I am interested in purchasing a mobile home park to be held within my self-directed IRA, but I am not sure how to deal with the hiring of an on-site manager. I assume that the manager cannot be an employee of the IRA. Does anyone know how this can be done?
Richard -
Of course the manager will be paid for by your IRA. Your IRA will pay for everything related to this investment - insurance, repairs, management, etc. You can’t be (too) involved in managing the IRA, this is considered unfair/illegal/taxable help to your IRA. So you’d better have a manager paid for by the IRA (your IRA will own the LLC that will, in turn, own the property - or better yet, own the property in a Land Trust and have your LLC be the Beneficial Interest holder), and you better be able to truthfully answer any audit from the IRS if they ask “How do you manage your IRA investment?” The answer better be “I’m not materially involved with improving my IRA investment. My manager does everything, and he is paid for by the IRA, not by my other non-retirment funds.”
I like Equity Trust (https://www.trustetc.com), but there are a number of good SDIRA Administrators.
Just don’t mix your ‘regular’ money with your retirement money and you should be OK. For example, you can not buy a MHP (the real estate) with your SDIRA and improve the returns into your retirement account by using your regular money to buy mobile homes (the wheel estate) and place them on the land your IRA owns. That would be co-mingling/self-dealing. However your ‘financial friend’ with his regular money could do that and benefit your SDIRA … and you could reciprocate with your regular money buying wheel estate to sit on his SDIRA-owned real estate. Become a student of Jack Miller and Pete Forunato, you’ll learn a lot.
To your continued success,
-jl-
Jefferson,
Thank you very much for your thoughts on this. So my understanding is that the on-site manager would be an employee of a newly formed LLC which owns the MHP where my IRA owns the LLC. All expenses of the MHP and of course all of the income from the MHP must pass through my IRA.
Richard