Self Directed, RE IRA Investment

[Tony Valle]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $135,000
Cash invested: $26,000

I bought a single family home using a Self Directed RE IRA with Equity Trust.
Loan is almost paid off now and I want to use equity to acquire another property.

What made you interested in investing in this type of deal?

I had some money sitting in an IRA and I decided to use it to buy Real Estate.

How did you find this deal and how did you negotiate it?

I joined a network of real estate investors from Los Angeles CA who were buying properties in FL., AL, and MS in 2004.

How did you finance this deal?

a non-recourse loan with North American Savings Bank

How did you add value to the deal?

I did not add much in value to the deal!

What was the outcome?

I have had a very stable investment property that has always had positive cash flow.
I have had excellent, long term tenants who cared for the property, and an outstanding property management company.
Tenants have paid down the mortgage and I am wanting to use the equity in the home to acquire another property.

Lessons learned? Challenges?

I did not apply any analysis to the purchase.
I had no substantive knowledge of the area. There were other areas in Florida that have had explosive appreciation gains, whereas my home/area has not (modest appreciation gains).
I did not appreciate how much insurance would cost in the area (and how that affects my cash flow).

For my future purchase, I will use better tools to analyze deal and make sure that I maximize cash flow.
I will also create my own real estate goals and strategy.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No.