Did you know you can purchase real estate investments with an IRA? Well, you can! 

Contrary to what your accountant, attorney or financial planner may have told you, stocks, bonds and mutual funds are not the only allowable investment choices within your retirement account.  If you have become increasingly dissatisfied with your stock-market based retirement plan portfolio, now is the time to shift your diversification strategy and begin to buy real estate within your IRA tax-free!  The solution? Establish a Vantage Self-Directed IRA.

Thought you didn’t have the money to take advantage of today’s real estate market? You probably do, but just didn’t know it!

If you have money saved in a retirement account, you can begin to implement all the wealth building real estate techniques you know today or are learning at AZREIA!  Self-Directed IRAs have become increasingly popular as more and more Americans desire increased control over their retirement investments and are learning the truth about the alternative investment choices available beyond the stock market.  In many instances, the attributes of investing in real estate with an IRA are clear — greater profit potential, no rental income taxes, tax-deferred or tax-free growth, added diversification, and decreased volatility.  It is no wonder why Self-Directed IRAs have gained so much press nationally by recognized publications.

How does a Self-Directed IRA work?

The reality is that it is quite simple.  The first step is to establish a Vantage Self-Directed IRA.  As an AZREIA member, you receive a 50% discount off the account set-up fee!  Once the account is established, you have to complete a few forms to initiate the process of transferring the money you are wishing to use to buy real estate from your current custodian who is limiting your investment choices to stock market based options only.  Remember, your custodian may be telling you that their products are your only choice, but the truth is that the federal government allows IRA account holders to invest in virtually an unlimited list of asset strategies, including any type of real estate asset category.  Once your money has been successfully transferred into your Self-Directed IRA, you are ready to begin directing your tax-favored retirement savings into the real estate deals of your choosing.

A Self-Directed IRA can acquire real estate in three ways:  Cash, partnerships and with a mortgage.

Each purchasing strategy outlined below has distinctive features and benefits.  The good news is that you are in complete control of how you can structure your real estate transaction within your Self-Directed IRA to best fit your overall investment objectives.

  1. Cash
  • IRA pays 100% of the purchase price of the property
  • IRA owes 100% of all expenses
  • IRA collects 100% of all the income – tax free!
  • Great advantage in the current market to beat other bids from competing investors that need financing to purchase the investment property
  1. Partnership
  • Accomplished through the use of entities, such as, Limited Liability Companies (LLCs) and Limited Partnerships (LPs)
  • IRA purchases a fractional interest of the entity alongside other investors by pooling monies to buy more properties or bigger deals your IRA can’t afford on its own
    • The other investors can use their personal money or their IRA funds to partner with your IRA
  • IRA owes pro-rata interest for all expenses within the entity
  • IRA collects pro-rata interest for all investment income – tax free!
  1. Mortgage
  • Buy real estate in IRA with a mortgage
    • IRA mortgage must be non-recourse (no personal guarantees)
    • The IRA is the borrower, not the IRA account holder (personal credit score not used to determine the IRA loan approval and underwriting)
    • Typical down payment for an IRA non-recourse loan is 30%-50%
    • Property must have rental income to pay mortgage
  • IRA will own 100% of the property subject to the mortgage
  • IRA collects 100% of all income
  • IRA pays 100% of expenses including mortgage
  • Your IRA savings can be leveraged to buy more real estate deals in the current buyer’s market!

Didn’t think you could use your retirement savings to buy real estate?  Well, now you know you can and what steps you can take today to get started!

For more information on Real Estate IRAs, please visit www.VantageIRAs.com/ AZREIATo learn more about Real Estate IRAs, please visit: www.VantageIRAs.com/AZREIA

By J.P. Dahdah, Chief Executive Officer Vantage Self-Directed Retirement Plans