I had a question the other day about how to buy a house in the Self Directed IRA.
First thing you need to know, is you need to know going in, right from the start that you want to buy the house in your IRA. So the initial offer needs to be in the name of your IRA.
It maybe that the average seller would let you rewrite the contract from your company or personal name and in your Self Directed IRA and replace the earnest money with money from your IRA . . . however, banks will not usually let you change after you have a contract and technically speaking if you personally or in your company get a house under contract and then assign the contract to your IRA, even with no assignment fee, or just simply change the buyers name on the contract, if the IRS dug deep enough, they could possibly decide you are self dealing – a bit no no. So to be on the safe side, make the initial offer in the name of the IRA>
And because the IRA is buying the property, not you, the contract needs to be sent off to the IRA custodian for signatures . .. every cumbersome. One way that many investors get this taken care of is to write the offer in the name of the IRA and personally sign the contract as beneficiary of the IRA, which they technically are and then once it is approved, send the contract off the the custodian to get their signature on it as the actual buyer and at the same time request the earnest money be mailed, wired or what ever is appropriate to the title company.
Then it is just a matter of getting to closing. Here you need to keep in mind that the transaction is not going to be overly swift. So be prepared for a bit of time to send the contract for signatures and get the earnest money to the title company. Once title is complete, you still need all the closing documents ready to go a few days in advance of closing so you can send them off to the Self Directed IRA custodian to approve, sign, notarize and to send back to the title company with a wire of funds.
If it is your first transaction, you may want to talk to the title company to make sure they know what you are doing and hopefully they will have someone in the office that has closed a few Self Directed IRA deals. Next I would consult with your custodian on the best way to get through the writing of the contract and the closing and what time frames exist, what extra fees will be involved to get them to move faster . . . .
And you want to make sure you have enough funds in the IRA to buy the property, pay all the fees involved and to support the property until it makes you money or is sold.