Direct Communication with Your Actual Lender

When your loan is kept in-house, you never have to worry about your debt being sold to a third-party servicer. You maintain a direct line of communication with the people who actually approved your financing. This transparency eliminates the frustration of “lost in translation” messages that often occur when dealing with large, disconnected loan providers who outsource their customer service.

The Security of an FDIC-Insured Bank

Partnering with an FDIC-insured bank provides an essential layer of institutional safety for your investment strategy. Unlike independent mortgage companies, we are held to rigorous federal standards of stability and capitalization. This means your non-recourse loan is backed by a regulated institution that prioritizes long-term financial health over quick profits from selling off loan packages to secondary markets.

Faster Decisions and Streamlined Processing

In-house lending means in-house decision-making. Because we don’t have to wait for external investors or secondary market aggregators to sign off on your file, we can move at the speed of your real estate deal. This streamlined approach allows us to be more responsive than other loan providers, ensuring your IRA doesn’t miss out on a competitive property due to bureaucratic delays.

Flexible Solutions for Non-Recourse Needs

Non-recourse lending is a specialized niche that requires a deep understanding of IRS regulations. By maintaining our own portfolio, we have the flexibility to tailor solutions to your specific investment goals. Whether you are purchasing a single-family rental or a commercial warehouse, our in-house team has the expertise to structure financing that protects your IRA’s tax-advantaged status effectively.

The decision of where to secure your financing is just as important as the property you choose to buy. First Western Federal Savings Bank offers the unique combination of specialized expertise and the unwavering stability of a portfolio lender. Contact us to experience how our in-house approach provides the peace of mind and professional service your retirement portfolio deserves.

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Prioritize Lenders with Proven Experience

Experienced borrowers emphasize the importance of working with a lender that specializes in this niche. A dedicated lender like us understands the unique nuances of this type of investment. We can provide a more streamlined and knowledgeable experience, ensuring your non-recourse financing is handled efficiently and correctly from the start.

Understand the ‘Non-Recourse’ Difference

Before you begin, it’s crucial to fully grasp the fundamental concept of non-recourse loans. This isn’t just a technical term; it’s the core of your investment’s security. Experienced borrowers highlight that the value of this type of loan lies in its built-in protection. This means your personal assets are shielded from liability, making it a safer and more secure method of non-recourse financing.

Don’t Rush Your Property Due Diligence

Seasoned borrowers will tell you that the property itself is as important as the non-recourse loan. Conduct thorough due diligence, including a detailed inspection and market analysis. Our clients have found success by carefully vetting potential investment properties to ensure they align with their long-term goals. Rushing this step can undermine the benefits of even the best non-recourse financing.

Plan for Your Property’s Cash Flow

A key takeaway from experienced investors is the need for a comprehensive financial plan for the property. A non-recourse loan is one piece of the puzzle; understanding your potential rental income versus ongoing expenses is vital. We encourage our clients to create a detailed cash flow projection, which is a critical part of a successful non-recourse financing strategy.

Securing a non-recourse loan is a significant step toward diversifying your retirement portfolio with real estate. At First Western Federal Savings Bank, we are proud to be one of the trusted non-recourse loan lenders in Rapid City, SD, to help you on this journey. Contact us today!

Contact Us

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Business-Related Benefits

Diversification: Non-recourse loans allow investors to tap into new markets and invest in projects they may have otherwise been unable to finance. 

Maximizing Returns: By using a non-recourse loan, investors can finance a larger project or invest in multiple projects simultaneously. This can lead to higher returns and faster growth of their portfolio.

Flexibility: Non-recourse loans offer more flexibility in repayment options. Since the lender is primarily relying on the collateral, they can be more open to negotiating terms that work best for the borrower.

Personal Benefits

Minimizing Personal Risk: Non-recourse loans do not hold the borrower personally responsible for repayment. This means that their personal assets are not at risk in case of default.

