Ideas for Finding Real Estate Investments for Your IRA

Ideas for Finding Real Estate Investments for Your IRA

So you want to purchase real estate in your IRA account? Most people do not even know that you can do this. Yes, you can, and for the right person, it can be an excellent investment. Why buy real estate in your retirement account? I would say there are three reasons. First, diversification away from stocks and bonds gives your portfolio an asset that traditionally holds its value over time and has the opportunity to appreciate. Secondly, you understand and want to be involved in the management of the rental property. Real estate is not like a stock. It requires love and care to make it grow. Third, the opportunity for the annual income and the gain on sale to be tax-free. All gains inside an IRA account are tax-free.

The first thing you need if you want to purchase real estate in an IRA is to understand what a Self-Directed IRA is. Ordinary IRA custodians (like the big brokerage houses) are not interested or equipped to hold real estate in your IRA. They don’t offer real estate as an IRA option because

  1. They don’t know how to generate revenue from an asset that they do not sell
  2. They don’t want to deal with administrative burdens such as closings, tax bills, insurance, rental agreements, and annual valuations (which custodians are required to report to the IRS annually).

To own real estate inside your IRA, you must have a “self-directed” IRA so that your investment choices are not limited to certain asset classes. Midland Trust Company is a perfect choice with a long history of reasonable fees and excellent service.

What are the different types of real estate you can buy in your Self-Directed IRA?

  1. Rental Real Estate – The most common real estate investment in a Self-Directed IRA is rental real estate. The most common types of rental properties include single-family homes, commercial properties, and condominiums.
  2. Raw Land – Many investors believe in the appreciation of good real estate and the low maintenance of raw land. This can also include leased farmland that generates cash flow.

Where do you get started finding a real estate deal? Well, there are many ways to locate or evaluate real estate opportunities, but they all require hard work. I am going to tell you a rule I learned 20 years ago that has always held true, I need to give credit to Jeff Tumberello, a local SWFL Real Estate investor, who I heard it from. The gain on the real estate is made when you purchase the property, not when you sell it. The moral of the story being, don’t overpay for the property; if you don’t get the right deal upfront, it can take years to make it up. I am not saying that is the only way to make money on a real estate investment, but it sure helps to get started by not overpaying.

So how do you find the deals? There is no right way to find real estate deals. Remember, you are looking for a property that has great potential to appreciate and cash flow. This can be a rehab flip or a long-term rental property with great potential. I am not trying to be sarcastic, but you probably won’t find it on under “new developments.”

Let me tell you how I have seen the best investors find real estate investments for your IRA.

  1. Join a REIA Club (Real Estate Investment Association). There are national groups and local groups. Surround yourself with like-minded people looking for deals and to share the knowledge they have learned. There are many types of Real Estate Groups, one place to look them up is
  2. Ask friends and acquaintances if they know of anyone interested in selling because you may be interested in buying. Without a real estate broker, you automatically save 5-6% of the purchase price. As mentioned before, the money is made on the purchase.
  3. Scour Craigslist and look for the oldest listing on Zillow and You are not looking for a beautiful house; you are looking for a property that will make you money. Also, follow up on a real estate deal that fell through. A contract may have fallen through because the roof was bad, but that may not scare you because your cousin in the roofing business.
  4. Have friends that are Realtors; they know of deals before they even hit the market. Realtors and a real estate office may have a pocket listing. A pocket listing is a property that the seller wants to get rid of but has not listed it on the local MLS.

One last tip, be good at math. I would recommend knowing a couple of easy calculations. How to calculate capital gains? Taxable gains are sometimes different than book gains. Understand the concept of basis; Basis is the tax term for Cost plus additions less depreciation. Second, know how to calculate an income statement for rental property. A rental property may have a mortgage payment, and typically an income statement, you do not deduct loan principal. I would learn how to run a cash flow statement. You need to know when you are making and losing money.

Finally, (I know I said the last tip above), know a good banker, preferably a community banker. A Community banker can make the deal so much easier, plus they can be a trusted source when you need advice on whether that property cashflows. FYI, most properties purchased in Self-Directed IRAs are cash purchases and do not use a mortgage.

For more information on how to set up a real estate IRA, check out Midland Trust’s Real Estate page. Buying real estate is not hard, but it does take hard work to stay on top of your investment. I always like the Warren Buffet philosophy; while you may not make money on every investment, make sure you do not lose money. It can be hard to recover lost money.

