In an interview with Joel, he discussed how he used his IRA to help his brother, but also turned a run-down property into a community favorite in a Buffalo neighborhood.
Haven’t read part one yet? Read how Joel’s IRA helped save his brother’s home.
Joel’s IRA investments didn’t stop with helping his brother. His investment activity would continue and, as fate would have it, another of life’s challenges spurred the opportunity.
Joel was in a serious car accident in the fall of 2012, suffering injuries that limited him from continuing his passion in the building industry.
“I was feeling lost, even worthless, after my injury because I could no longer work like I used to,” he said.
“I needed a project to focus on that would let me use the skills I built over the years. Were it not for my IRA, I might still be in that state of mind.”
Earlier that year Joel’s IRA purchased a run-down, mixed-use building in the Buffalo area. After the accident, it became the conduit for the passion and expertise he gained over decades in the industry.
Turning a Run-Down Building into a Community Favorite
Initially, the building contained a residential apartment in the upper unit and a commercial space in the lower unit.
In the 1960s, the lower unit housed a popular soda jerk restaurant, as well as many other businesses since. The entire building, and the lower unit in particular, had been neglected by the owner.
The owner was a woman who inherited the property but had no interest in using the building, or frankly, keeping up with expenses.
Acquiring the property with his IRA allowed her to exit the property without losing it in foreclosure and provided the investment upside he was seeking.
“By the time I got it, the lower unit lost its commercial status, much to the dismay of the many residents in the area asking if I planned on returning the historic soda jerk restaurant to its previous glory,” Joel said.
Executing the Renovation
Instead, Joel used his IRA to embark on a $99,000 renovation that would transform this two-unit building in his community.
His project completely gutted the lower level, replacing copper pipes found busted when he acquired the property.
He also found personal growth, learning how to conduct – and then ordering – his first asbestos abatement after over 30 years in the building industry.
“As you can see in my account activity, my IRA was paying electricians, plumbers, contractors, asbestos companies – it really took a team effort to get this thing renovated.”
Fortunately, Joel was able to rent the top unit after a few minor repairs – providing rental income to his IRA that helped supplement the renovation of the lower unit.
Note: All income and expenses related to the investment must flow to, and from, the IRA. Learn more about self-directed real estate investing.
I think they loved the idea. The town zoning board of appeals and the town inspectors seemed to be big fans of the renovation.
– Joel, Real Estate Investor
He even went to the town zoning board of appeals to determine how to convert the lower unit to a residential dwelling.
As the zoning board requested, his IRA paid to have the blacktop parking space in front of the property removed and replaced with a new lawn, opening the door to be rezoned as a double-unit residential property.
Today, this previously run-down, vacant property is home to two families and is a welcome addition to the Buffalo community.
Furthermore, the rental income is providing a healthy return to Joel’s IRA and the value of the property has more than doubled.