Leverage: Non-recourse loans can be a useful tool for leveraging assets. By using the collateral to secure the loan, investors can free up other funds to invest in different projects. 

Tax benefits: Non-recourse loans can offer tax benefits for investors. Since the loan is secured by the asset, interest payments may be deductible, which can lower the overall tax liability for the investor.

Risks of Non-Recourse Loans

There are still risks with these loans – if the loan is defaulted, the lender can still seize the collateral and potentially cause the investor to lose their investment. Therefore, it’s important to carefully consider the project and the potential risks before taking on a non-recourse loan.

Non-recourse loans can be a valuable and strategic tool for investors looking to diversify their portfolio and maximize their returns. However, as with any investment, it’s essential to carefully consider all factors and consult with a financial advisor or lender. If you’re ready to apply for a non-recourse loan in South Dakota, contact First Western Federal Savings Bank online today.

The post How to Use Non-Recourse Loans as Part of Your Overall Investment Strategy appeared first on First Western Federal Savings Bank.

To learn more about alternative investments you can take advantage of with your self-directed IRA, contact the team at First Western Federal Savings Bank. Our lenders will walk you through how non-recourse loans can be used in tandem with your self-directed IRA to invest in real estate and more. 

Investing in Agriculture Using an IRA

With a self-directed IRA, you have the option of using your retirement funds to invest in horses, cows, small farms, corn and grain fields, apple orchards, and so much more. But, investing in an individual farm, or even a herd of animals, often requires a significant initial capital investment, as well as the continual expense of overseeing agricultural activities, caring for animals, and/or leasing farm equipment.

All expenses related to the investment must be made through the IRA, so the IRA must have sufficient funds to pay these amounts. Having to rely on outside capital to cover expenses can lead to the loss of tax benefits or the incurrence of penalties. Also, all income generated by the investment must be paid into your IRA. 

Owning a farm outright is a great investment, but can take millions of dollars to make it profitable, not to mention a lot of knowledge, experience, and hard work. A better way to create income from a farmland investment in the IRA is to lease the farm out to an agricultural operator. The income from the lease goes right into the self directed IRA, tax free or tax deferred. And the value of the farmland continues to appreciate.  

Why Investing in Farmland Makes Sense

Some investors compare farmland to real estate because they are both tangible assets that produce yield and can have an appreciating value on the underlying investment. Investing in farmland, however, means tapping into all of the benefits of the investment without the burdens of capital gains taxes or income taxes on profit distributions. Any profit distributions you receive go right into your retirement account. This allows the profit to grow tax-deferred, which ultimately means you keep more of your investment and grow your retirement nest egg more aggressively.

Trustee’s Role

Although you make the decisions concerning your self-directed IRA, it is up to the account trustee to handle the actual management of the account and its holdings, including farmland. The trustee makes the purchase and sale of properties and pays property taxes and other bills out of the IRA funds. When the IRA receives income from the farm, the trustee reinvests it according to your instructions. 

Prohibited Transactions

Additionally, an agricultural investment that provides a personal benefit to the investor is considered a prohibited transaction by the IRS. An example of this would be the purchase of a timber stand where the investor wants to hunt. You also cannot purchase a piece of agricultural property you or a family member owns with a self-directed IRA. The IRS considers this self-dealing. Furthermore, you’re also unable to perform any work on the IRA-opened property yourself — your IRA must hire a trustworthy property manager to do so, but you’ll be the one who has to find a good fit. 

Some more prohibited transactions and conflicts of interests include:

• You can’t draw a salary from the farm
• You can’t hire your spouse, children, grandchildren, parents, grandparents, or those of your spouse, nor any entity they control
• You can’t commingle your personal funds with the IRA funds
• You can borrow money, but only a non-recourse loan. You can’t sign a personal guarantee or pledge anything as collateral that is outside the IRA
• You can’t take the livestock depreciation deduction

The Bottom Line

Alternative investments with your self-directed IRA allow an abundance of opportunities. Adding farmland assets to your portfolio is an opportunity that can mature and strengthen over time with the proper care, but like many other investments, has to be done with purpose. Due diligence, research, and care can help grow your investment and your portfolio, even if you don’t have a green thumb!