Midland Trust Resources for Self-Directed IRA Investments:

  1. Real Estate IRAs
  2. Types of IRA Accounts
  3. How to Handle Income and Expenses

Happy real estate hunting.

Dave Owens

President & CEO of Midland Trust Company

Loan Money Like a Bank

Loan Money Like a Bank

Wouldn’t it be nice to be a bank and lend money out for a 30-year mortgage at a fixed rate of return secured by the property itself? While there are many steps and hurdles to become a bank before you can begin accepting other people’s deposits into a checking or savings account, there is nothing stopping you from loaning your own money.

We are not talking about giving your friend $20 and collecting 10% interest as they pay you back in a week, although you could do that. There is a more formal process for treating your savings as a bank would and lending money out to people. Welcome to the world of Notes, and more specifically, Promissory Notes.

A promissory note is a written promise to pay someone. This is a common tool in the financial services industry and if you’ve taken out a loan of any kind, you’ve almost certainly signed one. A Note can be either unsecured or secured. An unsecured note carries more risk because there is no security if the borrower fails to pay; it can be very difficult to collect from them. A secured note, on the other hand, is secured by collateral (a house, car, raw land, or assets from a business). For example, if you loan someone money to pay for a property, you can draft a secured note and have the house as collateral. This means, should the borrower fail to make payments, you can legally own the property so you can be made whole.


  1. The date of the promissory note should be at the top
  2. The amount of the note
    • The amount of the loan should be written numerically, as well as in words (similarly to how you would write a check).
  3. A description of the terms
    • There should be a written description saying how the borrower is going to repay the loan. This could be monthly, quarterly, annually, or even in a balloon payment (one lump sum).
    • You will also want to state when the first payment is due by writing out the month, day, and year.
    • Finally, indicate when the last day and month for the final note payment is due.
  4. State if the note is secured or unsecured
    • If the loan is unsecured, state this in the note and be specific.
    • If the note is secured, provide details on the security instrument.
  5. Include the name of both the lender and borrower of the note and make it clear which person is which
  6. Provide specific details on where each payment should be made
    • This could be either check delivery instructions indicating your name and address to mail the check to or, ACH/Wire delivery instructions if they will be sending funds directly to your bank account.
  7. Print, sign, and date
    • The borrower(s) should print, sign, and date with their legal name. If there are multiple borrowers, each one should have a line to print, sign, and date. The lender may also sign, though this is not required to make the note legally binding.


It can be very frustrating when someone doesn’t abide by the written note agreement, whether it be inconsistent payments, late payments, or no payments. If you find yourself in this situation you may want to consider:

  • Reaching out to your borrower in a format that may be retained (email or digital chat).
  • Sending a formal notice by email and mail to the borrower. If there is no response to the letter, send a follow-up letter.
  • Hire a collection agency.
  • Take them to court.

Did you know you can loan money from your IRA account? Learn more here.

If you have questions or would like more information about money lending with an IRA account, contact Midland at (239) 333-1032 or visit

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and/or administrative in nature. The account holder or his/her authorized representative must direct all investment transactions and choose the investment(s) for the account. Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.

A Big Unknown Secret From Uncle Sam

A Big Unknown Secret From Uncle Sam

With the removal of stretch IRAs from the SECURE ACT passed this year, Inherited IRAs by non-spouses now need to be fully liquidated within 10 years. This can accelerate the amount paid in taxes on Inherited IRAs or, in the case of Inherited Roth IRAs, take away the tax-deferred status at a quicker rate. Originally, a “stretch IRA” was an estate planning strategy used to extend the tax-deferred benefits of an Inherited IRA by a non-spouse beneficiary, such as a child or grandchild. The beneficiary had to take required distributions from the Inherited IRA-but at a rate based on his/her life expectancy, not the original, deceased IRA owners. A Roth IRA is a powerful, tax-deferred tool that can be used for a wide variety of expenses throughout a lifetime. The gift of a Roth IRA is your chance to leave behind a legacy while teaching the importance of saving for retirement.

