Real Estate Notes, Mortgages/Deeds of Trust in Your IRA
Utilize Your Knowledge and Expertise to Prepare for Your Future
Historically, real estate and real estate-backed notes, such as mortgages and deeds of trust, have provided many Americans with a stable investment vehicle that provides both income and appreciation. One of the greatest tools available to mortgage/deed of trust and other note investors are government sponsored retirement plans.
Very few Americans realize that they have the option to self direct their IRAs in mortgages/deeds of trust and other notes. Most investors believe that their only IRA investment options are bank CDs or the stock market. If you currently are a successful note investor, or are just looking to diversify your retirement portfolio, the combination of mortgages/deed of trust and other notes with your self directed IRA can be very powerful.
The tremendous advantages IRAs and other retirement plans offer Americans include the following:
- The power of compound interest
- Reduction of taxable income
- Asset protection
- Estate planning
Click for more information on the Benefits of a Self Directed Individual Retirement Account (IRA). However, not all self directed IRA custodians are the same! See Why Equity Trust is the Preferred Choice.
Please refer to Procedures for Investing in Mortgages or Notes and to the Step-by-Step: Promissory Note / Mortgage / Deed of Trust Direction of Investment Guide.
Invest with knowledge, expertise and comfort
The greatest advantage IRAs hold for note investors is that they can apply their knowledge in investment areas in which they are already successful (and comfortable) to their IRAs and other retirement plans.
Real estate-backed investments that you can make within your Equity Trust self directed IRA include:
- Mortgages
- Deeds of Trust
- 1st and 2nds
- Partials/Back Ends of Notes
- Real Estate Lease Options
- Discounted Notes
- Promissory Notes
Your Rate of Return is Based on Your Knowledge and Expertise
When you combine the advantages of an IRA with your knowledge of mortgages/deeds of trust and other notes, you have the ability to compound investments tax free/deferred. The rate of return on your investments will be based on your knowledge and expertise in notes, not on the ups-and-downs of the stock market.
What kind of wealth can be created for you and your family with an Equity Trust self directed IRA invested in mortgages, deeds of trust or other notes? Find out with the Equity Trust Self Directed IRA Wealth Calculator.
Why haven't I heard of this before?
Because most custodians do not offer truly self directed IRAs. They will only allow you to invest in their approved list of investment options. If you have an IRA at a bank, you will probably be limited to CDs; if at a brokerage firm, to stocks, bonds and mutual funds.
Are there any downsides?
There are not any downsides per se, but there are certain types of transactions that you can not perform through an IRA. Basically, the IRS prohibits "self dealing," which are investments in which you or your family members of lineal descent have prior ownership. (For more information, please see prohibited IRA transactions.)
Additionally, no investment (aside from FDIC-insured deposits) is guaranteed and investments in mortgages, deeds of trust and other notes are not for everyone. However, most successful note investors feel that the investment risk of notes backed by good collateral is much less than that associated with investing solely in the stock market.
Please note:
- When purchasing any type of income-producing real estate note for your self directed IRA, it is required that a loan servicer be designated for the investment. A copy of the loan servicing agreement between the IRA owner and loan servicing company must be provided to Equity Trust.
- If qualified, IRA owners may service their own notes. If this is the case, a copy of the standard Equity Trust loan servicing agreement must be completed.
Equity Trust Company does not perform collection for any non-performing notes.
Our Clients are in Complete Control
The most important things to remember are that:
- With an Equity Trust self directed real estate note IRA, the type of investments you make will be exactly the same kind you presently are making for your personal account. The only difference is that the profits in your IRA investments are tax free/deferred.
- You need Equity Trust to serve as your IRA custodian because the IRS does not allow you to personally "touch" your IRA account. Our truly self directed IRA program gives you complete control and flexibility.
As a passive custodian, Equity Trust does not sell investment products or give investment advice, so you will never have to worry about conflicts of interest or high-pressure sales tactics.
How can I learn more?
For more information on Equity Trust self directed IRAs in general, please see Self Directed IRA Investment at Equity Trust Frequently Asked Questions.
For more information on Equity Trust Real Estate IRAs, please see Self Directed Real Estate IRA at Equity Trust Frequently Asked Questions.
How do I get started?
If you are ready to take control of your retirement funds with a truly self directed real estate IRA, please see the following links for more information:
How to open an Equity Trust Self Directed IRA.
How to transfer or rollover an existing retirement account to an Equity Trust self directed IRA.
Please refer to our Step-by-Step Guide to using your Self Directed IRA at Equity Trust to invest in notes, mortgages and deeds of trust.