Self Directed IRA for real estate purchase?

[nanci2539]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks

[Schaumburger]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks

Hope this doesn't sound like a dumb question, but is a "self directed IRA" the same thing as a "rollover IRA"? I opened a rollover IRA in 2002 from all the money that was held in my former company's 401K plan that I accumulated from 1988 to 2002.

And do you have to wait until you are 59 1/2 to withdraw money from a rollover IRA without incurring taxes/penalties to buy a home that would not be your primary residence?

If I am still working full-time at age 59 1/2, could I withdraw money from my rollover IRA to buy a home in TV which would not be my primary residence, or do I have to be totally retired to withdraw money from my rollover IRA at age 59 1/2? And is there a certain maximum percentage of a rollover IRA that a person can withdraw at 59 1/2 if that person wants to use those funds to purchase a home that would not be the person's primary residence?

[nanci2539]

As I understand it, no it's not the same as a rollover. In simple terms, we want to use money in an IRA to purchase real estate. A self directed IRA facilitated by a custodian (i.e., Bank, investment institution, etc) is set up so the owner (us) can deposit and withdraw funds without a tax liability. The real estate becomes part of the IRA. Many banks do not offer this service because real estate in an IRA is a tangible asset.

In terms of your other questions, I am not an expert to answer. But I bet if you google your questions, you'll get some info. Or others more proficient in this area can respond.

[rjm1cc]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks
A while ago I hear an attorney discuss doing this. It can be done. You can also manage the property if it is owned by a corporation or LLC but you have to be very carefully to make sure you set everything up to be legal. I would expect management costs to be a big part of the decision on doing this.

The IRA could purchase a limited master partnership interest that owned real estate but it is possible that LMP's could have taxable income even inside an IRA.

My point is it can be done, but be sure you hire an advisor that has done this before and knows the rules.

[rayschic]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks

Here's a link to an interesting article about it. There are lots of rules, so you should definitely use the professionals.
Seems like it can't be your primary home.
You can probaby gets lots of info from companies like Vanguard or Fidelity or whoever holds your IRA. Good luck.

How To Use a Self-Directed IRA to Buy Your Retirement Home Now (http://www.nuwireinvestor.com/howtos/how-to-use-a-self-directed-ira-to-buy-your-retirement-51545.aspx)

[justjim]

There is a guy with the last name of Potts who has given "talks" in TV regarding using your IRA to purchase real estate. Sorry I don't have any more information as I am in Illinois currently visiting my family but Mr. potts should be in the local phone book. I have been told he has set-up such transactions for real estate.

[nanci2539]

Thanks. I looked in the Village's phone book and there are four listings for Potts. Would you happen to know his first name or the company he's with

[justjim]

My wife thinks his name is Allan or Allen Potts and that is likely correct.

[rayschic]

Check this link for Alan Potts Financial.
Real Estate IRA Investing | Roth IRA | 401K Real Estate (http://www.pottsfinancial.com/index.shtml)

[nanci2539]

Hummmm, there isn't a listing for an Allen Potts; there's a Jim, Joseph, Earl and Susan.

I appreciate your help - any idea where he's spoken or if your wife remembers if he was affiliated with a firm or company

[nanci2539]

Thanks for the link rayschic; I'll have my husband check it out. Just wondering if it's worth it. We were thinking of purchasing a property here in the Villages for rental purposes.

[yarnspinner]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks

Hope this is not too late to be of use to you. The gentleman who purchased our house in Maryland used Pensco (https://www.pensco.com/) to put the house in a self-directed IRA and use it for rental purposes. Pensco's website seems to imply that they specialize in IRAs containing alternative investments. I suspect that the property can not be used for residency, but rental purposes in order to qualify.

Hope this helps.

Good luck.

Yarnspinner

[wendyquat]

Hummmm, there isn't a listing for an Allen Potts; there's a Jim, Joseph, Earl and Susan.

I appreciate your help - any idea where he's spoken or if your wife remembers if he was affiliated with a firm or company

We went to one of his "talks" a couple of years go, gave him all our info and never heard from him. He did not return our call! I get the idea he's only interested in helping you do this if you have a huge retirement account for him to get his hands on!

[Mallory Voice]

Did anyone use a self directed IRA to purchase real estate property? If so, who did you use to facilitate this.

Thanks

We don't advise going this route. We've been advisors for over 20 years and follow our own advise. Our niece used a self directed IRA for real estate and said it was a huge mistake. She did this without consulting with us first. Real estate tanked a few years ago - if you are over age 55 - don't recommend it.
MV
:read:

[RVRoadie]

I did this a few years ago. I used IRA Financial Group (http://www.irafinancialgroup.com/) to set it up, and IRA Services Trust Co (https://www.iraservices.com/) to be the Custodian. The costs were about $2,000 to set up, and about $500 per year to operate. That includes the LLC filing fees.

Basically it works like this. IRA Financial Group creates an LLC for you to use to make real estate investments. You open a bank account in the name of your LLC. You rollover IRA funds to IRA Services and then direct them to invest in your LLC. They transfer funds to your LLC bank account, which you then use to invest.

The only reporting requirements are an annual valuation reported back to the custodian, and annual filing fees for the LLC.

You must be careful not to engage in any prohibited transactions. This basically means that you (or any members of your family) can not have an interest in a transaction. Also, you can't contribute your own labor to the enterprise, beyond what you would normally do for a self directed IRA.

For me it has worked out well. I have purchased a few rental homes, and provided some high yield mortgage loans.

IRA Financial Group seems to have changed hands since I used them, so don't take this as a recommendation.