You will certainly want to discuss this with your CPA, but a potential alternative to transferring wealth with the removal of stretch IRAs may be giving the gift of a Roth IRA. There are many tax advantages to a Roth IRA, and with compounding growth year-over-year, the younger you can begin giving the gift of a Roth IRA, the better. When you’re between the ages of 16 and 25, retirement savings and saving, in general, is one of the last things on your mind. For those just entering the workforce with a summer job, the income generated is likely to be spent on food, fun, entertainment, gas, and car payments. Those who are fresh out of college are opened to a new world of expenses they never had to pay before; between renting or owning a home, payments on a car, health, home and auto insurance, student debt, taxes, and having some money to spend on yourself, saving for retirement may not be the first thing on your child’s mind right out of college.

The IRS prohibits, in the literal sense, gifting an IRA you own personally to a child or grandchild while you are alive. However, the IRS allows each parent and grandparent to gift $15,000 per year to each child and grandchild tax-free up to a maximum of $5.6 million over the lifetime of the parent or grandparent. Anything over $15,000 a year will create a taxable event on the excess. For those that can afford to do so, the gift of a Roth IRA to your children/grandchildren may be one of the best gifts they could receive. As long as your child/grandchild has working income from a job, you can match their working income via a Roth IRA up to the maximum contribution of $6,000 if under the age of 50 (assuming they do not make any IRA contributions themselves and make less than $139k a year or $206k if married and filing jointly as of 2020).

Roth IRAs have tremendous advantages over pre-taxed IRAs, such as Traditional IRAs, for two main reasons:

  1. For Roth IRA contributions, you have already paid taxes. This means you can take out the amount you contributed to the Roth IRA at any time, tax-free!
  2. Once you’ve held a Roth IRA for 5 years, any gains from the contributions you made are no longer subject to having to be included as income for the year. They will be subject to a 10% early withdrawal penalty if under the retirement age of 59 1/2.


  1. Transfer of wealth. This is a great way for parents and grandparents to transfer wealth to a child/grandchild each year with no tax consequences. It is especially important now that the SECURE ACT removed stretch IRAs for Inherited IRA accounts.
  2. Teaching the importance of saving/compounding growth. The importance of saving should be taught at a young age, especially the importance of IRA retirement accounts where gains grow tax-deferred. While saving and investing are briefly taught in school, it’s not something that’s often reinforced at home. As you’ve probably been told or read a dozen times, the earlier you start investing and compounding growth, the greater and faster your investment account will grow in value. Being older and wiser you know this, you’ve seen this, but your children have not. The earlier you start teaching them, the quicker you can show them the power of compounding gains and the importance of IRAs.
  3. Emergency fund. You can use the Roth IRA as an emergency fund if needed due to a job loss or unexpected issues that arise.
  4. Down payment on a house. The bigger the down payment you have, the less you will pay in interest if you take a loan out. If you saved enough, you may not even have to take out a loan!
  5. Pay off a car. You can tap into a Roth IRA to pay off a car or for a big down payment on a new vehicle purchase.
  6. Allows children/grandchildren to max out other tax-deferred accounts. If you are able to max out a Roth IRA for your child/grandchild, this means they have thousands of dollars to potentially use in a 401(k) or HSA if eligible to continue building wealth for themselves.
  7. Pay off tuition. Roth IRAs can be tapped into to pay for the tuition of college. Or, if your child/grandchild is older, they can use a Roth IRA to pay for the tuition of grade school, high school, and college for their child. Click here to learn about the difference between a Roth IRA and 529 plan for educational savings.
  8. Pay off weddings. You can use a Roth IRA to pay off wedding costs which can average $15,000 – $50,000.
  9. Extra disposable income. Having someone max out your Roth IRA may be a pleasant sigh of relief. Knowing your debt is paid off or feeling financially sound for retirement, you can have ease of mind knowing you can be flexible with your money. This advantage of receiving the gifts of a Roth IRA may allow your child or grandchild to do things you wish you had the money to do when you were younger.

As you can tell, a Roth IRA established at a young age can really put your child/grandchild ahead in life. A Roth IRA is a powerful, tax-deferred tool that can be used for a wide variety of expenses throughout a lifetime. Your child/grandchild may not understand the gift early in life, but it will certainly be appreciated when they realize the benefits that a Roth IRA yields in the long-term. The gift of a Roth IRA is your chance to leave behind a legacy while teaching the importance of saving for retirement.

Midland specializes in holding alternative investments such as real estate, promissory notes, futures/forex accounts, cryptocurrencies, real estate, and private stock. Midland will be able to hold your investment and do the necessary record keeping and reporting to the IRS that allows you to invest in alternative assets through your self-directed IRA.

