Strict Standards: Non-static method mosCache::getCache() should not be called statically in /home/marketne/public_html/includes/frontend.php on line 124

Strict Standards: Non-static method modules_html::module2() should not be called statically in /home/marketne/public_html/includes/frontend.php on line 155

Strict Standards: Non-static method modules_html::modoutput_table() should not be called statically in /home/marketne/public_html/includes/frontend.html.php on line 102
Main Menu
Home
News
Contact Us
Search
News Feeds
Articles
Financial News
Real Estate News
Directory

Strict Standards: Non-static method modules_html::module2() should not be called statically in /home/marketne/public_html/includes/frontend.php on line 155

Strict Standards: Non-static method modules_html::modoutput_table() should not be called statically in /home/marketne/public_html/includes/frontend.html.php on line 102
Home arrow Real Estate News arrow General News arrow Investment in real estate triggers use of IRA

Strict Standards: Non-static method mosMainFrame::sessionCookieName() should not be called statically in /home/marketne/public_html/includes/frontend.php on line 33

Strict Standards: Non-static method mosCache::getCache() should not be called statically in /home/marketne/public_html/components/com_content/content.php on line 33

Strict Standards: call_user_func_array() expects parameter 1 to be a valid callback, non-static method HTML_content::show() should not be called statically in /home/marketne/public_html/includes/Cache/Lite/Function.php on line 114

Strict Standards: Non-static method HTML_content::_Itemid() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 434

Strict Standards: Non-static method HTML_content::_linkInfo() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 437

Strict Standards: Non-static method HTML_content::Title() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 452

Strict Standards: Non-static method HTML_content::PdfIcon() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 455

Strict Standards: Non-static method mosHTML::PrintIcon() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 458

Strict Standards: Non-static method mosAdminMenus::ImageCheck() should not be called statically in /home/marketne/public_html/includes/joomla.php on line 2216

Strict Standards: Non-static method HTML_content::EmailIcon() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 461

Strict Standards: Non-static method mosAdminMenus::ImageCheck() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 709
Investment in real estate triggers use of IRA
Strict Standards: Non-static method HTML_content::EditIcon() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 611
Print E-mail

Strict Standards: Non-static method HTML_content::Section_Category() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 493

Strict Standards: Non-static method HTML_content::Section() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 734

Strict Standards: Non-static method HTML_content::Category() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 737

Strict Standards: Non-static method HTML_content::Author() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 496

Strict Standards: Non-static method HTML_content::CreateDate() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 499

Strict Standards: Non-static method HTML_content::URL() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 502

Strict Standards: Non-static method HTML_content::ModifiedDate() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 518

Strict Standards: Non-static method HTML_content::ReadMore() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 521
Saturday, 09 September 2006

Strict Standards: Non-static method HTML_content::TOC() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 508

How can someone's IRA become a real estate developer?

The answer is simple. They have something called a self-directed IRA. It doesn't matter whether it is a regular IRA, a SEP (self-employed) IRA or a Roth IRA. Any of these could be administered by a trust company that specializes in allowing people to invest their savings in any number of businesses or assets.

IRAs have been around since 1974, when Congress offered tax benefits for these personal retirement accounts. From the beginning, sophisticated financial advisers have been using them to buy real estate for their wealthy clientele.

Actually, one can invest in just about anything -- foreign as well as domestic real estate, boats, investment companies and start-ups -- as long as the assets are not used by the individual investors or their immediate family. That's called self-dealing and isn't considered fair game for tax-free investments. And there are three types of investments that remain verboten: collectibles (furniture, art, jewelry), life insurance (tough to retire when you're dead) and stocks from S corporations (taxed as partnerships, they can't have tax-free investors).

There are alternatives to the big-name banks, and some regular folks do manage a self-directed retirement plan. These investment schemes can run the gamut from noble to notably wacky: One Pensco client had a friend who was a war veteran and wanted to travel the world, so the client used his retirement money to buy an RV, which he rented to his friend. A fisherwoman used her retirement funds to buy sablefish rights from the Department of Fish and Game and sublease them to fishermen. Pensco clients have also funded a number of blue-sky projects, including cancer research and a robot that defuses bombs.

Pensco, founded by Anderson in 1989, is one of about 20 companies nationwide that administer self-directed IRAs. Although they represent a minute percentage of the total IRA market, business is booming.

Indeed, as Uncle Sam searches for new ways to wean us off the Social Security teat, the government continues to promote do-it-yourself retirement through a myriad of legal clauses. (Recent lawsuits by devastated Enron pensioners have also lighted a fire under the technocrats' tushes.) Last month, Congress voted to allow individuals to roll their 401(k) accounts directly into Roth IRAs. Contribution limits to IRAs and Roth IRAs continue to rise (for SEP IRAs for people over 50 it's up to $44,000 a year). The government is even providing more security for these accounts: IRA accounts now carry FDIC insurance for up to $250,000.

Real estate lenders have come around as well. Two years ago, banks wouldn't finance loans for properties purchased through IRAs, so when people wanted to buy real estate with their IRAs they needed to come up with 100 percent cash. (Of course, this worked only for the very affluent.) Now Kansas-based North American Savings Bank offers IRA loans for real estate in 50 states.

Indeed, expert counsel is essential to avoid the fines and penalties that mistakes can trigger. Legally, the IRA fund (not its owner) not only buys the real estate but administers the property, so funds must be available in the IRA for maintenance and other real estate expenses. If IRA-funded real estate is at risk of foreclosure, the owner of the IRA can make a temporary loan, but he or she can't simply pay off the mortgage, without a massive penalty.

Still, after being burned by the stock market one too many times, some investors cleave to the idea of long-term real estate investing -- even in a down market. "Now it's a buyer's market," said Dave Luchsinger, a telecommunications analyst who turned around his retirement with a real estate IRA after seeing much of his 401(k) savings disappear into stocks like Enron. "I'll make money either way."


Edwina Baniqued

 
Strict Standards: Non-static method HTML_content::Navigation() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 532
< Prev   Next >

Strict Standards: Non-static method mosHTML::CloseButton() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 535

Strict Standards: Non-static method mosHTML::BackButton() should not be called statically in /home/marketne/public_html/components/com_content/content.html.php on line 538