value investing principles translate directly to real estate, especially the concept of intrinsic value based on individual criteria. I quoted “The Intelligent Investor” at length in my book because IMO the principles are better grounded than the accepted methodology of real estate valuation practices.
ray
ray@lcorn, Host
CREOnline Commercial Real Estate Forum