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-Tony-

IRA and L/p

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Okay I'm starting to think about my future as well as my present....

 

Scenario:

 

I find a lease purchase deal that will net 20k. Can I set that up into a self directed IRA with say Mid-Ohio securities, lease it to my LLC $10 option consideration and for say 8k less than what I will get. Lease it from my LLC to the t/b 3.5k option up front (I keep) $200 a month (2.4k) $2110.00 at close

 

Over the next year I (LLC) get 8k. My IRA gets 12k. And, I get Protection From My t/b. what would be the best to protect me? Maybe form another LLC (llc to ira to llc to t/:blink:

 

Sorry for the what if’s but after a deal or two I would like to do this....

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Tony,

I have ver similar aspirations and I think, given the lack of responses you've got, it's not easy to understand and few have done it.

I have the mid-ohio stuff just out of reach of my desk here--I read it through once and they take a very limited view of lease purchasing--which, given that few folks understand that, may be a wise thing--and a good thing for we few, we proud (we who digress on bragodoccio).

 

Alas, to your questions--well, I guess I wonder if maybe it was hard for folks to follow what you were trying to do in the deal you described. For me, it was--I decided to scrap it.

Let me suggest the simplest scenario and we can work back to your idea from there...

 

Let's say I have a self directed IRA with Mid-Ohio (or like company) that has several thousand dollars in cash in it and I find a deal.

Here's what I've negotiated with the owner--but have not signed! **(see note below)

$100k house (fair market value)

Will take $80k on a 3 year option, which costs you $500.

Owner needs $800/month from you.

Fair rent you think can get: $1000.

 

Option A: IRA is the only principal in the deal on your side of the table.

You have Mid-Ohio sign the contract for your IRA and cut the $500 check and make $800 rent payments. Your IRA receives option money, rent money, and whatever you get at closing greather than the $80k the owner wants at the end, but paid the option consideration ($500) at the beginning and $800/month during--causing it to assume risk should you not be able to rent/sell it.

(I don't know, but I'd think your IRA might also have to pay marketing fees and such).

 

Option B: IRA does the option with the seller and you personally do the lease.

Your IRA cuts a $500 check and hopes that the option gets exercised, but collects on the option money from the T/B--and you personally cannot exercise that option (that would violate 'arm's length' transaction). Not real sure, again, if this can be done or if it might require some contract tweakings...

 

 

**

(I believe that this is important because I think you either do this deal as yourself or you do it "at arm's length", where you're not involved and it is your IRA, with acting custodian Mid-Ohio, who is doing the deal. You may well be able to structure the option with your IRA and the lease with you personally, but maybe not--I'm pretty sure you'll be forbidden, told or advised not to split benefits that cannot be contractually and totally split between you yourself and your IRA)

 

I am not an attorney, not a CPA, not a financial advisor--I am a layperson who has read and thought and nothing more, but I think this is kind of the idea we're talking about.

 

For a very simple pure option, this strategy is dynamite--your sweat equity and knowledge locks up a marketable property for $100 on an option which your IRA pays for. You flip it retail or wholesale and all money goes into your IRA tax free. Ok, you have to acquire that whole set of skills, but if you can do it or if you can spot the perfect L/O deals for your IRA, then this is quite powerful, I believe.

 

Comments, wrinkles, further knowledge?

--Ben

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