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Contractor Uses IRA to Tackle Growing Housing Need

Tony of North Carolina uses his self-directed IRA to build senior-friendly housing and secure his own retirement.

Contractor and real estate investor Tony is using his retirement account to fill a growing need: providing housing for the senior and disabled population.

Tony works for a large construction company in North Carolina. The company sent him to Charleston, South Carolina to build a hotel, followed by a senior citizen complex, 216-unit senior citizen complex in Charlotte.

That’s when he found his next calling.

“I fell in love with seniors, helping them and doing what we’re supposed to do,” Tony says. “The good book says we as able-bodied persons are supposed to help orphans and widows…I chose to help seniors after building that complex.”

Divide and conquer

Tony formed a company, RAL and Family, to build homes focused on safe senior living. He then rolled over a 401(k) from an old job to an Equity Trust self-directed IRA. He found a 2.57-acre piece of land and purchased it with an 80/20 funding split: 80 percent funded from his self-directed IRA, and 20 percent from his personal funds. (Tony has to ensure that all income and all expenses flows proportionate to the capital structure that he’s put together, which in this case is 80/20 IRA to personal funds.)

“This is how I can help the community more because I don't have enough money to own all three [properties]. I have to sell the first two and then I’ll hold on to the last one for that passive income that's monthly.”

He divided the land into three lots and is in the process of building senior-friendly houses on each one.
The first house is almost complete. It’s a single-family home with two master suites on the first floor with a two-car garage. An apartment above the garage for a caregiver is outfitted with a full kitchen, as well as washer and dryer hookups.

He’s building a house on the second lot, and the third is under plan review. He plans to sell the first two properties and hold onto the third one, renting it to needy seniors.

“This is how I can help the community more because I don’t have enough money to own all three; that would be wonderful,” Tony says. “I have to sell the first two and then I’ll hold on to the last one for that passive income that’s monthly.”

If he does sell the houses, any profits would flow back in the same proportion that they funded the investments: 80 percent to his IRA, and 20 percent to him.

A win-win

The ability to use his self-directed IRA money to help seniors has been “an absolute blessing from above,” Tony says, adding, “It’s just been such an easy transition to Equity Trust Company and its bill pay (online feature), and the website is so user friendly.”

In addition to feeling fulfilled, Tony is helping to tackle a fast-growing issue. The U.S. population of residents 80 and older is expected to double in 2035 from what it was in 2016, and there will be a surge in demand for adequate housing, according to Harvard’s Joint Center for Housing Studies.

Tony, who still plans to work for several more years, feels more comfortable about his prospects for his golden years.

“I am 62 and I think I will use my knowledge and services for a general contractor who I work for now, and I love them, for another eight years,” he says. “I’m going to retire when I’m 70, but this self-directed IRA from Equity Trust is almost like a side job for me. But it’s a very lucrative side job.”

Create Your Own Story: Discover what's possible with an Equity Trust Self-Directed account

Case studies are provided for illustrative purposes only. Past performance is not indicative of future results. Investing involves risk including possible loss of principal. Information included in the above case study was provided by the investor and included with permission. Equity Trust Company does not independently verify all information provided by third parties.