Author Box
Articles Categories
All Categories
Articles Resources

IRA Loan for Construction Real Estate

April 17, 2012 | Comments: 0 | Views: 167

When purchasing property in a self directed IRA, getting the right loan is key to making your IRA more profitable. If you have a self directed IRA, you can use it to purchase real estate in any form: residential, commercial, and even raw land. Another option is purchasing raw land and building new construction through the self-directed IRA.

If you are serious about retirement planning, it is worthwhile to consider where there is maximum profit potential. While most custodians traditionally preferred that their investors put their money in stocks, mutual funds, and bonds, many custodians today allow investments in real estate and other non-conventional alternative investments.

The real estate market is currently in a prime position to offer great returns on your investment. Low property prices are the main reason for investors making a beeline for real estate deals. You can purchase land, buildings, and other real estate very inexpensively and rent it out, with the rent adding significantly to the IRA balance.

You can purchase raw land or distressed properties through the use of an IRA loan. The IRA loan enables people to leverage their self directed IRA to buy real estate, even if the IRA is not cash rich. An IRA loan also satisfies IRS rules regarding liability. According to the IRS, you cannot offer any IRA assets as collateral to obtain a loan except the real estate that is purchased. However, there is no rule preventing you from taking out a loan against the property when you buy through a self-directed IRA. This type of loan, also commonly referred as non recourse financing, helps individuals finance their real estate projects without assuming personal liability for repayment of the debt.

Getting a Loan for Construction Real Estate

Before you set about applying for an IRA loan, you need to have an IRA with at least 20-40% of the total land and construction costs of the real estate. Some lenders may insist that the amount be higher, in order to ensure that you are able to repay the loan.

Before approaching the lender, you have to know exactly how much the construction will cost. If you are planning to build from scratch, you need to purchase raw land. Next, you will need to consider the cost of actual construction. You will also need to factor in additional costs, such as interest payments for the non recourse financing, commissioning an architect to design the house, and so on.

While IRA investments do not mandate ordinary income tax on the profits, you may want to discuss UBIT with an accountant or tax adviser.

Loans for All Types of Construction

An IRA loan for construction is available for residential as well as commercial property. While IRS rules dictate that you cannot buy residential property for personal use, you can rent it out and add the proceeds to the IRA. The same holds true for commercial property.

You should choose the right lender if you want the best IRA loan terms and rates. Most lenders are willing to offer up to 60% cost basis on a new construction property once it is completed. The borrower finances the rest through their IRA savings. If careful planning is put in place prior to the purchase, a properly executed real estate deal can greatly increase the balance of a self-directed IRA.

For more information regarding IRA Loan, please visit Islandviewmortgage.com

Source: EzineArticles
Was this Helpful ?

 
0
 
0
 
Rate this Article
 vote(s)
Feedback
Print
Re-Publish

Article Tags:

Ira Loan

,

Ira Loans

The 3 Month Payday Loans is most suitable options for the people who do not possess assets. There are a variety of loan options for the people who are willing to pledge assets against the cash

By: Cameron white l Finance > Personal Finance l July 09, 2013 lViews: 560

For many people, bankruptcy can make their world fall apart. The apparent loss of reputation coupled with the inability to take financial decisions can deter anyone from thinking clearly. But all is

By: noragwilt l Finance > Bankruptcy Lawyers l November 18, 2012 lViews: 303

If you are availing payday loans with monthly payments, it is easy for you to obtain quick money from online lending companies.By getting the best deals of loan, you can save money in terms of

By: Malen Cheks l Finance > Loans l November 16, 2012 lViews: 289

Loans online have become the popular source of income and people can make smart decision of taking it.Now, don’t go anywhere and sit in your home silently. Such deals would bring you money without

By: Marsh Jone l Finance > Loans l November 13, 2012 lViews: 288

Loans for the unemployed would let you feel comfortable with your unstable conditions due to jobless period.If you compare the rates of a few lenders, you would definitely get the suitable lender to

By: kelse roy l Finance > Loans l November 13, 2012 lViews: 467

By taking cash advance for bad credit, it is easy for you to improve your credit status. This loan is useful to relieve financial stress. This loan is totally free from credit verification and

By: Honard Nork l Finance > Loans l November 09, 2012 lViews: 300

If you are availing payday loans with monthly payments, it is easy for you to obtain quick money from online lending companies.By getting the best deals of loan, you can save money in terms of

By: Malen Cheksl Finance > Loansl November 16, 2012 lViews: 289

Loans online have become the popular source of income and people can make smart decision of taking it.Now, don’t go anywhere and sit in your home silently. Such deals would bring you money without

By: Marsh Jonel Finance > Loansl November 13, 2012 lViews: 288

Loans for the unemployed would let you feel comfortable with your unstable conditions due to jobless period.If you compare the rates of a few lenders, you would definitely get the suitable lender to

By: kelse royl Finance > Loansl November 13, 2012 lViews: 467

By taking cash advance for bad credit, it is easy for you to improve your credit status. This loan is useful to relieve financial stress. This loan is totally free from credit verification and

By: Honard Norkl Finance > Loansl November 09, 2012 lViews: 300

By availing bad credit money loans, it is sure that you have the capability to obtain quick funds for up to $1500 bucks.Moreover, bad credit money loans can be availed without pledging of collateral

By: kenim widsl Finance > Loansl November 09, 2012 lViews: 326

If you are salaried person with having fiscal crisis, you should check out to grab advance till payday. This loan is quite helpful to meet your fiscal needs.To get applied for this loan, you will

By: Abell Bushl Finance > Loansl November 07, 2012 lViews: 249

An IRA loan is available when you want to invest in any kind of real estate, including commercial property, through your self-directed IRA, but do not have the entire amount of funds to purchase a

By: Corwin Smithl Finance > Loansl April 17, 2012 lViews: 136

Foreclosures spell doom for many people, but investors are often able to make the most of the situation. If you are an individual with money invested within a self-directed IRA, you could use it to

By: Corwin Smithl Finance > Home Equity Loansl April 17, 2012 lViews: 146

Discuss this Article

comments powered by Disqus