Sell More Real Estate to Your Clients: Tell Them to Use Their IRA Funds!

Self-directed real estate IRAs have been in existence for over thirty-five years.  These are the same IRA s everyone is familiar with but with a small and important twist:  These plans have an investment discretion section permitting investments in real estate, notes, trust deeds, leveraged property and much more.

You can transfer any non-self-directed IRA to a self-directed IRA, or amend and restate an existing 401(k) plan to one which permits self-direction easily.  All you have to do is:

1. Get educated. This applies to both you and your clients. If you’d like, we can arrange for a private seminar with you and your clients. We’ll provide all of the information you’ll need to get started.  You can also learn more on our website at www.uDirectIRA.com.

2. Select the plan option.  uDirect IRA Services offers the full range of retirement plans from Traditional and Roth IRAs, to plans for small businesses and self-employed individuals. You can also establish a new Individual 401(k) with generous contribution limits if you are in business for yourself.

3. Open an account and transfer the funds. If you or your clients have an old 401(k) where you used to work, these funds can be directly rolled over to a self-directed IRA.  You can also transfer an existing IRA into a self-directed IRA and begin directing your own retirement investing.

Now, you or your clients are ready to make real estate investments! 

Invest in real property directly. Use your IRA and or 401(k) funds to invest in an investment property directly. You direct us to make the investment in your choice of property by completing a Direction Letter (DOI) and providing the supporting documentation.  It’s the IRA that is the buyer, not you, so the name of the buyer is written “Custodian FBO Your IRA”.  The custodian signs the purchase documents on behalf of the IRA.

If you see a property coming on the market that you feel will appreciate or cash flow, buy it with your IRA or with OPI (Other People’s IRAs).   Combine your IRA with Other People’s IRA funds to make larger purchases or a single purchase of a larger dollar amount, be it a single family, apartment complex or condo.

OPM (Other People’s Money) and OPI combined: Combine your IRA, OPI and Other People’s Money (OPM) to acquire the investment property that you and yours want.  Each person receives an undivided interest in the property. All income is allocated directly in relationship to the amount invested by each person, IRA or 401(k). You can even include family members, as long as the transaction closes simultaneously (concurrently).

Leverage the Investment. Yes, you can have leveraged property in your IRA or 401(k).  The loan is actually made to the IRA directly, not you personally, and it must be non-recourse.  There are lenders who make non-recourse and we have a list we can share with you.   There may be a tax on the income on the amount financed (UDFI), but the overall effect can be a real advantage to your IRA.   Individual 401(k) plan acquisition debt is not subject to any other tax, except when you receive it from your plan.