Many ways to purchase real estate with an IRA | Commercial ...

Posted on: November 30th, 2012 by admin@cpp

Those looking to get involved in the Atlanta commercial real estate market, but don't feel they have the proper funding, may have an option they didn't consider. Using a self-directed individual retirement account can make this type of acquisition easier.

Some companies allow investors to switch their IRA to the self-directed options, which can provide funding that wouldn't necessarily be available otherwise. Bloomberg noted that the process can be complex, which is why careful management is important. Taking funds out of the account before a person turns 59 and one-half years old will incur a penalty of 10 percent, as well as a possible invalidation of the account, altogether. Additionally, the person in charge of the fund cannot receive rental returns from the account.

There are ways to receive funds, which could benefit those who need to make repairs on the property, the news source explained. A small percentage of the total property value could be used for liquid security options. Taking advantage of this type of financing may make the purchasing process, as well as later management, possible if they don't have the means to acquire the property they wanted.

"In every major metropolitan market, you face the same issues," Jeff Desich, chief executive of Equity Trust, told the news source. "There are people now who need to rent and can't get credit any more to buy, so there's a pool of homes that have been reduced dramatically in price."

Cash deals popular with self-directed IRAs
Those who want to take advantage of a self-directed IRA for a property purchase will likely be involved in an all-cash transaction, the news source explained. While some people look to the residential market for a purchase through their IRA, this may not be a good idea. Many industry members stress the importance of apartment complexes as a property purchase. This will give the investor the ability to still have at least one tenant if another rental agreement falls through at any point in time.

The news source added that it is also important for prospective investors to avoid scams when looking for a property. This is because those companies that help an investor set up the IRA don't factor in whether or not the property is a legitimate acquisition, as it isn't a part of the process. Examining properties and purchasing situations before signing anything is a good idea in this case.

If you own or are considering a commercial building purchase or lease, contact Daniel Levison or Furman Wood of Commercial Property Professionals. They can be reached at 404-848-1776.

Source: http://www.cpprofessionals.com/cre-news/many-ways-to-purchase-real-estate-with-an-ira-48071

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