A Perfect Time to Move IRA Money into Real Estate

[Shari Posey]

The past two weeks have only strengthened my resolve to end all investments in mutual funds and stocks to invest in solely real estate. I reviewed my investments last year, before the crisis, and my 10-year returns on my stock & mutual funds were dismal but all my real estate had done well. Even with the decline in RE values, they still cash flow.

Maybe all of you know that you can invest IRA money in real estate but just in case you don't here is what I know (and do):

You can rollover an old 401K or IRA into a "self-directed" IRA. I use a company called Sterling Trust out of Waco, TX but there are several companies that perform this function. It is possible for your IRA to get a loan but it's expensive and it really has to cash flow big tiime. However, you can use funds or combine funds with family members or accounts to buy properties outright. My fees are about $300 per year for two accounts.

What I love about it is that for my ROTH IRA, all the rent checks go back into my ROTH growing tax-free. The non-ROTH account accumulates as deferred taxes.

I am so sick of hearing that CEOs lied about the risk, lied about the debt, lied about the profit, cooked the books, etc. Unless there's a natural disaster, I know my rental units will keep bringing in income every month and by the time I retire, they will go up in value.

[Jon Holdman]

Agree. I've done some of the same, too.

I've used Sterling in the past, too, and have recommended them in previous posts. My last transaction, though, was a disaster, and I can no longer recommend them. They were very slow to process the paperwork, and messed up several times. For example, I faxed them a legal sized document which they printed on letter sized paper. That made the document unusable, but I didn't discover this until I received it back in the mail. Then, when the title person e-mailed them the document, and I called and asked, they said they would turn it around the same day. The title company provided a fedex airbill with early am delivery. It took them four days to send it back out.

I'm switching to an account with Guidant Financial. I know several people who use them and are happy. Expensive to set up, but you get a checkbook, allowing quick responses to deals.

Roth is an awesome alternative.