We’ve mentioned it a number of times: you can use a self-directed IRA to apply for a non-recourse loan, which can then be used to purchase an investment property. We’ve focused nearly exclusively on the non-recourse lending side of things (which makes sense, considering that’s in our wheelhouse), but we’ve yet to spend some time discussing self-directed IRAs. A lot of people want to get involved with real estate investments, but don’t realize that a self-directed IRA is one such way that you can make this happen.

There are so many benefits from having a self-directed IRA, and our non-recourse loan lenders are here to explain all. Take a look at why you should enroll in this type of retirement plan, and contact First Western Federal Savings Bank to apply for a non-recourse loan today! Offering purchase money loans, refinancing options, and more, you can find the best in real estate investment resources with a bank that puts you First.

Benefits of a Self-Directed IRA

The benefits of a self-directed IRA are many.

Tax-Deferred or Tax-Free Investment Savings

The biggest advantage of a self-directed IRA is that the profits from investment activity within the IRA are tax-deferred or tax-free (if it is a Roth Self-directed IRA). This is huge because not having to pay taxes on the investment income means your effective rate of return is much higher within the IRA than it is with personal income.

An example of this is rental income that comes from a rental property held within the self-directed IRA. Let’s say that after all operating expenses, that rental property is throwing off positive cash flow of $1000 per month. Not having to pay taxes on $12,000 of income in a year means more money in your account, and less going to Uncle Sam in the way of income taxes. That is more money to invest for your future.

Complete Control

As long as you’re using the funds in your IRA for investments that meet the requirements of your retirement plan, you have complete control over how your funds are used. Self-directed IRA’s means that you don’t have to go through a Wall Street broker to invest (although you can invest in stocks, bonds, and mutual funds with your self-directed IRA just as you typically can through an employer-based plan or through most other brokers). You can direct your self-directed IRA to invest in anything legally permissible per the plan documents.

Investment Opportunities

Property, land, gold, currency, commercial and residential real estate, tax liens, private company stocks, and so many other investment options exist when you open a self-directed IRA.

If you have expertise in some field, you can invest your retirement dollars in something you know. That is very important in this time where it seems like everyone is selling something touted as a good investment. But is it really for you?  If you really know what you’re investing in, you will be much more comfortable than with something you have neither the control nor the expertise in.

Funds for Retirement

This seems like a no-brainer, but considering half of all adults in the United States have nothing put away for retirement, and the majority of adults have less than $1,000 in their savings, having a retirement fund in itself is a huge benefit. Countless people are either unable to prepare for their financial future after retirement, or don’t want to start thinking about it. This sets a person back years on their retirement, and can, in some instances, be a detrimental one — if something comes up and retirement needs to happen sooner than you think, it’s better to have some funds ready to go.

Help Beneficiaries

As much as we don’t like to think about our own mortality, it’s inevitable, and it’s better to plan. If you had a certain type of retirement plan and were to pass away unexpectedly, there’s very little chance that your beneficiaries (such as spouse, children, or grandchildren) would gain access to those funds — or if they did, there could be some significant tax implications as a result. As Equity Trust states, “Certain Self-Directed IRAs allow the passing of assets to beneficiaries after death with little or no tax implications, allowing you to stretch wealth over generations.”

Grow Your Portfolio

With a number of investments available, your financial portfolio can substantially grow and generate significant revenue. One such example is when you work with our non-recourse loan lenders — by purchasing an investment rental property, you not only have equity that continues to appreciate in the form of a house, but also monthly income that comes from your tenant’s rent, or vacationer’s fee for staying at your property.

Qualify for a Non-Recourse Loan

As we’ve stated in previous blogs, a self-directed IRA is the tool you need to apply with our non-recourse loan lenders, and get your investment property purchases underway! Not only is a self-directed IRA beneficial for all the aforementioned reasons, you can start to get invested in real estate and rental properties — an exceptional way to continue growing your financial portfolio.

Our non-recourse loan lenders would love to talk with you if you have a self-directed IRA, and are ready to invest in rental property. If you don’t yet have a self-directed IRA, this is the perfect time to find one that works for you (and before the fiscal end of year, as well). Get started with First Western Federal Savings Bank today!