Self Directed IRA Real Estate - Here's What You Need to Know to Make Big Profits and Great Returns

Are self directed IRA real estate investments the right choice for you? I would have to say that anyone can make a profit, earn income within the account and receive a high return on these types of investments. But, you might need some help. Here's a little bit to get you started.

Choosing The Right Custodian

First, you want to make sure that you have chosen the right custodian. Does the custodial company charge additional fees for transferring deeds or titles? Do they charge check writing fees or other per-transaction fees? Do you lose a percentage of your interest on un-invested cash balances? What is their annual fee? You want your account to be worth millions when you retire. You have to start by looking at the small fees that add up over time.

You Need A Team

Do you have a team? What kind of self directed IRA real estate deals are you planning to make. If you want to buy property, hold it within the account and use it as rental income, then your team will include maintenance, management, a realtor, a lawyer and an accountant.

Are Foreclosures The Way To Go?

If you are thinking of buying properties that have been foreclosed on, you need to read the paper every day. Look for foreclosure announcements. Check out the property in advance of the auction date. Arrange with your custodian to have the money ready in case you win the auction.

Assuming you make the highest bid, you will then need to hire contractors, because at the very least, it will need a fresh coat of paint. A lot of these foreclosures require a lot of work. Remember that the evicted homeowners were upset and angry. Some of them left the places with no light fixtures and broken windows. You should consider all of this, before you ever make a bid.

I'm not trying to discourage you from making self directed IRA real estate transactions. I simply want you to know what you are up against and that there is a different way.

So, you found a property and you won the bid. You paid $200,000 for a property appraised at a half million. Sounds like you're going to make a big profit. By the time the contractors were done, your account paid another $10,000 for repairs. That's still not bad. So, you contact your realtor and put the home on the market. Then the waiting begins.

Tax Consequences

One of the only kinds of taxes charged to qualifying retirement accounts is personal property tax. Self directed IRA real estate holdings are taxed at the same rate as your private residence. If it takes you a year to find a buyer and the tax appraisal is $500,000, your tax bill could be anywhere between $15,000 and $100,000 depending on where the property is located. Nationwide, personal property tax rates run between a low of 3% and a high of 20%.

You can avoid all of the unnecessary costs and hassles that can accompany self directed IRA real estate investments, as long as you get some help. Think about it, before you begin.

Here's Where To Get Help

Visit http://www.RealEstateIraInvestor.com to find out about using your self directed IRA to purchase real estate hassle free with renters lined up and guaranteed payments the first year. Jefferson Davis is an expert author in the Solo IRA field.

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