To learn more about what you can invest in with your self-directed IRA, especially when used in tandem with a self-directed IRA, then contact the lenders at First Western Federal Savings Bank. Our lenders would be happy to discuss your current situation and financial goals and assist you in diversifying your portfolio. Give us a call today.

The post Can You Invest in Agriculture With Your Self-Directed IRA? appeared first on First Western Federal Savings Bank.

If you want to learn more about how to purchase real estate with your non-recourse loan and self-directed IRA, speak with the team at First Western Federal Savings Bank. Our team of non-recourse loan lenders are here to answer any questions you may have. Give us a call today.

Check the Exterior of Your Property

Before creating a lengthy list, take a walk around the perimeter of your property. Keep an eye out for any problems, or potential problems, that may arise during the winter, and perform preventive maintenance so those problems never occur. Structural tasks will be the job of the landlord and should include searching for areas that need to be caulked in order to improve heating efficiency, checking the function of the roof, turning off outdoor water faucets and drain pipes, ensuring the siding is stable and secure, properly insulating windows and doors, and cleaning out the rain gutters before fall leaves have had a chance to settle in. 

Take a look at the landscaping surrounding your property. Is there any vegetation or foliage that needs to be cut back, looks overgrown, or looks like it could damage the property with the help of winter storms? During this time, it is also a good idea to remind tenants of their responsibilities in helping to maintain the property, like shoveling snow and cleaning up their pets before the first snowfall. It may also be a good idea to remind them of the lease restrictions before they get started decorating for the holidays. If your tenants will not be shoveling snow, then it is recommended to hire a snow shoveling service as early on as you can. These services are high in demand and you will want a company that is committed to helping maintain your property.

Before heading inside, take a look at any potential slipping or tripping hazards. You may want to fix uneven pavement, or even install handrails along stairways. This could be especially beneficial if your tenants are older. 

Interior Maintenance

After you have completed your exterior property check, the hardest tasks have already been completed. While investigating the interior of your rental property, be sure to check the furnace. You may want to ask the tenants to replace the filter themselves, but it is up to you what tasks you choose to assign them. It may also be a good idea to hire an HVAC professional to inspect your HVAC unit so you can repair any issues that are in need. If your rental property has a chimney, you may want to hire a chimney sweep to remove any blockages. It may also be a good idea to invest in a chimney cap so no animals make your chimney their home. 

If your property is in an area that experiences high rates of pests, whether it be rodents or bugs, then you’ll want to prepare accordingly. Set up mouse traps around the exterior and interior of your home, if need be, and place bug catching strips around windows and small gaps in walls or basements. That being said, if you do notice gaps or cracks in walls, then it is definitely a good idea to seal them up.

Make Sure Your Tenant is Involved 

If you are enlisting the help of your tenants, be sure to be reasonable about the tasks you assign them as well as yourself. However, every landlord should make it a priority to check in with their tenant every now and again. You want to make sure they are maintaining the property up to leasing standards and if not, communication is key. Set those expectations again if you need to so you can maintain the Integrity of your property. If you don’t have any current tenants then you can use this time to really refresh the state of your rental property. Once the maintenance is done you can sit back, relax, and enjoy the fall real estate season. 

If you do not have experience purchasing real estate with your non-recourse loan and would like to get started, contact our lenders at First Western Federal Savings Bank. Bolster your retirement fund and learn how to take advantage of your self-directed IRA. Give us a call today to learn more.

