22.1 – Qualified Retirement Plans & Self Directed IRAs

I personally don’t like these QRPs or qualified retirement plans (Roth-IRA, Solo 401ks, etc) if you are an real estate investor because part of the reason we are investing in an asset class like real estate is to get the depreciation on deals and bonus depreciation on syndications via cost segregation. If you are conservatively using prudent leverage and finding decent deals there is no reason you should not be able to retire in 10 years or less and thus negating the very reason for these accounts. Frankly, I want my money today. I want to build mini pensions today instead of waiting till 60-70 years old. When you have money in these accounts it sounds good that you are not taxed on gains but you are restricted from getting a Fannie Mae loan. Therefore you are forced to get second tier financing options, for example, a Roth IRA can buy real estate on leverage, however, will need a non-recourse loan which is often a 1-2% higher interest rate and lower LTV. No Bueno! Caveat: If you are late to the game and already have a fat 401k then you should convert it to a solo401k. At that point, you should think about putting it into a syndication since you are restricted on how you can leverage it. Anyway let me know you would like a referral to my checkbook ira contact. The only reason I would use a tax sheltered account is to invest in assets that do not have depreciation such as life settlements. This is only a 10-15% IRR investment therefore it is more of a lower risk end game strategy when you net worth is over $1-3M. People like to use QRPs or SDIRAs to invest in Private Money Lending but there are many cons to that strategy as a means of increasing your net worth.