Recently a friend of mine who is a Realtor in Albuquerque opened a self-directed Individual Retirement Account with us. He has been a Realtor and real estate investor in Albuquerque for more than 15 years, so he is comfortable with the process of buying distressed properties and turning them for profit.
He adhered to the time-honored principal- and just plain sensible idea – to use your self-directed IRA to invest in what you know.
Once his IRA was set up, my friend rolled over funds he had in a 401K from a previous job and paid $125,000 cash from his IRA for a small three-bedroom, two-bathroom house on the southeast side of town.
Using funds from his IRA that was managed by a duly chartered custodian, the IRA beneficiary hired a contractor to do repairs on the home. The total cost of the improvements was about $11,000. He listed the property for $165,000 and almost immediately got an offer for $160,000. However the man making the offer could not qualify for a mortgage. Read more on how this story turned out for the investor and get our complete Investor Review on using a self-directed IRA for real estate investment.