You can buy Charlottesville real estate with your IRA

It's curious that so little is understood about "the real estate IRA." Perhaps it's simply a lack of advertising. IRA accounts invested in stocks, bonds and other financial paper are very lucrative for banks, mutual funds, insurance companies and brokerage houses. These institutions will gladly act as your trustee (the middlemen in all IRAs) and sell you their wares. But they won't act as your trustee if you want to buy real estate with IRA money. Why? They're not in the real estate business.
So you're pretty much on your own investing in a real estate IRA. You have to find your own property, trustee and perhaps a management company, to collect rents and maintain the property.

All your IRA money is in mutual funds and you'd like to diversify. One way is to buy raw land, a house or a building -- even your retirement condo on Wintergreen Mountain.There it is, the retirement home of your dreams. The trouble is that you're at least a dozen or more years from retirement and most of your money is tied up in your IRA.
Too bad, because by the time you're ready to sell your current home, that oceanfront beauty could be way out of reach. If only you could access some of that IRA money without paying a penalty. If only you could rent the space and sock away the income, tax-deferred. Until you retire and enjoy it yourself.

All your IRA money doesn't have to be in paper (stocks, bonds, CD's)
Most investors believe they cannot use IRA money to buy real estate. They are wrong.
You can invest IRA money in a wide range of investments, including stocks, bonds, mutual funds, money market funds, saving certificates, U.S. Treasury securities, promissory notes secured by mortgages or deeds of trust, limited partnerships and … real estate. That includes houses, condos, office buildings -- even if located in another state or country.

You cannot use IRA money to buy your own residence, or any other property in which you live. It has to be investment property. But when you retire, you can direct your IRA to turn it over to you as a distribution, at the current market value.

After the closing, the IRA can make capital improvements in the property and rent it out for a nice income, all tax-deferred. (It could even be tax-free if the Roth IRA is used.)

Remember, you can always get out of your investment. Just direct your trustee to sell your property or interest, and have the funds reinvested elsewhere.

For a FREE REPORT detailing exactly how to purchase real estate with your IRA, just fill out the form below.

5 Steps to Buying Real Estate with your IRA

1) You have the money to rollover from a self directed IRA such as a 401(k) plan and want to buy an investment property (real estate such as a vacation rental condo on the beach, an apartment building, or strip shopping center).

    * Complete an application to open an IRA with a qualified third party     administrator (i.e. Entrust, Mid-Ohio Securities)

    * You ask the new third party administrator and your previous     administrator (i.e. Stock Broker, banker) to roll the funds over to the     new traditional or ROTH IRA

    * Now find the Real Estate that you want to OWN with your IRA

2) For example, YOU HAVE NOW SELECTED A Country Home or an Apartment in Charlottesville which your IRA can buy for $300,000

    * You complete a purchase agreement for the property showing that     your IRA will have legal title.

    * You give a good faith deposit, which you tell the seller will be replaced     shortly with a check from your IRA

    * You complete a Buy instruction letter for Real Estate, this describes     the transaction in detail

    * Your Realtor will have the title company contact the IRA     administrator

Question: Can I finance the real estate investment and just use the cash in my IRA for the down payment?

3) Closing on and taking title to the Real Estate with your IRA

    * You send a copy of the purchase contract to the administrator

    * The administrator sends a replacement check for the deposit to the     seller (or escrow account)

    * You read and approve all documents that the Realtors, title     companies, or lawyers have prepared, then send them to the     Administrator to sign on behalf of your IRA

    * The administrator signs all of the documents on behalf of your IRA     comparing your BUY Direction Letter and the actual purchase     documents to ensure that hey agree.

    * The administrator funds the purchase of the property by wire transfer     to the escrow account.

    * CONGRADULATIONS - Your IRA now owns the property.

4) Managing your Real Estate - you now have two options

    * OPTION 1 - Have your IRA hire a property manager or management     company (not you or your family member) for the real estate based on     terms agreeable to you.

    * You direct the administrator to sign the agreement

    * All rents are collected by the management company and all expenses     are paid by that company

    * The net proceeds are sent to the administrator to credit your IRA

    * OPTION 2 - You can have all rent checks sent to third party     administrator to be credited to your IRA account

    * The administrator will pay all expenses related to the property such     as light, gas, utilities, taxes from your IRA

    * You can also have all rent checks mailed to you, then forward them     intact to the administrator to credit your IRA

    * You can then invest the cash balances in your IRA into other     permitted investments by directing the administrator to make the     investment through a buy instruction letter.

5) Disposing of the real estate ... Again you will have 2 options

Option 1 - Selling the Property

    * A third party, not a member of your family, makes an offer to     purchase the property at price acceptable to you (for example     $450,000)

    * You decide to accept the offer

    * You complete a Sell instruction letter for Real Estate and send it to     the administrator

    * The seller sends a deposit to escrow and the purchase agreement to     the administrator

    * The administrator works with your Realtor, Title Company, and/or     attorney involved for the sale.

    * The property is conveyed to the purchaser in closing, and the title     company records the transaction.

    * The escrow company wires the funds to Entrust for the benefits of     your IRA.

    * Your IRA now has all cash net of costs you paid as part of the sale     agreement.

    * You now decide on your next self directed investment

Option 2 - Distributing the Property

You can have your IRA hold the real estate until your reach retirement age and then you may receive any property as a distribution from your Plan as a retirement benefit. IRA disburse the real estate to you as allowed by IRS code.

Question: Can I finance the real estate investment and just use my IRA for the down payment? YES - Buying Real Estate through your IRA with Debt has some special rules:

    * If you wish to purchase real estate and you do not have sufficient     funds in your IRA, your IRA may incur debt. This debt/mortgage must     be in the form of a non-recourse note loan. The only recourse for     default of the loan is the underlying real estate/property.

    * A non-recourse loan may be obtained from a lending institution, a     private investor or the seller of the property. (The loan may not be     originated from you or any family member that is of direct linear     descent. (i.e. grandfather/grandmother, father/mother, husband/wife,     son /daughter etc.)

    * You may not personally sign for the loan.

    * Using a Direction of Investment Form, you will direct the administrator     to sign the loan document. A copy of the loan must be remitted to the     administrator and a liability will be posted to your account.

    * Then you will need to complete a payment schedule (using a Direction     of Investment form) instructing the administrator to make the     payments with regards to the loan.

Investing in commercial real estate is an exciting step toward creating a solid financial portfolio with rewarding results. We are eager to help you invest intelligently so that you can create the maximum potential for success.

The following information has been provided to educate you about the benefits and the process of becoming a commercial real estate investor. Click on the links below to learn more about commercial real estate:

 

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