Real Estate IRA’s: Getting Started Right (Part 3 of 5)

September 20, 2017  --  Episode #274

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You can’t do a great real estate deal in your self-directed IRA or 401k without first setting up that IRA or 401k.  But who is the right provider?  And if you’re not using the best provider right now, should you switch?  I’m Bryan Ellis.  I’ll give you the answer right now in Part 3 of 5 Simple Steps to Getting Started right with a real estate IRA.  This is Episode #274.



Welcome, my friends, to part 3 of this 5-part series about getting started right with real estate investing in your IRA.  If you’ve missed either of the two previous episodes, you definitely should catch up on them, as each one builds on the last, including today.  And my friends, there’s no time like the present!  You can get links to the previous two steps by visiting today’s show page.  Speaking of such things…

Today’s show page can be found at SelfDirected.org/274.

So today, we address a big question:  Which provider should you use for your self-directed IRA or Solo 401(k)?

Well, in yesterday’s episode which, again, is linked on today’s show page if you missed it, you were able to determine whether an IRA or 401(k) is right for you.

Now maybe you already have the right type of account set up, or maybe you don’t.  Either way, you should pay close attention, because your choice of IRA or 401k vendor can make a huge difference.

Let’s start with solo 401k’s.  They are different from IRA’s because the law doesn’t obligate you to use a qualified custodian to hold the assets.  What is required is a “trustee” to manage the 401(k), but that can be you or practically anybody you choose.

Because 401k’s don’t require the presence of a custodian, you have far more options when it comes to opening them.  There are many attorneys, CPA’s and other providers who can set you up with a solo 401k plan.

But they’re not all the same, not even close.

Now look, with deference to my colleagues in the self-directed IRA custodial business, I’m going to recommend that you do NOT go to an IRA custodian or other financial service company to open up a solo 401(k).

There’s one reason for that, and that is that there’s substantive evidence to suggest that the biggest benefit of using a solo 401k over an IRA – namely, that it’s easier and less expensive to deal with prohibited transactions – well, there’s substantive evidence that that benefit disappears entirely if your solo 401k is a custodial plan.

I’m not going to get into the why’s and wherefores of that particular issue right now, but I will happily direct you to a segment I did on my radio show about this.  You can find that link on today’s show page at SelfDirected.org/274… and I really do recommend you listen to it.

As for precisely WHO should set up your solo 401(k)?

I recommend, without hesitation, that you work with attorney Tim Berry to set up your solo 401(k).  He knows more about this stuff than anybody in the country, and his 401k plan documents are top-notch.

If you’d like more information about that, visit today’s show page and click the link that says “How To Set up a Solo 401(k)”.  That will tell you what you need and how to contact Tim to make it happen.

As for IRA’s…

Wow, what a can of worms that is.

Here’s the bottom line:  I think most of the IRA administrators and custodians are doing a pretty good job these days, but not all.  There’s one… one of the oldest, most high profile custodians, who I’ve literally never heard anything good about them from their clients, and the last report I had about them… totally unsolicited, was two nights ago at the Georgia Real Estate Investor Association meeting.

This guy said that for 10 years, they show the status of an investment in his account as “deed missing”… even though he’s sent it to them repeatedly.  And this is far from the worst thing I’ve heard about this particular major custodian.

That’s not to say that the big ones are inherently bad.  I don’t have an account with them, so I don’t know for sure.  But it’s my impression that among the biggest custodians, both Pensco and Kingdom Trust do a pretty good job.

I also have heard a lot of good things about Advanta IRA, NuView and Next Generation.

But again, please note:  I do not have an account with any of them, and am only giving you my impression.

Here’s a good idea for you:  Take a look at the comprehensive listing of self-directed IRA custodians we have at SelfDirected.org.  It lists all of the truly self-directed IRA custodians and administrators.  Go down the list of them, read reviews and interview them.  This is an important decision.

That list is available for you to review, and for you to download, on today’s show page at SelfDirected.org/274.

Whatever you do, just make sure you work with a custodian who provides for your specific needs.  For example, if you’re going to be buying real estate from the courthouse steps, you’ll need very quick access to your capital.  Make sure that your custodian can accommodate that.

This topic – selecting a self-directed IRA custodian – is a big deal.  I devote a substantial amount of time to this issue in The Definitive Guide to Self-Directed IRA’s.

Oh, you haven’t seen the definitive guide to Self-Directed IRA’s?  You’re kidding me!  It’s only the very best resource ANYWHERE for the topic of self-directed IRA’s.  If you’d like a complimentary copy – complimentary because you are a loyal listener to this show – then go to today’s show page at SelfDirected.org/274 and you can download without paying a single penny.

So there you have it, folks.  If you are going to use a 401k, have Tim Berry set it up.  The info you’ll need to make that happen is at SelfDirected.org/274.

And if you are going to use an IRA, download the comprehensive list of custodians – also available at SelfDirected.org/274 – then do a bit of homework, check with your friends, and choose wisely.

And if you’re a part of that exclusive group of highly motivated investors known as the SelfDirected.org Inner Circle and you’d like to know SPECIFICALLY who I recommend for IRA’s, just drop me an email to [email protected] and I’ll clue you in.

Hey… I have a question for you:  If you already have a self-directed IRA or solo 401(k), who did you use to set it up.  Do you like the service you’ve received? Sound off on today’s show page at SelfDirected.org/274

And my friends… invest wisely today, and live well forever!


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Bryan Ellis

I am host of Self Directed Investor Talk, which I'm told is America's #1 podcast and for affluent self-directed investors. I'm also something of an expert in self-directed IRA's, solo 401k's and 1031 exchanges. You can find more of my writing in some cool places like TheStreet.com, Entrepreneur.com, ThinkRealty and even Forbes (that was always one of my goals!). I live in metro Atlanta, Georgia with my wife and business partner Carole Ellis(she's a real business partner... not just because she's my wife... I'd want to work with her if I wasn't married to her... and I'd want to marry her, too). I also have 4 children ranging in age from 2 to 20 (yes, you read that correctly). It's my goal to be the name everybody thinks of when they think of Self-Directed IRA's and Solo 401(k)'s.