Posted by Sailor on April 12, 2006 at 19:31:33:
This is a personal SDIRA, & my deals work the same as the ones I did in the past w/the exception that there’s an extra step in gettings papers to/from the holding co. I only do ca$h deals, as (1) you cannot obligate an IRA w/a mortgage, & (2) I don’t like to rent $$$ @ this stage in life, anyway. I didn’t set up the account myself, as I was cruising abroad @ the time. My clever RE agent did all the research, so it was a matter of signing papers. However, there really isn’t much involved these days other than deciding which co. to use. (Back in the days, though, research was more difficult, especially w/out the internet.) Note that you can use more than one account, though some fees would be redundant.
One thing to consider is keeping SDIRA accounts simple because you don’t want to involve yourself in a continuous cycle of requesting funds & paying outrageous ($25 per) check fees. For rental properties I use one or more mgt companies that can collect rent & pay operating expenses. For me that is cheaper, w/less bookkeeping.
Sorry I can’t be more helpful, but there really isn’t much involved in setting up or using a SDIRA acct. Pls do be careful using your mom’s funds. A deal that might be appropriate for the younger you may not be a sound one for her. She doesn’t have as many years to recuperate from a less than good investment. Remember, too, that we older folks often have life-threatening or altering events requiring liquidity. At my age I would never consider any investment that wasn’t pretty liquid in both good & bad markets (why I have waterfront). At the other end of the spectrum, I wouldn’t churn the acct, either. Make sure Mom knows enough to make her own decisions, fully understanding all risks–don’t just tell her where to sign. If she doesn’t understand, or doesn’t want to learn, then REI isn’t the place for her retirement $$$. REI isn’t right for everyone.
Another thing to remember in all investing, SDIRA or other, is to not put all one’s eggs in a single basket (after all, it is that time of year). I try to stage my investments to pay off sequentially. Sometimes things have a way of happening all @ once, but I do attempt to plan otherwise. Nowadays I think in terms of 1-5 years, though in the past I had plans as long as 30 years.
One of the beauties of SDIRA investments is that you no longer have to muck w/1031’s (oh how well I remember the audit of 1989). That increases your $$$, just like compound interest. No tax planning is necessary, as there are no tax consequences as long as no distributions are taken. Once set-up, a SIDRA is kind of a lazy gal’s way to invest. I no longer have to spend all that extra time tax planning. Gee, maybe that apple pie I baked this afternoon is the result of my SIDRA!