Self-Directed IRA’s And Buying Real Estate

U.S. Residents Buy Property In Monterey Using Their Self- Directed IRA’s

 

There are numerous investment opportunities that abound on the Central Pacific Coast of Costa Rica. One way to tap into this great investment opportunity is with a self directed IRA. If you want to sock away something in your IRA besides stocks, bonds and mutual funds, you may want to consider real estate. Raw land, houses, condos, commercial properties you can use an IRA to broaden your portfolio.

 You cannot invest in real estate with your basic IRA; you will need to open a self-directed IRA. To buy real estate you may have to find an independent administrator to serve as a trustee or custodian. An administrator will walk you through the steps needed to set up a self-directed IRA. You can set up an account with new money, but then you’d only be able to fund it with the maximum IRA contribution each year. Or you could transfer some or all of the assets from your traditional IRA. One reason you probably shouldn’t tackle an IRA real estate investment on your own is that the IRS has a strict criterion when it comes to using retirement funds for real estate.Historically, real estate has provided many Americans with a stable investment vehicle that provides both income and appreciation. One of the greatest tools available to real estate investors is government-sponsored retirement plans. The tremendous advantages IRAs have are that they provide the power of compound interest, reduction of taxable income, asset protection and aid in estate planningVery few Americans realize that they have the option to self direct their IRAs and other retirement plans into real estate. If you currently are a successful real estate investor, or are just looking to diversify your retirement portfolio, the combination of real estate and your IRA can be very powerful. One of the companies we suggest that has allowed us to use our self-directed IRA to purchase property within Monterey is Equity Trust. Go to their website at trustetc.com, it is very informative and they are one company that is known for teaching individuals and companies how to use self-directed IRA’s.When you do call Equity Trust we recommend that you take the time to explain your situation and be specific about what you want to do. Don’t fear that you are asking too many questions. We probably called a dozen times as questions came up.  We also discovered that investing overseas is not the common call. So our first customer service representative told us we could only invest in domestic properties and not one overseas. (She was new) After explaining our project to her supervisor we discovered we could indeed invest. What we also learned is that the real estate development project we invested in (Monterey) was an approved project by Equity Trust. Once we got the details squared away our money was rolled over from our 401K into a self-directed IRA within 21 days. There are other companies that can roll over your 401K into a self-directed IRA. Another one that we know a lot of people use. But make sure they allow you to invest in overseas property. We invest in real estate back in the states and never pay a dime for the property or for the repairs. We simply have private investors who have self-directed IRA’s who loan us the money and then we pay them back in 90 days with interest. It’s like renting their money. Our private investors love it because they are earning 10-12% on the loan and basically doing nothing. They come back to us over and over again. So your IRA money can invest in overseas real estate but remember you can also become an arm chair investor for other savvy real estate investors. Also keep in mind that if you have a 401K you need to first check with the company that manages the 401K. They are called the “custodian”.  The reason for this is some companies will not allow you to roll your money over as custodians they have certain restrictions. For example the law firm that was the custodian for our 401K had a rule that only lawyers could roll over their 401K’s and not paralegals or secretaries. I’m not sure what their reasoning was for this rule, but because the employer set the rules, those rules applied.So if you were contemplating investing in Costa Rica and thought it to be an elusive dream —-think again. It is possible and using your self-directed IRA is a smart way to do it.