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A Decrease in Value

If the property you have invested in is in an area that is plagued by floods, fires, or erosion, then your property’s value may be negatively impacted. To avoid floods, there is less demand for waterfront homes. Traditionally, these types of homes have been the most expensive and most sought-after, especially for vacation rentals. The increase in vacation rental properties is taking over the hotel market, and areas that are are traditionally popular may see some change, potentially seeing a decrease in value. A study from Columbia University and the nonprofit First Street Foundation looked at over 2.5 millions coastal properties in Massachusetts, Maine, New Hampshire, and Rhode Island between 2005 and 2017, and found that increased tidal flooding caused by rising sea levels caused homes to depreciate in value by $403.1 million. 

Recently, California has been plagued by fires that ravish its landscape, burning down homes and damaging hundreds of thousands of acres of property, costing the country billions of dollars in devastating damages. In areas that are at risk of severe damage, whether it be from a fire or a flood, there is always the potential for well-developed communities and marketplaces to rebuild, introducing new opportunities. Buyers may begin seeking out properties that offer discounts, buying up damaged land and altering their use for marketplaces. Property owners face the decision of whether to stay and rebuild in areas that are damaged, or to sell and start fresh. That being said, natural disasters can impact a property, but not necessarily the value of the home. 

Higher Property Taxes

Some areas are routinely being affected by certain natural disasters, which naturally drive people away. If you live in a part of a country that sees disasters like floods and fires that has fewer residents and a smaller tax base, you might expect property taxes to rise significantly, because someone has to pay for the infrastructure in that area. Additionally, the property taxes will be higher to pay for any damage that is likely to come.

Building a Resilient Portfolio

Natural disasters increasingly highlight the vulnerability of individual assets, locations, and metropolitan areas. When prioritizing risks, investors need to create new approaches to the real estate market and develop new mitigation strategies. In order to stay competitive in a changing market, it is essential to prioritize the risk of these natural disasters and build for a resilient portfolio on a property, and potentially citywide, bases. Factoring risks may be the new normal in the industry, and for good reason, as natural disasters have the ability of affecting anyone, anywhere. Real estate is a business of location, and as climate change continues, without investigation and risk management, investors are navigating the industry blindly without any kind of educated knowledge of what is going on with their investments.  

As an investor in real estate, you may be needing to consider climate as a part of your responsibility to your stakeholders. Climate consideration will help in ensuring that your portfolio is not overexposed in a market that is adopting more risk. Further, when you incorporate additional mitigation measures for assets that are at risk, you leave some room for error that, overall, shouldn’t affect your portfolio too much to the point where you are not able to recover. Another way to reduce asset loss is to diversify your portfolio. Instead of investing in property in one area, diversify your portfolio to include areas that still have a competitive market but don’t have the same risk that other areas prone to natural disasters do.   

The real estate market faces considerable risks from rising sea levels and other natural disasters as a result of climate change. More extreme weather events will occur with greater frequency and intensity, making homeowners allocate their portfolio to make up for investment losses. Climate change is extremely disruptive, but also extremely opportunistic — only for those who are prepared for it. 

First Western Federal Savings Bank is dedicated to helping you buy the property you desire — whether it is residential property, commercial property, multi-unit property, or agricultural property. If you are ready to purchase real estate with your IRA, then contact us today, and we can help you. Your non-recourse loan is waiting, so apply today!

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Winter

Prices Are Lower in the Winter

Winter is synonymous with a great time to buy, favoring buyers who are ready to make the investment when there is a lack of competition. It is not uncommon for prospective buyers to only consider buying property when the weather permits, leaving many areas that are hampered by severe cold weather up for grabs for those who are ready. This doesn’t mean that real estate seasonality makes buyers and sellers go on a real estate haitis — instead, it simply means that those who are intent on buying property could be nicely rewarded for their efforts during the slower months. 

While a low price during the winter puts buyers in a great position, it usually means that sellers are desperate. Sellers probably aren’t receiving multiple offers on a property because there aren’t as many buyers during the winter months, which means they are more open to making deals and negotiating, selling for lower than the original price. Once winter starts turning into spring, you will be happy that you remained active in the market, and now you get to relax a little while the stakes rise for others. 

