Did you know your IRA can invest in Real Estate instead of volatile and fragile stocks and mutual funds? In 2009 I fist learned about this possibility, and kept it in mind as I learned more.
This is a good, safe way to build your retirement package. Even if something goes wrong, you have a deed to the property and the value is there. With stocks, your money is at risk. Your IRA can own a rental property or loan money to a company to rehab and resell a house. You get a promissory note and a Trust Deed just like a bank. Your IRA custodian manages the investment.
Some custodians are harder to work with, or require more paperwork; some are cheaper; some understand Real Estate better.
In 2011, we decided to put my wife’s retirement fund into Real Estate. Through research and my Real Estate contacts, we had become acquainted with an investment company in Dallas called Diversified Metroplex Investors. They buy distressed and down apartment buildings, and rehab them and turn them around. They put together funds from private investors, many of whom invest with funds from their IRA.
I talked with others who were investing their IRAs in Real Estate, and talked with custodians of several companies who manage IRAs for people who want to invest in Real Estate.
We decide to invest in a new DMI venture in single family homes. The company we chose as a custodian for a Self Directed IRA was IRA Services. We rolled over Edith’s 403b fund into a new Self-Directed IRA with IRA Services. This custodian was chosen because of a prior relationship with DMI, who facilitated the transactions and funding paperwork.
Other investors also loan our company money from their Self-Directed IRAs to buy properties to remodel and sell or rent out.
In February 2012, we rolled over my retirement fund with IRA Services as well, to invest in a single-family home rental The rent money would build the IRA. This experience did not go well. Without the facilitation of DMI, I found IRA Service to be terrible in communication.
It was impossible to get to anyone who could even clarify what their paper instructions meant and make any decision. Fortunately, we were buying from a development company with experience working with investors and IRAs. This is their business model. Otherwise this deal would have fallen through early in the game.
Even with Property Direct handling contacts with IRA Services to get straight what was needed for them to release my funds, it took us two months to get funding and documentation finalized to actually get the money to the owner we were buying from.
Property Direct, whose business model is remodeling and selling rented homes to investors with IRAs, said they have never had such a hard time from any previous IRA custodian they have worked with.
Despite our good first experience with IRA Services, facilitated by our investment partner DMI, I cannot in good conscience recommend IRA Services. There are great companies out their who serve as custodians for Self-Directed IRAs investing in Real Estate.
Investing in Real Estate with your IRA is a great approach to build your retirement. I am glad we learned about this avenue of investment personally and for our business.
Find out more about Self-Directed IRAs here:
Texas Home Strategies assists homeowners and sellers to explore options open to them and to assist with difficult decisions. Free consultation. 682-325-8439