Throughout her career as a high school art teacher, Susan of Texas built a retirement portfolio that consisted of savings from her TRS retirement fund, her IRA, and inheritance money from her parents.
“After a divorce in 2010, I became solely responsible for making investment decisions and wanted to invest wisely, Susan says. “The economic impact of September 11, 2001 on the stock market sent asset values plummeting with some investors losing their entire funds. I wanted to find alternatives to the stock market.”
Susan and her children spent the last ten years vacationing at beach front property near Jacksonville, Florida. “I fell in love with the area and dreamed of someday owning property there,” she says. “However, I did not have the cash to personally buy into such an expensive market and all my retirement savings were invested in traditional assets.”
Susan placed a small wooden box with sand from that memorable beach in her classroom. It had miniature beach chairs, a palapa, sandals and other small items to remind her of her retirement goal. “I shared my dream with my students and they loved it. They often ran their fingers through the sand and rearranged the furniture at the ’beach’.”
Chance Encounter Leads to Realizing a Retirement Dream
Susan became aware of the concept of self-directed IRAs in the fall of 2015. Susan recalls, “I was on a date with a commercial real estate broker and he said, ‘Why don’t you roll your traditional IRA into a self-directed IRA? Then you could buy your beach house with it.’ I didn’t know anything about this topic and began researching it.”
Susan sought out education and connected with other real estate investors. Equity Trust Company was consistently mentioned as a self-directed IRA custodian. In 2016, Susan felt the time was right for her to act. “I called Equity Trust and immediately felt encouraged,” she says. “I found I really could transfer my IRA to Equity Trust and use the funds to buy a beach rental property. It was a simple process to set up a traditional IRA with Equity Trust.”
After opening her account Susan contacted a real estate agent and investor specializing in beachfront properties in that area. Within six months of transferring her IRA to Equity Trust, she was able to use her IRA to purchase the investment beach house rental property for $308,500. She flew out to sign closing paperwork, select a property manager, and set up contractors to perform repairs.
The property needed some general repairs and updates. Per IRS guidelines, all asset expenses must be paid from her IRA. “I use Equity Trust’s online account management system myEQUITY to manage the investment online,” she says. “It’s a quick and simple way to pay bills and view the account balance.”
The property saw its first vacationers in spring of 2017 and generated approximately $40,000 in yearly rental income. “If the area continues to perform at this level,” Susan says, “I project regaining my initial investment in within ten years and begin building funds for future property investments.”
As a lifelong educator, Susan decided to share her personal journey in building and realizing a dream with her students. “My students have told me that my story encouraged them to go for the impossible things on their list.”
Susan‘s ultimate goal is to grow her retirement account to the level where she can live in the same beach front community in a personally owned home. (Note: Because Susan’s IRA owns the house, Susan and her children are considered disqualified individuals according to IRS guidelines and Internal Revenue Code 4975 and cannot stay in the house or perform any of the repair work.)
For now, she says she takes joy in reading the guest book from her investment property. She adds, “It warms my heart to think that my dream is giving families a wonderful place to share time together and make memories at the beach. I could not have done this without Equity Trust. Their assistance has been invaluable.”
Case studies are provided for illustrative purposes only. Past performance is not indicative of future results. Investing involves risk including possible loss of principal. Information included in the above case study was provided by the investor and included with permission. Equity Trust Company does not independently verify all information provided by third parties.