Told I need a "checkbook IRA" to fund deals fast. Do I?

The LLC doesn't change anything about how the loan itself gets underwritten, which is where your actual money is at risk. What it does change is your annual reporting chore. The custodian still needs a year-end fair market value for whatever the IRA holds, and if the IRA holds an LLC instead of a note, you're valuing the LLC. Most custodians I've priced charge a per-asset holding fee in the $75 to $200 range and will ask you for a valuation form every year. One note is one form. Ten notes inside an LLC is one form, which is the real convenience nobody mentions in the sales call.

Ask them what their funding turnaround actually is. Mine says two business days after receipt of signed originals and it has never once been two days.

Different flavor of the same trap, but worth having in your head since you mentioned land. If the IRA ever ends up owning dirt instead of paper, you cannot pay for the survey or the brush clearing off your personal card and get reimbursed later. Every dollar has to come from the IRA. I've watched people treat a $400 invoice as too small to matter, and the size of the bill has nothing to do with whether it's a prohibited transaction.

Does the LLC need its own EIN and its own bank account, or can it share the custodian's account? I read the LLC is disregarded and then assumed that meant it doesn't need its own anything, which now sounds wrong to me.

@juniper it needs both. Disregarded is a tax word, it doesn't mean the bank will let an entity with no EIN open an account.

Parcel, the reason the checkbook package gets pushed so hard is that it's a higher-margin product for the promoter. That doesn't make it bad. It does mean the person quoting you $1,300 isn't neutral. The published cases I've read about people getting burned with these usually involve the owner treating the LLC account like a personal one, guaranteeing something, or drawing a management fee.

One or two notes a year, stay custodian-directed. Mine charges $30 a wire and a flat annual fee, and the paperwork per loan is a funding authorization plus the note and security instrument. That's an afternoon, not a structure.

Where's the crossover though? If someone is making six or eight small loans a year, say $25k each, does the LLC start paying for itself in fees or is it mostly about the speed?

@kestrel do it on paper. Custodian-directed at $300 base, say $150 per asset per year, $30 a wire. Two notes is roughly $660. Eight notes is roughly $1,740 a year, every year. Checkbook is $1,300 once plus $400, plus whatever your state charges the LLC, call it $500 all in annually after year one. So at two notes it never pays back. At eight it's ahead inside the first year and further ahead after. That ignores your own time, which is the part people actually care about, and it ignores that you now have an entity to keep in good standing.

Speed is not a small thing if you're funding anything with a short fuse. A seller-side deadline doesn't care that your custodian needs originals by courier.

Basic question I'd rather ask here than there. When the IRA "buys" the LLC, is that money leaving the IRA? I keep picturing it as a withdrawal and I'm sure that's not how it works.

@ember no, the IRA is just exchanging cash for an asset, same as buying a note. Nothing leaves.

Parcel, the piece I'd hold onto from all of this is cash inside the account. Land-adjacent stuff has bills that show up whether you like it or not, and if the IRA is fully deployed into notes you can't wire the property tax from your checking account to cover the gap. I keep a few thousand sitting idle in the IRA specifically so I'm never in that corner. It looks lazy on a spreadsheet.