3 Ways to Invest in Property Using Your Modest IRA

Posted by Steph Kaye on Friday, July 1st, 2016 at 11:22am.

Real Estate IRAs are gaining ground and home buyers who have retirement wealth have a great advantage when it comes to real estate investments.  Buyers do not need to have the full cash amount in order to invest in real estate with retirement dollars.  If you are a buyer and you have a small IRA, there are three ways for you to use your small IRA to invest in real estate:

1. Partner 
A self-directed IRA or Real Estate IRA can partner with other IRAs, investors’ money, and even personal funds. You may not necessarily find adequate funding provision via partnering with one account, one investor, or only yourself. That being said, you may partner with a group. This means that the IRA would own a fraction of the investment while sharing the profits and expenses with other investors equally.  

2. Leverage 
Your IRA can take a loan and regulations require a non-recourse loan if you intend to use the loan to complete a real estate transaction in a self-directed IRA.  A non-recourse loan means that you, as the IRA holder, are not personally responsible for repaying the loan.  The IRA holder cannot guarantee the loan being acquired by the IRA.  Once you locate a lender/bank, that particular lender will then lend to your IRA and not to you individually.  The lender will have no recourse against you or assets in your IRA if there is a default. The lender can only go after the property which holds the loan as well as that particular property's equity.  

3. Lend 
The third option is to provide capital from your IRA for a real estate transaction.  This is considered a passive investment.  Sometimes investors borrow from a third party’s IRA to close on a transaction and the IRA owner gets to select the rate and terms.  The loan is secured by the property.

Understanding small IRA investment strategies knowing how to leverage your finances can serve you well when it comes to investing in real estate.  

If you'd like to learn more, please don't hesitate to message Lang Premier Properties online or call us at 1-855-526-4466.

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