Sunday, September 6, 2009

How to Use Self Directed IRA’s to Buy Real Estate

HomeSkeer Center By: Don Sieb Little-known IRS rules allow retirement savers to take "non-recourse" loans against IRAs and leverage their savings as a down payment to buy investment real estate. IRA borrowers can get loans on a condo or townhouse, a single-family home, a multi-unit apartment building and even commercial property -- so long as the rental income will yield positive cash flow. Since 1974, Americans have had the ability to use IRA assets to buy investment property. Yet the means to do that -- called a self-directed IRA -- remains one of the least known and unheralded investment vehicles in the vast financial marketplace. The overriding factors are whether the property appraises for the sale price and will produce enough income to cover mortgage payments, property taxes, insurance and related costs. With foreclosed homes selling at deep discounts, residential real estate is a bargain for investors holding cash. And if they can put 30% down, IRA investors will find specialty lenders eager to help them leverage their retirement savings with mortgages on rental properties. Existing-home sales are on the mend in hardest-hit markets and foreclosure-avoidance programs are expected to stem the rising inventory of bank repossessions, meaning the window to buy at rock-bottom prices could close before the year is out. HomeSeeker Center specializes in difficult home sale situations. Our group of agents specialize in helping Buyers and Sellers. Visit us at

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