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Posts for January 2014

IRA Loan Debt Service Coverage

IRA Loan Debt Service Coverage is the ability of the rental property that the self directed IRA (the Plan) owns to generate enough income or rental stream to pay all the operating expenses of the property and the loan payments with a cushion. A Non Recourse loan can only be paid back by the income and liquid assets in the Plan. So when a lender is evaluating whether or not to make a non recourse loan, that lender and you should look at all the operating expenses the property has such as taxes, vacancy factor (we use 7% of gross rents), insurance, any HOA Fees, maintenance, and any other operating expense the IRA is obligated to pay.

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Titling Self Directed IRA Owned Properties

Titling self directed IRA owned properties (naming the entity) is different than owning a property in your own name or privately funded LLC. If your self directed IRA is held by a custodian or administrator and you purchase a property with that account, the name on the Deed or ownership document filed with the county recorder in the area of the country you are purchasing the property in must show the name of the company where your account is held FBO (for the benefit of) your name. An example would be: XYZ Trust Company Custodian, FBO Roger St.Pierre, IRA. Or if an administrator, then the name of that company FBO your name IRA.

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