Self-Directed Investment Dress-Rehearsal

By Elsie Dudukovich0 Comments

Finding the right investment for your self-directed IRA is an exciting, but sometimes tense time. You want to make sure you’ve made the right choice for your retirement funds and that you’re doing the right things.  Your investment is often the result of combining your personal knowledge and experience, guidance from your qualified third parties, and the educational opportunities you’ve gained along the way. While Equity Trust is a passive custodian and prohibited from providing investment advice or guidance, we are happy to tell you what is needed to direct funds from your self-directed IRA to make that investment happen.

It’s important to make sure your account is ready before you submit your completed paperwork.  Here are three things you need first:
  • An open Equity Trust Company account (schedule a time to start the process)
  • Sufficient available funds to make the investment and a method of covering any processing fees, if applicable
  • An investment your IRA is permitted to hold, according to IRS rules.
 In terms of paperwork, the information you need to submit will fall into two categories:
  • An Equity Trust Direction of Investment (DOI)
  • Supporting documentation
A Direction of Investment form is our internal form that gives us the permission and instruction on how to send funds from your IRA and sign and send documents for investments to benefit your IRA.  The DOI initiates the process to direct funds from your account, sign and send documents needed to execute the investment, and have the information regarding your investment to update your account holdings.

We encourage you to contact our First Class Service Team members to discuss the details of your investment to confirm what DOI and supporting documentation will be appropriate for you. 
Video: Real Estate DOI Explained
Check out this video for details on completing the Real Estate Direction of Investment form, one of our most commonly used investment forms:

DOI Breakdown: What Type of Investment are you Purchasing?
To give you a head start on your planning, here is a sampling of what Direction of Investment and supporting documentation is needed for some of the more common investment choices:

Tax Lien Direction of Investment
  • Used for investing in: tax lien certificates, tax deeds, auctions/sheriff sales.
Private Equity Direction of Investment
  • Used for investing in: limited partnerships, limited liability companies, land trusts, private stocks, C-corporations, and joint ventures.
  • Supporting documentation:
    • Limited Partnerships: Copy of signed Limited Partnership Agreement, Private Placement Memorandum and signed Subscription Agreement with Investor Questionnaire, if applicable.
    • Limited Liability Company: Copy of signed Articles of Organization, LLC Operating Agreement, Private Placement Memorandum and signed Subscription Agreement with Investor Questionnaire, if applicable.
    • Land Trust: Copy of the signed Land Trust Agreement.
    • Private Stock/C-Corporation: Copy of the C-Corporation’s signed Articles of Incorporation, copy of signed Bylaws or Operating Agreement, Private Placement Memorandum and signed Subscription Agreement with Investor Questionnaire, if applicable. If the corporation issues actual stock certificates, these must be physically held by Equity Trust Company.
    • Joint Venture: Copy of signed Joint Venture Agreement.
Real Estate Direction of Investment
  • Used for investing in: real property, subject-to’s, wholesaling, short sales, and pre-foreclosures.
  • Supporting documentation:
    • Purchase Agreement
    • Settlement Statement
    • Preliminary Statement
    • If debt financed, the Amortization Schedule and Copy of the Note.
Promissory Note Direction of Investment
  • Used for investing in: promissory notes, mortgages, deeds of trust, corporate debt, unsecured notes, and other types of loans.
  • Supporting documentation:
    • For a note secured by real property:
      • Issuing a new note - Submit a copy of the proposed Promissory Note and proposed Mortgage/Deed of Trust.
      • Buying an existing note - Submit a copy of the Original Note, Assignment of Note, and Deed of Trust/Mortgage.
      • Issuing a seller carry back note - Submit a copy of the Carry Back Note and a copy of the proposed Deed of Trust/Mortgage.
    • For a note secured by collateral other than real property:
      • Issuing a new note - Submit a copy of the Original Note clearly stating the associated collateral.
      • Buying an existing note - Submit a copy of the Assignment of Note, and a copy of the Original Note clearly stating the associated collateral.
    • For corporate debt/equity:
      • Articles of Incorporation:
        • Operating/Partnership Agreement
        • Bylaws
        • Private Placement Memorandum
        • Subscription Agreement
    • For an unsecured note:
      • Issuing a new note - submit a copy of the Original Note.
      • Buying an existing note - Submit a copy of the Assignment of Note and a copy of the Original Note.
General Direction of Investment
  • Used for investing in: annuities, land contracts, lease agreements, mobile homes, oil & gas ventures, options, and structured settlements.
  • Supporting documentation:
    • Annuities - Annuity Application
    • Land Contract - Land Contract agreement
    • Lease agreement - Lease Agreement
    • Mobile Home - Mobile Home purchase agreement
    • Oil & Gas Venture - Agreement.  Note: Use this form if not part of a joint venture; if part of Joint Venture, then use the Private Equity Direction of Investment Form.
    • Options - Option Agreement and Maturity Date
    • Structured Settlement - Purchase Agreement or Assignment Showing it is titled to IRA