INVESTMENT STRATEGY: VACANT LOTS
bank. I used my self-directed Roth IRA with an administrator that allows for real estate investments, which is called a self-directed real estate IRA. By doing this, I was able to control $5,000 with only $500 of my own money. Five years later, that vacant lot doubled to $10,000. So, I was controlling $10,000 with only a $500 down payment. I made my payment on time every month. When I sold the lot for $10,000, five years later, I had averaged about 20% per year in profit. Obviously, if
you double your money in five years, that's approximately 20% a year. I was happy because that investment beat the stocks I was in, all my mutual fund investments, and, of course, annuities. It also beat bonds. Owning a piece of land was less risky than being in stocks and mutual funds. I put the lot up for sale for $10,000 using some enticing sales techniques. I would say, “Quarter-acre buildable lot for sale, zero down payment, 100% financing, no credit check. Everyone approved.”
I got 80 phone calls in three weeks because everybody who saw that ad that wanted to own a piece of land, but they did not have a down payment or good credit. But they could still buy my lot. I realized that I had no risk. What happens if I sold my lot for $10,000 and someone made $400 monthly payments into my Roth IRA tax free? What if they defaulted? What is my risk? I didn't have any because I still owned the land. I don't give up the deed until they make their last payment. It's no different from an
38 | think realty magazine :: january – february 2024
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