If you have any questions regarding Roth IRAs, feel free to contact us at (239) 333-1032. Visit our website for more information regarding the benefits of Roth IRAs.

Extensions for 1031 Exchanges Have Been Issued by the IRS

IRS Issues Extensions for 1031 Exchange Deadlines

Taxpayers involved in a 1031 exchange finally have the answer they have been waiting for regarding extensions for 1031 deadlines.

On April 9, 2020, the IRS Issued Notice 2020-23, an update to Notice 2020-18, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.”

Taxpayers currently engaged in a 1031 exchange with a 45-Day Exchange Period or 180-Day Exchange Period deadline between April 1 and July 15, 2020, will have an automatic extension to July 15th. Unfortunately, this notice does not provide extensions for anyone whose 45-Day or 180-Day deadline was in February or March.

The Federation of Exchange Accommodators (FEA) and the National Association of Realtors (NAR) will continue working tirelessly to seek additional relief for those taxpayers not covered by these extensions.

We will keep you informed of any developments as they are released. Please contact Midland 1031 if we can help you or your clients in any way.

We are here to help. Stay Safe.

Tips for Utilizing E-Signatures

Tips for Utilizing E-Signatures

The world is going electronic. From IRA applications to real estate contracts – almost all of what was previously daunting paperwork has evolved into electronic form. And the way we sign these documents (e-signatures) has changed too.

E-signatures (electronic signatures) have become the widely accepted standard across all industries. At Midland, we have adopted using e-signatures on almost all of our client documentation. This has allowed us to become more efficient with client requests.



Not all e-signatures are the same. While word processors and PDF editors allow you to type out or insert an image of your signature, you want to make sure that the recipient of the document you are signing will be able to accept that signature. The party you are working with may require you to use an e-signature service that offers a form of authentication.


The device you are using to e-sign will also contribute to how easy (or difficult) signing will be. For example, if you are using a desktop or laptop, it may be easier to insert a scanned image of your signature using a PDF editor. Or if you are using your phone, using your finger or stylus could be an easy way to draw your e-signature. Also, keep in mind that desktop and app versions of the same program (for example Microsoft Word) may differ in functionality.

With any device, a web-based e-signature service should be pretty user-friendly; however, remember that you will need to be able to access the internet from whichever device you use.


Web-Based Services

As touched on above, web-based e-signature services should be easy to use whether you are using a desktop or your smartphone. Arguably the most well-known service and one that we use at Midland is DocuSign.

When it comes to receiving signature invitations for a web-based e-signature service, be sure you are familiar with the sender or are expecting the invitation. Never open links in an email if you are not sure who it is from, or if you were not expecting it! If you unexpectedly receive an email requesting your signature, call the sender at a number that you find on your own, not the one listed in the email.

Whether you opt to use DocuSign or you prefer another web-based service, just be sure to confirm that the service you use will be accepted by the party receiving the signed documents.

PDF Editors

PDF editing software, such as Adobe Acrobat or Foxit Phantom, allows you to add signatures directly onto a PDF file. From the toolbar, there should be a “Sign” option. There are typically three ways to create a signature in a PDF editor: typing your signature, drawing your signature, or uploading an image of your signature.

With typing your signature, you simply type your name into the field. However, some issues can arise with using this feature. Since the signature ends up being pretty generic, typed signatures are typically not acceptable on legal documents.

Another option is to draw your signature. While this will be closer in appearance to your pen-signature, you will want to confirm with the receiving party that this is acceptable.

The last option you have with a PDF Editor would be to add an image of your pen-signature. Before choosing this option, you should first be sure you have a copy of your pen-signature saved as an image file (.jpeg, .png) on your computer or cloud storage. Some institutions may not accept this “stamp” of your pen-signature, so just be sure to confirm that this is acceptable prior to submitting your signed paperwork.

Word Processors

Similar to creating an image signature with a PDF Editor, you can insert an image of your signature into a word processor (such as Microsoft Word or Google Docs).

As our world continues to grow more sustainability-conscious and technology-driven, it is safe to say that e-signatures are here to stay. While the above touched on several different types of e-signatures, this does not encompass all of the options available. Whichever e-signing method you choose, be sure to check its acceptability and verify the sender before clicking any unexpected email links!

If you have any questions about this article or would like more information, please feel free to contact Midland at (239) 333-1032, or visit