USING A SELF DIRECTED REAL ESTATE IRA TO ACQUIRE INVESTMENT PROPERTY

[Tony Valle]

Hello Forum Community!

I am reaching out to those who have used a self directed RE IRA to build their RE portfolio.

I would love to hear from others who have used RE IRA's and share some success stories!

The basics are that you open an account with a specific IRA custodian (Equity Trust Company, is one example).

You can rollover funds from either a 401K or an IRA to initially fund the account.

Once you have funded the account, you can use the IRA to hold a property within it. There are a few requirements, including: All the gains of the property flow into the RE IRA, and all of the expenses flow out of it. The Investor should be "hands-off" and not use any personal funds for property expenses, nor use gains from property for personal use. You can make yearly contributions to your own RE IRA that are based on IRS guidelines according to your age. You also cannot use the Investment property for any personal use or enjoyment (nor can family members).

You can obtain a loan from a bank who offers "NON-RECOURSE" loans, if you need funding on a property. Each back will have limits and guidelines, besides setting their own rates and terms, that they expect you to comply with, based on the liquid assets held in your RE IRA.

I bought a property using a RE IRA back in 2004 that I will be selling in April of this year. All of the proceeds from the sale will flow back into my ROTH IRA, and I plan to use those funds to acquire additional properties this year.

Some Investors used their RE IRA as a private lender on RE Investments, others buy and flip properties, and others buy and hold.

How about you? How has your RE IRA worked for you?