Can I use my IRA to buy income property?

Asked by Home Buyer, 92395 Fri Oct 28, 2011

I have money in my IRA I would like to use for a down payment or purchase of income property. Like investing in stocks and mutual funds with my IRA, I would like to invest in residential income property. Can I buy realestate in the name of my IRA? Can my IRA get a loan to purchase income property?

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13
Bo Goulet, b…, Agent, Spring Valley Lake, CA
Fri Oct 28, 2011
BEST ANSWER
Thank you Kirsten, that is an excellent answer. Home Buyer, you might also be intersted to know that you can actually buy more with your money by having your IRA borrow money. Yes, your IRA can get a "home loan". If you search the internet for "IRA Lending" or "Non-Recourse Loans" you will find lenders that will provide such lending products. Companies that come to mind are NASB and Island View Mortgage come to mind.

You may even be able to invest your 401k, and 403b. You may even be able to strengthen your buying power by investing you AND your spouses' retirement funds.

Remember, certain restrictions apply, and consult your tax advisor for all transactions regarding your IRA.
You can contact me if you have any further questions.
1 vote
Kirsten Hagen, Agent, Half Moon Bay, CA
Fri Oct 28, 2011
You can invest in any kind of real estate (and other investments as well) using your retirement funds. For real estate, it cannot be property that you personally are living in or otherwise benefitting from. All proceeds must be directed to the retirement fund, and all costs must be paid from the fund. there is even financing available if you'd like to leverage your funds.

What you need to find is a custodian for your retirement funds which allows for "self-directed IRAs." A couple which I know of are IRA Services and Entrust. They will be able to work with your Realtor to help you purchase properties. You must take care not to cause taxable events as you move your funds and invest.

You are welcome to contact me if you have further questions or would like clarification.

Best,
Kirsten Jaeb
1 vote
Kirsten Hagen, Agent, Half Moon Bay, CA
Sat Nov 5, 2011
Robert, thank you for the book reference - that's helpful. Also, Lamarr Baxter with Entrust (Oakland office) does regular (quarterly, I think) educational seminars about self-directed IRAs, so it's worth looking him up.
0 votes
Robert Chome…, , San Diego, CA
Fri Nov 4, 2011
Yes, check out Entrust. They are one of the oldest self-directed IRA administrators out there. Ask for Brian Davis. Also U Direct IRA Services is also good. There are even a few small private lenders that will lend to you IRA so you can buy with leverage and not all cash. You have to pay all the expenses of the property with your IRA and all the rents will go back into your IRA. I also like buying private trust deeds with self-directed IRA's. But make sure you study up on all if it first. There is a good book called "IRA Weath" by Patrick Rice that is a good primer on all the things you can invest in with a self-direct IRA.
0 votes
Garrigus Real…, Agent, Redlands, CA
Fri Nov 4, 2011
Make sure you consult your CPA if you move forward with this type of investment. S/he should be able to share with you the pros and cons.
Web Reference:  http://RealEstateABC.info
0 votes
Harold Sharpe, Agent, LAKE HAVASU CITY, AZ
Sat Oct 29, 2011
Homebuyer,
Yes you can.
You can buy and you can get a loan.
You just cant "touch the property"
There are some rules you should check out about how close you can get to the property.
You will probably need a property management company etc.
Look into it with an IRA person you work with.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
harold@socalhomesrealty.com
http://www.socalhomesrealty.com
California Department of Real Estate Broker License # 01312992
0 votes
Hector Reyes, Agent, Victorville, CA
Fri Oct 28, 2011
consult your tax advisor, sorry I forgot to add that on my answer
0 votes
Dp2, , Virginia
Fri Oct 28, 2011
Yes, one could do that, and you might be able to do that with your IRA provided your account is set up properly.
0 votes
Hector Reyes, Agent, Victorville, CA
Fri Oct 28, 2011
Please call Al Pasimio with Paramount Residential Mortgage Group at Office Phone (760) 245-6776 x 4316 or Cell Phone (760) 403-7576 he has about 23 years of experience

He will give you the right answer
0 votes
Artur Urbans…, Agent, Burlingame, CA
Fri Oct 28, 2011
It certainly can be done. There are a few companies that are helping to do that. Here is a link to a website page of one of them explaining how it is done: http://www.adelphiretirement.com/Questions.html. Please note, I am using it to illustrate how it is done and not to recommend this particular company.
Web Reference:  http://www.cimpler.com
0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Fri Oct 28, 2011
Home Buyer,

This is a question best directed at your CFP or investment advisor. This person will tell you what, given your plan, is possible and also in line with your investment goals. There are many ways to invest in real estate without actually taking title to a piece of property and sometimes that a good way to go as well.

I know several, great investment advisors who would be willing to help, so let me know if you need their contact information.

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes
Mary Young, , Victorville, CA
Fri Oct 28, 2011
Yes you can do this. I just closed a deal. The IRA most likely has to be rolled over to a company that does Real Estate. The funds buy the Real Estate. The Real Estate stays in the IRA and the income and expenses from the income property stay in the IRA. The file closed so I don't have the name of the company available at tis moment. But if you are interested I will be glad to get this for you.
0 votes
Marge Bennett, Agent, Fort Myers, FL
Fri Oct 28, 2011
I have a couple of buyers who are using their retirement funds to buy investment properties. They are paying cash. Talk with your financial advisor to see how they handle it.
0 votes
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