Investing via Self-Directed Retirement Plans

[Sonya Marin]

Investment Info:

Condo buy & hold investment in Chicago.

Purchase price: $92,950
Cash invested: $92,950

Purchased within a Self Directed Retirement Entity

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

Having seen my retirement portfolio go through a terrible drop during the 2008 financial crisis I wanted a way to diversify my retirement portfolio.

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

My partner found this on the MLS. This owner had moved out of state and no longer wanted to manage the property. Was able to negotiate down as this was a cash purchase.

How did you finance this deal?

I moved money from an existing old 401k to a self directed retirement entity

How did you add value to the deal?

This was already being rented out so we did not need to spend any additional monies other than the purchase price.

What was the outcome?

So far, this property has been a fairly easy rental to manage. This tenant has been low maintenance. In the last two years the tenant has only reached out once. Monthly HOA's are low as well.

Lessons learned? Challenges?

The challenge here was the time spending learning how to do set up and work through the self-directed retirement plan and finding a company to do this correctly. Fortunately we invested in a set of videos that explained the process and offered some resources for this which is how we learned to do everything and knew what to look out for in terms of not disqualifying our retirement plans!

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

My business partner is a real estate agent in Chicago who I highly recommend. She has over 12 years of full time experience in the industry. https://www.dreamtown.com/agents/lauren-bergiel

[Sonya Marin]

@Meredith Burt-  Hi!!!  I see you are from OK!  My very first rental was out in OKC and I still have it there!

I would recommend this if you're going to have investments that will put cash back into the account as there are usually annual fees so you'll want investments that are cash flowing back into the account to help pay for them (vs say investing in gold and needing to make contributions just to pay for fees or having enough cash sitting in there to just cover fees). I set mine up a couple of years ago so don't have an exact amount but I think I paid whatever the fees they charged to set up a legal entity along with an annual maintenance fee every year. I didn't remember thinking it was too terrible given the upside :)