I disagree Bud. I never implied that we can sell anything to Mom’s IRA. Nor can mom’s IRA loan us any money to do deals. What I described was partnering with mom’s IRA in the purchase of an investment that is owned by an unreletated 3rd party.
Example. Mom’s IRA kicks in $1000 and I kick in $1000 to buy a mobile home for $2000. We sell the mobile home and split the monthly payments.
I have not sold anything to mom’s IRA. Mom’s IRA did not loan money to me to make this purchase. Mom’s IRA simply bought a 50% ownership in a mobile home from a private, unrelated seller.
Where do you see this as violating an arms length transaction? What is your experience with these deals? Have you tried calling Entrust and ask them if this is possible. I believe that you will find that these companies are very willing to answer questions. The info I have recieved from these companies is that you can partner with your own IRA so long as you take title as such.
The partnering with your IRA as I described has been approved by several sources. I don’t see why mom’s IRA would be considered any different than one’s personal IRA when it comes to arms length transactions.
I am not providing legal advise and that is why I suggest that people considering such a transaction go straight to these companies to get verification. Many who post about this topic are merely repeating what they have heard or believe but the info is not confirmed by any source of true authority. I may well be wrong despite my confirming this scenario with true authorities. Perhaps I have been mistaken in my interpetation of their advice. Again that is why I recommend that all of this be confirmed by anyone considering such a transaction. If your IRA company cannot answer such questions, perhaps it is time to find a different company. These companies make their living doing this niche investing. They had better know what is arms length and what is not. If they are not willing to share this info with me, they are of little use.
I have gotten my mother interested in investing some IRA money into some mobile home notes that I will be creating in the future.
I know that her IRA cannot directly purchase existing notes that I have in my name, but can anybody think of a legal way to set up my future deals so they would qualify?
I’m thinking, set up a corporation to buy all future homes, and create all future notes in this corporation’s name, and have it owned at least 51% by somebody else (father-in-law?). Then sell the notes to her.
But it seems like there would be a simpler way. Any thoughts?
Your mother is a direct relative so you personally can not do business with her IRA. Nor will an IRA trustee give you legal advice. They are limited in what they can advise you on. What you can do is have your Roth IRA participate with her IRA. Your IRA owns the asset with a $500 down. Her IRA funds the rest of the purchase and gets a fixed return.
You may want to look into partnering in the deals. Check into and confirm this first, but it is my understanding that you can partner with the IRA. Not on the purchase of the NOTE, but on the purchase of the HOME. You then sell the home, create a note and split the payments, some to the IRA, some to you.
I would not recommend putting a controlling share of the company in someone else’s name just to try and use IRA funds. If this person is you partner, that may be one thing, but I don’t know that this share distrubution would work for the IRA funding.
Send an email to people at Entrust or Mid Ohio (from the banners above) and get advice from the pro’s.
My suggestion would be for you to retain the controling shares of your company especially since I don’t know for certain that your father in law understands lonnie deals. Have your mom confirm the above plan and transfer her funds to a Self-Directed IRA that allows for this type of investment.