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Kurt of Minnesota has taken his real estate IRA rural to sow an investment that is already flourishing into quite a nest egg.
Kurt used his knowledge about farmland to buy land through his retirement account and rent it out to create a constant stream of passive income. He had bought and sold Iowa farmland outside of his IRA in the past but wanted to make a purchase with long-term benefits. “I thought (buying the land with) the IRA would be a good fit,” he says.
Kurt funded most of the transaction with his Equity Trust IRA money and took out a non-recourse loan to cover the balance. He purchased 40 acres of farmland for $1,750 per acre. The land gained him more than 6 percent in profits from the annual cash rent, but the investment’s real gain is in the property’s appreciation. It has appreciated to $2,700 per acre or more in one year. He already received an offer of $2,650 per acre.
“So, if you add in appreciation, the investment would have a return on investment of close to 60 percent in one year … I’ll take that any day!” he says.