HELPING SMALL BUSINESS OWNERS WITH FINANCING Another self-directed IRA account holder with an interest in buying and selling homes took a bit of a detour. The investor, Matt, came across a classified ad from a local used-car dealer seeking financing to repave his business’ parking lot. He negotiated a private lending agreement with the owner with funds from his self-directed IRA. After the success of this initial loan, Matt now uses his self-directed IRA to provide floor-plan financing to this dealership and other nonfranchise dealerships in the area. This loan provides 10 percent interest payments tax-deferred to his IRA and is secured by the car titles. Every time the dealer sells a car, he pays a title exchange fee of $250 (back to Matt’s IRA) and provides a new title to secure the loan. In the end, Matt gave his retirement a boost while helping a local business stay afloat and demonstrated the diversity of potential opportunities available with an IRA. OPPORTUNITIES BEGIN WITH EDUCATION Of course, as with any investment, it’s important that investors do their homework to understand the intricacies and risks of what they are investing in. Working with a team of financial professionals can help ensure real estate investments fit into a cohesive retirement plan. And for the community-minded real estate investor, self-directed IRAs could offer an opportunity to grow your retirement nest egg and your community at the same time. •
purchasing and renovating the home, as well as paying the property’s carrying costs. Four months later, the rehabbed house sold for $235,000, with the couple securing 33 percent of the sale price per the agreement with their friend. The proceeds were tax-free because the couple invested through self-directed Roth IRA accounts, earning a 35 percent return. In addition, the deal directly inspired two similar renovation projects in the area, helping to rebuild a community that was devastated a decade ago. LENDING A HELPING HAND TO AMERICAN VETS In another case, Roger, a client from Maryland, worked with his friend Bob, a pastor and Vietnam veteran, to fulfill a dream—creating a ministry for vets returning from Iraq and Afghanistan. Many veterans suffer from post- traumatic stress disorder and struggle in their return to civilian life. Bob’s goal was to provide spiritual guidance and skills training as a way to help them find meaningful and gainful employment. After bank financing for the property fell through, Bob feared his dream would not come true. Roger stepped up and provided a $100,000 loan from his retirement account. The 6 percent interest he received was returned back into his retirement account tax-deferred. But he concedes that the real payback was making the “Building Veterans” ministry a reality. "If I wasn't able to step in and use my self-directed IRA funds as the initial financier for the house, the whole thing would have fallen through," recalled Roger.
keep their family home. “Katie mentioned she thought
many times this would never happen, considering all the borrower home loan hurdles and recent changes in her life, but today, the family owns their home again,” Rex stated on the day the sale finalized. “The home is 100 percent repaired and good to go for another generation and more,” he said. “After perhaps 300-plus home transactions in my career, this was the most fulfilling. What a fun day!” STANDING UP FOR NEW ORLEANS POST-HURRICANE A couple from New Orleans saw an opportunity to help a friend who hoped to rehab a flooded and gutted home in their community, which was ravaged by Hurricane Katrina. They pooled their IRAs and co-invested $106,000 toward
BY RICHARD A. DESICH
Richard A. Desich is Executive Director and a Co-Founder of Equity Trust Company. With more than 300,000 clients and $30 billion in assets under custody and administration, Equity Trust enables individual investors, financial professionals and institutions to diversify investment portfolios through alternative asset classes, including real estate, tax liens, private equity and precious metals. 888-382-4727 | www.trustetc.com
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