Why Not Prosper? Private Lenders and the Individual Retirement Account
Most investors believe that an individual retirement account can only be used to purchase investments such as stocks and mutual funds. Not true! When individual retirement accounts were first introduced, the only companies that provided them were large brokerage firms that sold just stocks and mutual funds. When an investor chose to open an IRA with them , they provided you a selection of investment options to choose from. The part they didn’t tell you was that all the options proposed to you were investments that they sold and would make commissions on. They ignored all the other things that you are allowed to invest your retirement dollars in because they didn’t handle them and would not make any commissions on those investments.
Enter the Self-Directed IRA. The IRS has set forth guidelines on what you are allowed to invest in with your IRA. People would be amazed at the wide range of options available to you . From gold bullion, to tax liens, to real estate investments and real estate notes, IRA’s are much more powerful than many of us ever realized. Add to that the power of a Roth IRA, which allows you to withdraw your earnings tax-free, and the investor has a straight road to retirement.
Many of the private money lenders you talk with might have funds in an IRA account, but many of them may not be aware that they can invest those funds, via a self-directed IRA, in real estate Notes that are completely secured by a Deed of Trust or Mortgage, and are also insured. Picture having a fixed, secured, insured, tax-free gain of 10% to 15% or more annually, then compounded over the next couple of years! That’s a powerful blend of safe, secure investments, with the high yields normally found only in more aggressive and high-risk investments.
Many people’s IRA accounts have seen a big loss in recent years which has forced them to either monitor their account paperwork nervously , or even move their funds to a money market account within their IRA producing a lowly 1% interest. The return and safety that you can offer these investors right now will overwhelm any options they’ve been shown elsewhere , so recruiting new lenders for your business will be far easier than you expect .
Many of your new private lenders will have IRA accounts, but not with a custodian that allows for self-directed investments. The new lender will have to roll their current IRA account (or 401k from a previous employer) into a fresh account held by a custodian offering a self-directed IRA. As the company losing the account will try to do anything they can to keep the business, the transfer process could take as little as a week, or as long as a few months.
Once you’ve found a lender that has an individual retirement account and wants to invest the funds with you, get them started with the account transfer process right away . Since the transfer could take a while to become available in their account, you are unable to count on their funds until the transfer is confirmed .
Talk to several self-directed IRA custodians yourself, review their websites, and review their paperwork and procedures ahead of time . Your ability to help your lenders through the application and transfer process will add to their confidence in you and will show your professionalism and commitment to meeting their needs.
There are a dozen or more IRA custodians offering self-directed options. Select one that specializes in real estate notes to ensure that your transaction structures appear familiar to the custodian company and your deals close easily .
Related posts:
