How to Use Your Self-Directed IRA to Invest in Real Estate Notes

Does using your IRA to invest in Real Estate Notes make sense?

  1. Real estate notes are often illiquid, long-term investments.
  2. Unless an investor is at or near retirement age, the illiquid and long-term nature of note investments is usually not a significant concern.
  3. Although there can never be a guarantee with any investment, real estate note investments routinely provide superior returns on investment (ROI), as compared with the ROI that a typical stock market investors are currently experiencing.

Structure of a Self-Directed IRA

  1. A "traditional" IRA can easily be converted into a Self-Directed IRA.  Making the change is as easy as changing IRA administrators.
  2. IRA administrators that provide investors with the ability to invest in publicly-traded investments (e.g., stocks and bonds) do not allow their investors to "self-direct"  investments in real estate and real estate notes (e.g., non-publicly traded investments).
  3. After an IRA is moved to an administrator that allows self-direction on investments, the IRA investor can begin investing in real estate notes!

Most Popular Types of IRAs

  1. Traditional IRA
    Investors fund Traditional IRAs with pre-tax dollars and defer the payment of taxes on both invested capital and profit until the investor reaches retirement age and, presumably, is in a lower tax bracket.

  2. Roth IRA
    Investors fund Roth IRAs with after-tax dollars and enjoy the ability to earn profits that are completely tax-free!  We really, really like tax-free profits!!!!

Resources

Quest IRA:  www.QuestIRA.com

MidAtlantic IRA:  www.MidAtlanticIRA.com

Pensco Trust Company:  www.PenscoTrust.com

Entrust Administration:  www.EntrustAdmin.com

IMPORTANT NOTICE

Information provided by The Note Company is general in nature and is not intended to constitute or be relied upon as legal, tax, or investment advice.  Please seek and obtain the advice and counsel of independent professionals, such as attorneys and accountants, as appropriate.