Winter is a Great Time for Beginner Investors

If you’re new to purchasing real estate, then you are approaching a great time to do so. One of the best times to invest in real estate is during the winter season, because of the better services offered by real estate agents. They will work with you and your budget to find you the best property that meets all of your requirements. First Western Federal Savings Bank has been helping people purchase real estate with their self-directed IRAs for over 40 years. Whether you are interested in residential property, commercial property, multi-unit property, or agricultural property, our non-recourse loan lenders are ready and waiting to help you. What’s more is that we offer exceptional services year-round. There is no seasonality with our commitment to customer service. 

Considering the Upkeep

If you are planning on buying rental properties during the winter, then it is important to consider the upkeep of the property. Any property seems beautiful and desirable during the summer, but the same crop of land can look dramatically different during the winter. Dead trees and winter snow can make previously stunning yards into unappealing eyesores that will discourage many buyers. If you are the type of person that is up for a challenge — and if you’re into property investment, chances are, you are — then create a plan for dealing with the effects that the season leaves. 

• Hire a professional and qualified inspector to take a look at the property, inspecting any potential problems that are hidden by snow or fallen leaves.
• Find some pictures of the property during the summer months when the foliage is in full bloom. These photos not only let renters know what to expect and give them something to look forward to, but it also gives you an idea of any landscaping needs that need to be planned for once the snow starts to melt. 
• Think about snow removal from the sidewalks and the driveway. If it’s something that isn’t too bad, then think about making it a resident’s responsibility, or make it something that you take care of by hiring a snow removal service. 
• Make sure all the appliances are more than up-to-date and work well during the winter. Have someone inspect your HVAC system to ensure that any residents or tenants moving in during these months are going to be warm in their new home.

The Downside of Buying in the Winter

There will likely be fewer houses on the market during this time, making the search to find the perfect house more challenging than it would be during the summer. The lack of housing inventory means it’s harder to find a home that meets your requirements, which is where you may need to lower your standards or look into renovation and landscaping opportunities. While there are tools you can use to help find properties in your area that do meet your requirements, if you are buying a property that doesn’t meet your standards, then add in the costs of fixing up the property to your desired preferences.  

Summer

Just like the temperature outside, the housing market begins to heat up, and thus making buying property and selling property all the more competitive. Summer represents a special time in real estate market trends, as it is when people are actively participating in the housing market. Buyers aren’t restricted by the winter and they are fully able to look at properties in all their glory. Summer is notorious for having the most people look for new places to rent, buy, and sell, making the market intense and inherently very fast-paced. This creates a new atmosphere for both buyers and sellers, as they are competing against each other and other buyers and sellers, of course. This competition, however, isn’t necessarily a bad thing for those who are involved in the real estate market. As a matter of fact, it usually helps tip the scale for those who are prepared, offering a degree of leverage for those who are motivated and ready to pounce on the offer that appeals to them the most and meets their requirements. 

For Sellers

If you are trying to sell your property during the summer, it is vital to have the area looking the best it can, or else it just won’t compete with the other properties on the market. In one of our last blogs, we outlined curb appeal, which helps make the property appealing for potential buyers and renters. You want to do everything you can to avoid your property from flopping in the heat of the market, so think about the features and design elements that make any home make a great first impression, and then apply them to your property. You want your property to stand out against the other houses that are also on the market. Here are some features that will make a big difference when trying to stay competitive in the summer real estate market. 

