Real Estate IRA's
In this volatile investment market it has become the responsibility of each of us to have control over our personal wealth, especially our retirement accounts. We are painfully aware that we cannot be sure that Social Security benefits will be available to us when we retire. Many of us have looked to IRA's, Roth IRA's and 401K's to hold money for us in a tax deferred/free environment until we retire as a form of building a nest egg. The money is usually held in stocks, bonds or cash. Not many people know that they can use self directed IRA's/401k's to invest in real property
Most companies that offer IRA's are not set up to invest the money in real estate. The truth is that by using money you already have in your IRA or 401K accounts, real estate can be bought and sold within self directed accounts. This can be a profitable, although sometimes complicated way to use and diversify your retirement portfolio. Everyone's situation is unique, so be sure to talk with your competent investment advisors before you take any action.
Obviously, the first step is to open a self directed IRA. There are a few companies that offer this service. Pensco, Entrust, Lincoln Trust and Sterling Trust are just a few of the possibilites. Next, you will need to become acquainted with the ins and outs of buying property within the IRA.
You can:
1. Buy real estate of most kinds, including rentals, raw land, condos, commercial etc. The property that you buy will be owned by the IRA and the custodian for the account, not you, will be buying or selling. All rents, repairs, expenses, taxes etc flow from the IRA account.
2. You can finance a property within your IRA. The financing must be a non-recourse loan. There needs to be at least 10% of the loan amount left liquid as a reserve in the IRA account. There are very few lenders who will provide this type of financing. Glen McDermid of Equity Home Mortgage has had great success with finding this type of financing. His phone number is (503) 617-4548. Again, I want to emphasize that it is vital that you speak to a professional about the subject of IRA real estate investing.
You cannot:
1. Your primary home cannot be part of your investment through your IRA. Vacation homes, and second homes are also not good candidates. Rentals that you own which you are currently using as tax deductions or tax shelters would not be wise uses of your IRA dollars.
This is just an overview of what is possible for you. Please give me a call if you would like more information. In addition, it is imparitive that you get credible information from providers of this type of account.
