If you have questions about how your self-directed IRA can use a non-recourse loan to invest in real estate properties, contact us today. Our experienced employees are experts in the field of using your self-directed IRA to obtain a non-recourse loan. See why so many customers choose First Western Federal Savings Bank to help achieve their real estate goals.


Administrator

An IRA Administrator normally provides an IRA owner with education and consulting services about their IRA investments. In some cases they can hold IRA funds on deposit, but normally this is left up to a Custodian or Trustee. An IRA Administrator can maintain IRA paperwork and provide IRA statements.

C-Corporation

(or C Corp.) refers to the way a corporation is organized. C Corp status defines how the corporation will be taxed. A corporation is called a C corporation if it is taxed under Subchapter C of the Internal Revenue Code of 1986. The C Corp has the benefit of no liability for partners or shareholders.

Collateral

Property used as security for the repayment of a loan.

Common Sense

Ordinary good sense and judgment.

CRP Program

Conservation Reserve Program. CRP offers annual payments for 10-15 year contracts to participants who establish grass, shrub and tree cover on environmentally sensitive lands. First Western Federal Savings Bank can help you cash out your CRP payments.

Custodian

A company who is either approved and regulated directly by the IRS, or affiliated with or owned by a bank or trust company and subject to regulation from their state Banking Commissioner and/or the Comptroller of Currency and FDIC. Custodians handle the formation and maintenance paperwork for a self-directed retirement account as well as handle the money for that account.

Debt Service Coverage Ratio

Debt Service Coverage Ratio is Net Operating Income (NOI) that a property can generate divided by Annual Debt Service principal and interest payments on the debt. Expenses commonly figured into Net Operating Income are vacancy, maintenance, management, home-owner association fees, taxes, and insurance among others.

Default

Failure to do something required by duty or law.

Discounted Note

A Note that has been purchased for less than the face value of the Note Balance.

Facilitator

A facilitator is normally a company that provides advice and consulting to IRA Account Holders. Facilitators are not custodians or trustees and will not normally hold assets or process IRA transactions.

IRA Loan

An IRA Loan is really another name for non-recourse loan. An IRA loan or non-recourse loan is a loan made to a self-directed IRA for the purpose of acquiring real estate assets.

Multi-Family Dwelling

A multi-unit dwelling made up of several apartments or dwellings to be used by several families.

Non-Recourse Loan

A Non-Recourse Loan is a loan secured entirely by the collateral. Upon default, there is no recourse to collect the loan from the IRA Owner personally or the IRA itself.

Prohibited Transactions

Prohibited transactions, as defined in IRS Publication 560 are transactions between the plan (IRA) and a disqualified person that are prohibited by law. Ex. A transfer of plan (IRA) income or assets to, or use of them by or for the benefit of, a disqualified person. Ex. Any act of a fiduciary by which he or she deals with plan (IRA) income or assets in his or her own interest.

Real Estate Appraisal

The practice of developing an opinion of the value of real property, usually its Market Value.

Real Estate

Property in buildings and land reserves.

Requirement

This is the amount of excess liquid cash or investments in an IRA expressed as a percentage of the loan amount of a non-recourse loan. 10% is the minimum. A $100,000 non-recourse loan would require $10,000 in reserves.

S-Corporation

Subchapter S Corporation. The choice by a small corporation to be treated under Subchapter S by the Internal Revenue Service, which allows the corporation to be treated like a partnership for taxation purposes. This may provide the benefit of passing losses to the stockholders.

Self-Directed IRA

A Self-Directed IRA is an IRA that has a Custodian who allows the IRA Holder to invest in a wide range of assets.