• Attractive landscaping – Good landscaping takes good work, but it’s work that pays itself off. Good landscaping is more than just maintaining a green yard and keeping the weeds out of your gravel. Greet guests with flowers, as they will make the property seem more inviting. A low fence around the perimeter of the front yard, or along the sidewalk, is a great place for planting colorful flowers and vines that give the house vibrancy. Plus, planting seasonal flowers will keep the home colorful all year long, so when you are selling in the winter, the property won’t be dull. Keep all shrubs, bushes, and trees nicely groomed and pruned, as this adds a sense of extravagance to the home and will attract renters and buyers who want to uphold this appeal. 
• A well-kept exterior – The exterior is the first thing that potential renters and buyers see, and if it isn’t well-maintained, then you are telling people that they shouldn’t even bother seeing the inside, because who knows that that is going to look like? Make sure the roof is clean, not damaged, and doesn’t have any nests or debris on top. Make sure the exterior walls of the home are in good condition. There is no chipping paint, the brick isn’t eroding, and the wood isn’t splintered or cracking away.
• Dress up the entryway – If you have potential buyers or renters about the enter the property, then the front door is the last first impression that you can “wow” them with. Make the front door stand out by painting the casing a different color than the door. Paint the door in a color that stands out, like a red or black, and add light fixtures and front-door accents will complement the look of your home and will excite renters and buyers. Creating symmetry around your door, which can be done by adding large planters, will also give a sense of elegance. 

For Buyers

Before you enter the market, it is extremely necessary for you to understand what you can actually afford. Once you find this out, then commit to this budget amount, and don’t look at homes that are over your budget. Don’t rush to buy a property that is in your budget, but lacks a few of your requirements, making it fall below your standard. Rushing to buy a property — despite how much pressure you feel watching competitors take good properties off the market — doesn’t make much financial sense, and further, it could comprise your finances. If you are using your self directed IRA, plan to put at least 40% down. If you don’t quite have that amount saved yet, keep saving and when you do, you’ll be ready to make a move and purchase that rental house. 

Real estate seasonality isn’t difficult to understand and use to your advantage, as the familiar patterns will prepare you for the seasons to come. If you have a good grasp on the market and understand your competition, then you are ahead of many investors. If you are new to investment property, then contact First Western Federal Savings Bank and speak with a non-recourse loan lender today. We would be happy to walk you through applying for an IRA non-recourse loan. We look forward to hearing from you!

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Our non-recourse loan lenders at First Western Federal Savings Bank are here to answer that very question. Find out why property investment is one of the best and most safe financial risks to take and get started by applying for a non-recourse loan with our lenders today.

A Reliable Demand

As we’ve mentioned in previous blogs, there are more renters nowadays than in the past 50 years. SmartMove reports that “The national homeownership rate has dropped 9% since 2004.” Our non-recourse loan lenders have also talked about how millennials are staying in the rental market longer than previous generations. All of this goes to say that unlike stock markets and business ventures, which can be unpredictable, investing in real estate is much more reliable.

More people can afford to rent properties, but they cannot afford a down payment and monthly mortgage. This trend doesn’t show any signs of changing, especially as interest rates continue to rise. Investing in a rental property is going along with the demands and trends of not only today, but tomorrow.

A Source of Passive Income

By owning a long-term tenant rental or even a vacation rental property, there’s a good chance that you could easily cover your monthly mortgage payment by collecting rent along — if not generating even further income. Rental income can also be taxed differently than income from a traditional source of employment income, which can also work to your advantage.

Once you pay off your non-recourse loan and mortgage, you could see massive gains on your property and rental income. Whereas stock markets fluctuate, rental property investment is a pretty solid source of revenue.

An Opportunity to Sell

When the time is right, you’ve fulfilled the requirements of your mortgage and/or non-recourse loan, and you’re ready to sell, you will suddenly be able to add an enormous boost to your financial portfolio. Especially if your property has appreciated over time, you’ll be profiting from this investment. This is highly advantageous to planning for retirement or investing in other avenues as the opportunity presents itself.

A Diverse Investment Portfolio

SmartMove talks about how diversifying your financial portfolio is important for many reasons, one of which is adding a layer of security to your assets. Owning a rental property that’s doing well can protect you from any hits that come from other higher-risk investments. As great as your brother’s new barbershop sounds, it’s an investment that comes with much more risk — Investopedia reports that “The SBA states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. The SBA goes on to state that only 25% make it to 15 years or more.”

