Real Estate With Roth IRA Funds? Some Tips to Mistake Free Investing

If you are thinking of buying real estate with Roth IRA funds, let me give you a little advice. Choose the right custodian. There are many examples of a roll over IRA buying real estate, successfully, but the fees charged by various custodians can make a big difference.

#1 – Un-invested Cash Balances

Once you begin buying real estate with Roth IRA funds, you will almost always have some cash in the account. In fact, you need to have some cash there, because all of the costs associated with maintaining the property must come from the account.

Don’t think that custodians don’t know this. They take advantage of it. There is one big company that takes away 45% of your earned interest on un-invested cash balances every year. They call it a maintenance fee, but there is no extra maintenance involved. It doesn’t matter what is held within the account, the same type of maintenance is necessary.

#2 – Additional Charges

When it comes to a roll over IRA buying real estate, you’ll have to have a self-directed account. You tell your custodian to write a check for a purchase. Some companies charge for writing checks. They charge for transferring titles and deeds or mortgage notes. They charge a fee every time that you use the account to make a purchase or sell a holding. All of these fees can add up to thousands of dollars in a year’s time.

When speaking of a roll over IRA buying real estate, one of the biggest advantages for investors is the ability to keep more of their profits, due to the tax-free environment of the account. But, if a custodian charges numerous fees, you aren’t keeping as much.

Similarly, one of the biggest advantages to buying real estate with Roth IRA funds is that you will “never” pay taxes on those earnings. Your contributions are taxed as regular income. There are no capital games or income taxes on earnings made within the account. Qualified distributions are never taxed.

#3 – Annual Maintenance Fee and Reasonable Set-up Charge

If you have a roll over IRA buying real estate can only be accomplished if you choose a custodian that offers the option. Those companies that are currently offering “free and easy set-up” do not offer the option. They are stock brokers and they charge large fees for buying and selling stocks.

A reasonable set-up fee is $50. The annual maintenance fee depends on the total value of the account. If you’re like me, you’re shooting for a million dollars or more by buying real estate with Roth IRA funds. Believe me, it’s not an impossible dream.

#4 – Get An Education

If you are inexperienced when it comes to a roll over IRA buying real estate, get some education and information first. There are a small number of companies that offer “hands-off” investment options. That could be the best choice at this time.

As you learn more about buying real estate with Roth IRA funds, you will be able to do more. But, start out slowly, just to be safe.

Some Rules For Buying Real Estate With Roth IRA

If you are interested in buying real estate with Roth IRA funds, take some advice from an experienced investor. There are successful examples of a roll over IRA buying real estate and there are some failures. Learn from the mistakes of others and you can be one of the latest success stories.

Everyone makes mistakes, but when it comes to buying real estate with Roth IRA money, mistakes are costly. Let’s start with choosing the wrong custodian and go from there.

Here’s an unsuccessful example of a roll over IRA buying real estate. A man chose to take a roll-over from his traditional account and chose a custodian that offered self-investing. He deposited the funds into the account well within the 90 day time period to avoid IRS penalties.

Once he started reading the fine print, he realized that the custodian he had chosen took 45% of his earned interest on un-invested cash balances. He also learned that for each transaction, he would be charged fees ranging from $25-$150. He did a little research and found a different custodian that only charged a reasonable annual fee, while offering more investment options.

When buying real estate with Roth IRA money, you will almost always have an “un-invested cash balance” and you are likely to conduct numerous transactions per year. So, per-transaction fees can really add up.

The man truly believed that a roll over IRA buying real estate was the right choice for him, but he realized that he had chosen the wrong custodian. Instead of transferring the funds, he took another roll-over that year.

The IRS only allows one tax-free rollover per year. So, the total dollar amount of the fund had to be included in “other income” at tax time. The result was a devastating bill that almost bankrupted him.

This man, whose name I won’t mention, made two mistakes. First, he didn’t read the fine print or shop around BEFORE he signed up with the custodian. Second, he failed to read the IRS rules for roll-overs and was unaware that transfers were a better choice.

Breaking the self-dealing or indirect benefit rules is responsible for some of the failures, when it comes to a roll over IRA buying real estate.

Buying real estate with Roth IRA funds must be kept an “arms-length”. Your account cannot buy from you or for you. Those are some of the rules that you need to know before you begin.

Knowledge is everything when it comes to the success of a roll over IRA buying real estate.

A different man grew the value of his account from $20,000 to over a million in less than three years. He started out slowly by flipping vacant lots, making $1000 profit on each transaction.

Now, he holds the mortgages on several properties. He’s only one of the success stories.

Buying real estate with Roth IRA money can be highly profitable, as long as you get the information that you need, ahead of time.

Considering today’s economic environment, selecting IRA real estate turnkey solutions can be the best investment strategy for building your retirement wealth.

Visit my website now to learn more about investing your Roth IRA money in real estate. Using a turnkey solution can be the best investment strategy to accomplish your financial goals.