Other Fees with the New SDIRA
Let’s talk about some of the other fees you’re going to have to pay once you roll your money over to the SDIRA…
…that is, if you choose to use someone else as the custodian/administrator, instead of doing it yourself.
Balance or Custodian fees. Balance fees are when you’re charged a percentage of the assets you have in that account to them. Usually they charge about 0.5% of the money in your account.
Transaction fees. Transaction fees are fees you’re charged any time money is either put into your IRA, or taken out of it.
“Per-Asset” fee. Some custodians will charge you up to $250 per acquisition. So each time you buy stocks or real estate or whatever out of that account, they can charge you $250 each time.
To me, that’s ridiculous. But as you’re calling prospective SDIRA’s that you’re considering, you want to make sure you have a full understanding of all of the fees they charge.
LLC Creation and Checking Account
If you want checkbook control, you’re going to need a single-purpose LLC that is owned by your IRA account.
The IRA becomes the member of the LLC, and you get named as the “manager” of the LLC. This gives you the ability to write checks from the checking account.
If the custodian of the new SDIRA offers checkbook control, they’ll take care of setting up the LLC for you.
Once the LLC is established, you then setup a business checking account in the name of the LLC.
Then your new custodian wires your money into the LLC’s checking account.
This way, the funds from your real estate transactions go in-and-out of the LLC via that checking account, not your IRA.
What is Checkbook Control?
Checkbook control is where you’re able to write checks to fund your real estate investments.
Having checkbook control allows you to make purchases faster. Otherwise you’ll have to constantly fill out forms and fax them to your custodian each and every time you want some money from the SDIRA.
In real estate, you need to be able to act quickly, and checkbook control can definitely help you in that regard.
Alright, now you’ve FINALLY got your SDIRA setup, you’ve got checkbook control, you’re happy.
Now let’s finish-up and talk about the actual buying process.