Investing in Real Estate in an IRA using Non-Recourse Loans

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Interested in investing in real estate using your IRA?  Not sure how to start?  First, attend the MAREI meeting on November 10th.

You will need to set up a self-directed IRA.  Be sure to use a custodian that specializes in real estate investing in an IRA.

Your self-directed IRA can purchase any type of property and hold title to the property. Your IRA will realize any gains, including rental income, appreciation, sale proceeds, etc. allowing you to fix and flip or hold rental property in your IRA.  If you wish to leverage a portion of the purchase, your IRA can obtain a non-recourse loan.  The IRS does not allow the account holder or any disqualified person (such as your spouse or other immediate relative) to be personally liable for a loan made to the IRA therefore, a non-recourse loan is a good alternative.  In a non-recourse loan, the lender is not able to use any remedies for repayment in the event of default except the collateral itself.

Conventional lenders do not offer non-recourse loans.  Most portfolio lenders and some private lenders do.  Terms and pricing will vary from lender to lender.  Lenders that offer non-recourse financing will typically require a significantly higher down payment than seen in a traditional loan.  You can expect different loan terms as well, including higher pricing on non-recourse loans.

Susan Aubin can be reached at 720-554-9480 or [email protected] for more information.