This isn’t to say you should avoid all other investment channels, but it goes to show that there is truth and benefit to not keeping all your eggs in one financial basket.

An Enjoyable Project

A lot of people love sweat equity. They watch those DIY shows and find YouTube videos that teach about fixing up properties — there is a lot of purpose and joy that can come from landscaping, performing your own renovations, and taking a property on as a project.

To be clear, a non-recourse loan does not cover sweat equity. Your loan can only be used towards purchasing the property. But for some people who have owned property for several years, have paid off their loan, and are excited to make some changes, this is a great opportunity to combine your passions with growing your financial portfolio. Not to mention, making some of these changes also helps your property appreciate in value.

Investing in real estate and rental properties are a solid source of passive income that could be the perfect opportunity for you. Ready to take the next step? Visit our non-recourse loan FAQ page or purchasing rental property page to learn how to get started, and apply with our lenders at First Western Federal Savings Bank today.

The post The Benefits of Property Investment appeared first on First Western Federal Savings Bank.

Have a plan.

The most common mistake people make with retirement savings is thinking that they can put it off until later. But even if you were able to put $300 in a year from the age of 18 — just $25 a month — until feeling more established at the age of 30, that would be $3,600 that could go towards your retirement. That’s a whole lot better than nothing.

Do something now with retirement. Even if you’re not provided with a 401(k) through work, even if you’re not ready to open up a Roth IRA, finding some kind of retirement plan that works for your budget is a good start. It’s easier to build off of an existing foundation than to start completely from scratch.

Make it automatic.

If you take a few hours one day to set up a retirement account, figure out your contributions, and automate your payments, you will be contributing to your retirement without having to give it too much thought. Simplifying and automating the process makes it a lot easier to grow your nest egg, and takes very little energy on your part.

Think ahead.

What age do you ideally want to retire by? Are you fine with working until the age of 70, or do you want to be done before hitting 60? Strategizing about retiring is important for determining how aggressively you should be saving. This helps set a budget in mind, and keep the bigger picture ahead of you.

Set some goals.

Are you just wanting to save, save, and save some more for retirement? Many people opt for this, but for others, the idea of passive income and drastically growing their retirement savings is more up their alley. Consider investing in a rental property with the help of a non-recourse loan to maximize your financial potential.

When setting goals, one of the biggest things to consider is what you want your life to look like when you’re done working (and when that will be). If you’re drawn to traveling around the globe, dining at fine restaurants, and living it up in general, it might be more worth your while to use your retirement account as an investment tool. If you’re comfortable with tending to your garden and hanging out near the grandkids, you still might want to invest with your account so that you can live even more comfortably.

Learn as much as you can.

Setting up retirement accounts and saving for your financial future are big steps. You want to be sure that you’re making the most informed decisions as possible. Consider talking with a financial advisor, consulting with retirees whom you want to learn from, and reading blogs and other publications that can set you on the right course.

Spend wisely.

If you can afford that sports car and it won’t set you back on your retirement plans, go for it! But oftentimes, we can get caught up in material things that we think are important now, which can later impact our retirement savings. Purchasing a modest, reliable, and safe car is likely at least $10,000 less than the aforementioned sports car — imagine what saving that $10,000 could do for your retirement, and how much it will mean later on.

Don’t give up!

You might feel like it’s too late to start your retirement savings, but it’s better late than never. You can absolutely make it happen, even if it means that some sacrifices must be made. Pick a day to thoroughly sit down and set some goals and intentions — it might seem tedious now, but it will be absolutely worth it, and your future self will thank you.

