Read a message from Equity Trust CEO George Sullivan regarding services amid coronavirus concerns.

[close]


Real Estate

Self-Directed Investments Give Musician the Freedom to Help Charities

February 4, 2020
I think people are better off investing in what they know, but even then due diligence is critical.
Don, Nashville, TN

In November 2015, Don and his wife co-invested with their retirement accounts to purchase an office condo in Hendersonville.

The opportunity arose when Don learned of a friend who needed a location for his commercial real estate business.

After deciding it was a sound investment choice for their retirement accounts, Don’s IRA purchased 62 percent of the office condo, and his wife’s SEP IRA purchased the remaining 38 percent, using a concept commonly referred to as “Partnering.”

Don leases his IRA’s 62 percent ownership interest back to the company owner as a triple-net-lease and his wife sold her SEP IRA’s 38 percent ownership interest back to the company owner as a carry-back mortgage.

“This created between $2,000 and $3,000 of income per month (combined payments to both Don and Elaine’s accounts) we can use in retirement,” Don says.

Using Self-Directed IRA Earnings in Retirement While Building a Tax-Advantaged Legacy

Earnings from Don and his wife’s self-directed IRA investments help support their retirement. The couple regularly takes cash distributions from their accounts using Equity Trust’s online account management system, myEQUITY.

“Someone asked me what I do in retirement,” Don says jokingly. “I told them, I try to just go to the mailbox.”

Don is able to take a long-term approach to his retirement funds because he maintains performing assets in his IRA and continues to invest in retirement.

“Since age 59½, my goal has been to enjoy a nice income off the earnings while preserving the principal amount so I can leave the account to my grandkids,” Don says.

“So far, so good,” he says proudly.

He doesn’t feel his investments or returns are extraordinary, but is pleased with the results.

“A lot of my investments over the years have been small, but those earnings have paid the bills for a long time,” he says. “It may not be a major deal to high-net-worth investors, but it’s been a major deal for my family. It’s really been a blessing.”

Don still blocks off a few hours each week to focus on his self-directed IRA investing, but believes he has a good system in place.

“I set it up so that as long as my brain still works, I can do what I’m doing,” he says.

“I’m too old to rip out a wall of a house as a real estate investor outside my IRA, but I’m not too old to do what I do as an investor with my retirement account because I don’t perform any of the labor.”

Gaining the Freedom to Make a Difference: The Garage Band Revival

A little over ten years ago, Don picked up his saxophone again and started a 14-piece jazz and R&B band of local musicians. The band, Garage Band Revival, raises money for charities in his local community.

“The band does two things,” Don says, “we either play for free at an event a charity is hosting or, if we’re hired to play at a private or corporate event, we select the charity and our ‘fee’ requires the event organizer to write a check to the charity we select.”

The band supports local charitable organizations, especially those dedicated to helping children. Two charities the band regularly supports include Children Are People, Inc. and Court Appointed Special Advocates (CASA) for Children.

Don feels children’s organizations have an opportunity to make a lasting difference.

“If you can get the kids off the street and get them educated early, you have an opportunity to impact a life for decades to come.”

Managing the band, which began as a fun way to give back, has turned into a full-time job for Don.

“If it wasn’t for my IRA, I wouldn’t have the freedom to do this,” he says. “It’s a lot of work to run the band, practice, and coordinate events, so if it wasn’t helping charities I wouldn’t be doing this at 70 years old.”

Even still, Don is quick to deflect praise. “This band isn’t about me,” Don says. “It’s really about people coming together to help charities. There are so many wonderful people involved, it’s a blessing to be able to give back through music.”

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.

Yes, all income generated by an IRA-owned property must return to your IRA. This ensures that you retain the tax-deferred or tax-free status of the investment.

A self-directed IRA is technically no different than any other IRA or 401(k). A self-directed IRA is unique because of the investment options available. Most IRAs are used for stocks, bonds, mutual funds and CDs. A self-directed IRA allows those types of investments along with real estate, notes, private placements, and other investment options.


Have Questions?

Get answers to your questions and learn more about building wealth with tax advantaged accounts.

Contact Us