First Western Federal Savings receives "EXCELLENT" Rating
First Western Federal Savings receives Excellent rating from Weiss Ratings
IRA Loan Debt Service Coverage
IRA Loan Debt Service Coverage is the ability of the rental property that the self directed IRA (the Plan) owns to generate enough income or rental stream to pay all the operating expenses of the property and the loan payments with a cushion. A Non Recourse loan can only be paid back by the income and liquid assets in the Plan. So when a lender is evaluating whether or not to make a non recourse loan, that lender and you should look at all the operating expenses the property has such as taxes, vacancy factor (we use 7% of gross rents), insurance, any HOA Fees, maintenance, and any other operating expense the IRA is obligated to pay.
Titling self directed IRA owned properties (naming the entity) is different than owning a property in your own name or privately funded LLC. If your self directed IRA is held by a custodian or administrator and you purchase a property with that account, the name on the Deed or ownership document filed with the county recorder in the area of the country you are purchasing the property in must show the name of the company where your account is held FBO (for the benefit of) your name. An example would be: XYZ Trust Company Custodian, FBO Roger St.Pierre, IRA. Or if an administrator, then the name of that company FBO your name IRA.
Non Recourse Loan Reserves (reserve funds left in your IRA) are an important piece of the process when planning that real estate purchase in your self directed IRA, SoloK or IRA LLC. We as a lender and you as an investor should concern yourself with the idea of keeping a liquidity buffer in your Plan so that any unforeseen expense or lack of income can be handled easily without causing stress to you or your IRA.
We as a Non Recourse Lender require that when your retirement plan is borrowing money for the purchase or refinance of an IRA held property that you keep at a minimum 15% of any and all loans outstanding in liquid funds inside the retirement plan. That way should there be some months without a tenant, unexpected repairs, or other unforeseen expenses the IRA can still make any loan payment, do any repair or handle any expense of the IRA or property owned by the IRA without stressing you or your plans finances. It just good business planning.
So when thinking about that property purchase with your self directed IRA, SoloK or IRA LLC, plan for the unexpected and keep some reserves leftover. You'll sleep better at night!
Non Recourse Loans for your IRA
For your self-directed IRA, Non Recourse Loans are a great way to add leverage to that real estate purchase in your self-directed IRA (SDIRA), Solo 401(k), or IRA funded LLC. You don
Buying investment real estate with your self directed IRA is not difficult.
Buying investment real estate with your self directed IRA or IRA LLC or Solo K is not difficult. No more so than a personal investment in real estate.
The only difference is the entity.
Your retirement plan is the owner/buyer/borrower and all income and expenses flow to and from that entity. Loans are also available as long as it is a non recourse loan. Many investors nationwide are using their self directed retirement plans to purchase investment property. The tax advantages and ability to grow your retirement plan tax deferred or tax free in an asset that you understand and can control is powerful way to build retirement wealth.