Right now Fannie Mae still suffers tremendously in many ways from cranial-rectal inversion. Perhaps the worst result of this condition is the hamstringing of worthy real estate investors from having more than four properties on credit. But there are alternatives. Agents I can help you add sales to your month with this program and will help you market it. Call me directly at 866-946-0120 ext 101 nationwide.
One of the alternatives we at Novation have offered for many years is the IRA loan for real estate investors. This allows an investor with an IRA to tap the strength of their IRA to acquire real estate investment properties without using all of the funds in their account. While you certainly may purchase real estate directly into your IRA with all cash does it not make more sense to purchase three or for at today's amazingly low prices using our IRA non-recourse real state investor loans?
Qualifying is really simple. In fact the borrower really does not qualify at all. Because the loan is non-recourse the qualification is mostly incumbent on the property and the holdings in the IRA. It requires a 30% to 35% down payment which must come from the IRA. And additional 10% must remain in retirement funds for reserves. So if you have $120k in your retirement account you can easily require 3 small investment homes.
We show you how to determine rent rates and manage cash flow. In fact I personally have been training conservative investors for nearly 10 years. Call my office but speak with KIM NOBLE who is the national accounts rep for IRA loans. Even if you have already contacted another bank or lender you need to call us because we can likely beat their services and take a lot of the effort out of the transaction for you. The largest national bank will not try to make your deal work - you are either immediately qualified or immediately and permanently not qualified. DO NOT CALL NASB first. Call Novation FIRST. This is not some ploy - we save you money and get deals closed they deny.
We have a no-obligation transaction evaluation package and will work with you to understand the technique. We have closed more investment loans than any other team we know of -nationwide. Literally over 3000 loans since 2001.
IRA loans are available in all states with a short moratorium in Las Vegas and Arizona.
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
7 Comments on Can an IRA borrow money to buy real estate?
JAN
02
2009
Yesterday there was a question here from someone with Nouveau Riche asking why anyone would finance if they could just pay cash. Sorry I do not have their name but I do have the answer and the answer is quite simple. If I have $200,000 in my IRA and I see an amazing $200,000 investment opportunity (or any other price level) I would have to deplete my IRA to make that investment exposing my entire retirement account to a proportional declination (the same thing stocks have done to IRA's lately). On the other hand if I use a non-recourse IRA loan I am exposing only 30% of my IRA to cash on cash losses but still able to accept the full gain of value escalation. The "no brainer" answer which anyone with a small understanding of economics is that I can do it THREE times and still have cash left in my IRA instead of once.
I didn't ask why someone would pay cash instead of a loan. I asked why not self-direct your IRA instead of getting a non-recourse loan? If you self-direct you have control over it yourself. You can set up your own loan, charge yourself interest and make more money for your IRA. I would rather charge myself interest and make money off of me than paying someone else interest. This is what I was saying. Nothing to do with paying cash.
Well, I suppose I should simplify every article I write:
(A) To buy real estate in your IRA requires you to have a self-directed IRA. We provide all the services required for this including creating your LLC and establishing the checking account you will use to write your checks. (B) With the exception of personal benefits you derive from the ownership of your property all taxes are eliminated or deferred in accordance with IRA regulations. (C) You have full control over your IRA when it is in any self-directed account, this account included.
Now I suppose I should explain what non-recourse means:
Non-recourse means the lender, that would be me, cannot recover any losses from anything other than the property in the event of a default. In other words I cannot go after the IRA or the IRA owner. In fact the IRA itself owns the property and by regulation the IRA owner does not own the IRA.
Well, I suppose I should simplify every article I write:
Do you always attempt to insult the intelligence of others. No I don't teach at NR. But I do use American Pension Services who I recommend to everyone for setting up their self-directed IRA's and 401k's.
There are people out there who do not know of a self-directed IRA. You didn't state it in your article so people probably assumed you were referring to the traditional IRA's
Tony I do apologize if you took that as a personal insult to your intelligence (or anyone elses) when it was intended as a response to address your statements. Your statements indicated I needed to simplify and let you, and other readers know, you must already have a self-directed IRA in order to obtain a loan. Even of the small percentage of people who know about self-directed IRA's most do not know the IRA can actually borrow money and leverage their buying power. The respons was my recognition that I needed to simplify - not that you have a lack of intelligence.
I have written hundreds of articles about the subject over the years and often assume readers who find these articles are searching for more information on the subject. You are absolutely right about people not knowing about them. I do regular seminars and webinars filled with people who are just discovering this method. No intent to put you down or attack your intelligence just responding to your comments which did not really appear to be phrased in the form of a question but rather statements. Maybe you and I just don't play well together online, it happens about 1 in 10,000 to almost everyone - just a part of human psychology we all should work to overcome.
Ken.... I will agree when I get statements or questions that are way to detailed, when you can only make a specific blog detailed to an extent. You are just trying to make a point. I have written a few in the past to where the person making the comments attacks something else, that is not related to your post. And in some cases, makes a statement that could be related to the blog, if it was mentioned. When I dissect a specific topic, and not talk about it in general, I will specifically make a statement within the blog post, telling people that I am not talking about this or that.... just this.. (if that makes sense) Ex. when I talked about 4.5% interest rates and how lowering the rate could be bad. I specifically stated why I made that comment and not to get wrapped up in all the other good reasons for the borrower. Well, low and behold, one specific person just had to talk negative and rip me on other issues, that didn't pertain to that blog. It just happens... some people must try to make others look bad. You put out some good and interesting info here... thanks
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One of the alternatives we at Novation have offered for many years is the IRA loan for real estate investors. This allows an investor with an IRA to tap the strength of their IRA to acquire real estate investment properties without using all of the funds in their account. While you certainly may purchase real estate directly into your IRA with all cash does it not make more sense to purchase three or for at today's amazingly low prices using our IRA non-recourse real state investor loans?
;)
;)
Yesterday there was a question here from someone with Nouveau Riche asking why anyone would finance if they could just pay cash. Sorry I do not have their name but I do have the answer and the answer is quite simple. If I have $200,000 in my IRA and I see an amazing $200,000 investment opportunity (or any other price level) I would have to deplete my IRA to make that investment exposing my entire retirement account to a proportional declination (the same thing stocks have done to IRA's lately). On the other hand if I use a non-recourse IRA loan I am exposing only 30% of my IRA to cash on cash losses but still able to accept the full gain of value escalation. The "no brainer" answer which anyone with a small understanding of economics is that I can do it THREE times and still have cash left in my IRA instead of once.