Benjamin Franklin once said that “an investment in knowledge pays the best interest.” When it comes to investing using a self-directed IRA knowledge is key. There are over 7 trillion dollars sitting in IRA funds and most people do not realize that they have the option to use that money to invest in real estate. Informing your clients of this option introduces a new source of cash funds that they may have never thought to use. Below are some reasons on how a self-directed IRA can help you sell more real estate.
Do you have a client lacking funds to purchase investment real estate? How about a client who is unable to get traditional financing? Presenting the option to use a self-directed IRA could save the deal. Investors can purchase the property 100% using their retirement account or they can partner with it personally or with other investors.
For example, John Smith wants to purchase a property for investment use for $200,000. The problem is he only has $100,000 personal funds and he doesn’t qualify for traditional financing. Normally this deal would fall through, until his realtor asks if he has funds in his retirement account. John has over $100,000 saved up for retirement. He then purchases the investment property 50% personally and 50% in his self-directed IRA. All rental income and expenses are then split according to percent ownership. John also has the added benefit that the percent of funds going back into his IRA is tax-free, and he is diversifying and building up his retirement savings in the process. If his realtor didn’t know about the option of using retirement funds to purchase investment real estate, the deal would have otherwise not have happened. Not only did the realtor save the deal, but his client was so pleased that he told his friends about investing in real estate using an IRA and the realtor gained new clients.
Investing in real estate using a self-directed IRA also has the benefits of a tax-sheltered account. This means that all rental income and sale proceeds are deposited back into the IRA tax-free. This is not only great for the client but also great for you since the client now has extra funds to reinvest that they would have otherwise had to pay in taxes. Imagine the tax savings when all of the sale proceeds are put back into the IRA tax-free!
Another huge benefit is that all investment real estate qualifies to be purchased using a self-directed IRA. This includes single-family homes, condominiums, commercial properties, and land. Since your client is purchasing property using a self-directed IRA the transaction is considered a cash deal which creates the benefit of faster turnaround times. This means you are able to close the deal quickly. The process is simple and is not much different than purchasing real estate outside of a retirement account.
To sum everything up, finding new solutions to offer your clients on how they can purchase investment real estate equals more commissions for you! Mentioning solutions to your clients that might not only save the deal but will also save them money will make you their trusted resource for real estate.
Start gaining interest and investing in your knowledge by requesting our free guide to investing in real estate using a self-directed IRA. You may call us anytime with questions at 239-333-1032 visit www.MidlandIRA.com to learn more information.
This article was written by Brenda Whetsell.