Q A Z Z O O . C O M



With the popularity of Real Estate IRAs gaining ground, it’s important that you, as a trusted real estate advisor, stay up to date on this topic. Clients in your database that have retirement wealth may look to you to provide more information about investing in real estate. I am always sharing important information on this topic with agents, including this particular key insight: your clients do not need to have the full cash amount in order to invest in real estate with retirement dollars. If a client has a small IRA, there are a few paths they can follow.

Here are the three most popular ways for a client with a small IRA to invest in real estate:

Partner the IRA

A self-directed IRA or Real Estate IRA can partner with other IRAs, investors’ money, and even personal funds. Sometimes partnering with one account, one investor, or only yourself, will not provide enough funding for the investment you are interested in. In this case, you can partner with a group. The IRA would own a fraction of the investment and share the profits and expenses with other investors in that same proportion.

Leverage the IRA

Yes, your IRA can take a loan. The regulations require a non-recourse loan if a loan is to complete a real estate transaction in a self-directed IRA. A non-recourse loan is a loan in which you, as the IRA holder, are not personally liable for repaying the loan. The IRA holder cannot personally guarantee the loan the IRA is acquiring. Once you locate a lender/bank, the lender will lend to your IRA, not to you as an individual. The lender will have no recourse against you or other assets in your IRA in the event of a default. The lender will only be able to recover the property and your equity in the property that has the loan.

Lend your IRA

You can passively invest in real estate by providing capital from your IRA for a real estate transaction. In many cases we see investors borrow from a third party’s IRA to close on a transaction. The IRA owner determines the rate and terms of the loan. The loan from the IRA is secured by the property.

Knowing about small IRA investment strategies can help you enhance your value to your clients as a trusted source for important real estate information. Help leverage the wealth that lives in your database today.

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