“Mortgage delinquencies doubled between March and April to nearly 3.4 million, according to Black Knight Inc. That could put more foreclosed homes on the market for investors,” says Dezember.
[Read more: Where Equity Trust clients are using their IRAs to purchase out-of-state properties]
Whether investors are in Cleveland, or other housing markets impacted by COVID, a self-directed IRA allows individuals to use their retirement funds to invest in properties, such as fix-and-flips, apartment buildings, and more.
Not only do investors have the option to purchase property with a self-directed account, it’s possible to lend money for these types of investments to real estate companies, startups, LLCs and more.
“The Retirement Industry Trust Association says $5.6 billion of IRA money is invested in property and an additional $27.7 billion with limited liability companies, which usually own income-generating real estate. The spending power is even greater considering lenders will ﬁnance most of the purchase price,” he says.
If I invested in a rental property with my IRA, how does the rental income get into my account?
Rental payments are sent to Equity Trust for the benefit of (FBO) your IRA. The checks or money order should be made payable to: “Equity Trust Company Custodian FBO [Your Name] IRA.”
Once received, the checks or money orders are deposited into your IRA. All checks must be sent to Equity Trust with a payment coupon.
Can I roll over a 401(k) account into a self-directed IRA?
Yes. A self-directed IRA gives you the ability to diversify your portfolio with additional investments that are permitted by the IRS, in a tax-free or tax-deferred environment.
What are prohibited transactions in an IRA?
According to the IRS, a prohibited transaction is improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person. Examples of prohibited transactions with an IRA are borrowing money from it, selling property to it, using it as security for a loan and buying property for personal use (present or future) with IRA funds.
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