New Direction IRA Reports More Real Estate IRA Investors Using Banks To Rebuild Retirement Plans

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New Direction IRA announces an increase in leveraged Real Estate IRAs. "We've seen a big increase in self directed IRAs using bank loans to buy more real estate. Our clients are trying to create more cash flow and higher appreciation," he said. "Using the bank loan as a lever, your IRA can lift more real estate - it's pretty simple and elegant."

lever loan retirement investment

Use Leverage To Increase Your Retirement Fund Cash Flow

a self-directed IRA holder can more than double their buying power, which means the investor could increase the value of the retirement money (or make up for stock losses) faster.

Bill Humphrey, CEO of New Direction IRA, Inc., reports an increase in self-directed IRAs using bank loans to buy real estate in an IRA. Humphrey is a CPA with 30 years experience. He teaches classes at the University of Denver on tax law and IRS rules. He can recite obscure IRS statutes all day long. But today he wants to play with paperweights. On the desk in front of him is a standard yellow pencil, a large marble paperweight, and a little ceramic turtle.

"This is the bank," he said, pointing to the turtle/fulcrum. "Many people blame the banks for their retirement fund loss, but I am not getting into blame. All I want to show is that the banks can help, right now, so a self-directed IRA can grow."

"This is the retirement fund," he holds up the pencil. "And this," he lifts the large marble slab,"is, say, an apartment building or a duplex. It's more real estate than your retirement account can afford alone." He uses the bank to lift the apartment building with the retirement account.

Humphrey said he warns his clients about the risks as well. "It also works the other way, should the investment not be profitable the IRA could lose more; leverage should only be used by those who understand and can manage it. But our clients are still using the power of the lever."

Using a self-directed IRA, an investor can more than double their buying power if the IRA uses leverage to purchase real estate. "More and more banks are learning about self-directed IRAs and offering loans for purchasing real estate," said Humphrey. The loans are non-recourse, which means they are only secured by the asset itself, not your personal value. The IRA loans are non-recourse, which means they are only secured by the asset itself, not your personal assets. Since the loan is secured only by the asset, there is more risk for the bank. Thus, the down payment is often higher than with personal financing.

Humphrey explained that some restrictions apply:

1) The loan must be non-recourse, which means personal credit, and the rest of the IRA or other retirement plan does not apply to the value of the loan - only the property does. In the case of defaulting on the loan, the bank takes over the real estate.

2) Every bank is different, but in most cases, the property must be income-producing. This makes more sense for the bank and the IRA holder. This makes more sense for the bank and the IRA holder.

The down payment is usually in the neighborhood of 40% of the value of the property. This means a self-directed IRA holder can more than double their buying power, which means the investor could increase the value of the retirement money (or make up for stock losses) faster with profitable real estate investments.

New Direction IRA, Inc., a self-directed IRA plan administrator with half a billion dollars in assets, also offers self-directed Health Savings Accounts and can be reached at 303-546-7930 or toll free at 877-742-1270. New Direction IRA teaches hundreds of free webinars and classes to educate new and experienced real estate investors and real estate professionals, so even a person with a small IRA fund can make big money for their IRA. Visit their website at NewDirectionIRA.com.

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John Sheflin
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