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WHAT TYPE OF INVESTMENT IRA DO I WANT?
This is the first decision you make because all other decision flow from this one. There are really two options – a self directed IRA or a Checkbook LLC. Although both of these options are “self directed”, one is more self directed than the other. Let’s briefly talk about the differences.
With a self directed IRA your funds are generally in the control of the IRA custodian. If you want to purchase a property you must fill out appropriate forms, wait for custodian approval and then get a check cut. As you might imagine, this scenario may not be quick enough if you are bidding on foreclosure properties or if you are in a multiple offer situation on an investment property. There are other restrictions on this type of IRA. You cannot be the property manager of your investment real estate. You cannot even change a light bulb at the property.
With a Checkbook LLC there is another entity formed, an LLC, whose sole asset is the IRA. You actually control the checkbook under this scenario because you are the manager of the LLC. You have sole signature authority over the LLC. You can be the property manager if you so desire.
Generally the costs associated with a Checkbook LLC are much less than with a self directed IRA because the custodian’s time is much less.
There are startup fees associated with each type and different companies will charge different fees. We have several custodial companies we are familiar with and we could urge you to check them out. Please see the IRA custodians list on the home page.
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