At First Western Federal Savings Bank, we are committed to helping all of our clients by providing financial insights to set them up for success. We’re right up there with the nation’s top non-recourse loan lenders, but we offer a more personal and thoughtful experience for everyone who looks to invest their self-directed IRA as a means to purchase rental properties. And with more than 40 years of experience, we’re proud to be a name that you can trust and rely on, time and again. Contact our non-recourse loan lenders for more information on purchasing rental properties, vacation rental properties, home equity loans, refinancing, and with any other questions you may have.

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Some might just want to be able to live comfortably, without having to work full-time, and get by without any lavishness. Others might want to invest and grow their financial portfolio, using their retirement account as a tool. While we at First Western Federal Savings Bank specialize in non-recourse loans and self-directed IRAs, we’re still here to offer our insights to choosing the right retirement account for you. Learn more from our non-recourse lenders, and best of luck in setting up your retirement plan.

Roth IRAs

Roth IRAs are extremely common, and kind of like an umbrella term for many different types of IRAs. As we’ve discussed in previous blogs, they’re an individual retirement account that offers tax benefits — more specifically, you can start taking tax-free withdrawals once you’re 59½.

Self-Directed IRAs

Self-directed IRAs are a type of Roth IRA. They differ slightly from other IRAs, because you can use them for investment purposes, such as with a non-recourse loan. While investing with a self-directed IRA has higher risks than if you were to just let those savings sit, there’s also a much higher chance of reward.

NerdWallet explains a bit further: “A self-directed IRA is a type of traditional or Roth IRA, which means it allows you to save for retirement on a tax-advantaged basis and has the same eligibility and contribution rules. The difference between self-directed and other IRAs is solely the types of assets you own in the account.”

Solo 401(k)

An individual (solo) 401(k) is a retirement account where an individual sets this up on their own, and can make contributions to their account as both an employee and an employer. Solo 401(k)s are for anyone who’s self-employed and who doesn’t have their own employees. Basically, you have to be a business owner with no employees in order to have a solo 401(k), such as an independent consultant or contractor.

Solo 401(k)s can be used in tandem with a non-recourse loan. Similar to a self-directed IRA, this retirement account is great for anyone who wants to invest in assets (and who also meets the requirements/qualifications of the IRA).

SEP IRA

A simplified employee pension (SEP) IRA is a retirement account for small business owners or self-employed workers. As U.S. News reports, “As the employer, you can contribute up to 25 percent of your income or $56,000 in 2019, whichever is less. These accounts are easier to set up than a solo 401(k). If the business has employees, the employer must contribute for all who meet certain requirements.”

This type of IRA is not as lucrative for someone wanting to use their retirement account as an investment tool. Unlike a self-directed IRA or a solo 401(k), SEP IRAs cannot be used with a non-recourse loan.

Simple IRA

For small business employers who have fewer than 100 employees, a simple IRA is a relatively easy account to set up. With a simple IRA, employers are expected to contribute to their employees’ accounts as well.

Health Savings Account

People often don’t realize that their health savings account (HSA) can actually function as a retirement account. Each year, you can put up to $3,500 into your account ($7,000 for families) until the age of 55, at which point you can put $4,500 in annually. While HSAs are set up to help pay for health expenses, such as copays, glasses, and prescriptions, you can continue saving that money — and if you pay out of pocket, you can be reimbursed for it years later, as long as you keep receipts.

The money, like any savings account, continues rolling over indefinitely. You can’t use this money for anything other than health expenses without being fined, however, that changes once you turn 65. At that point, you can take money from your HSA and use it for any reason, though you’ll have to pay income taxes on any money you withdraw.

If your employer offers you a retirement account, you can still look into some of these options, particularly if you’re interested in investing and expanding your portfolio. As always, we at First Western Federal Savings Bank are happy to help you determine if your retirement account can be used for purchasing a rental property with a non-recourse loan. Whether you’re looking to purchase a long-term tenant rental, a vacation rental property, or are even interested in home equity loans or refinancing your existing loans, we’re the FDIC-insured bank with more than four decades of experience that you can rely on. Contact us today to learn more.

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