Posts Tagged ‘checkbook IRA’

HomeVestors Knows How To Use A Checkbook IRA To Fund An Investment Property

Thursday, August 29th, 2013

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Those who have money in a self-directed IRA are able place these funds in an LLC and directly invest the money into an investment property.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years.  The company knows that a checkbook IRA can allow individuals to fund an investment property.  While there are numerous rules to follow when investing in this fashion, those with IRAs can put their money into an active real estate investment and potentially earn a steady stream of income.

After a 1996 court ruling, those who had money in an IRA didn’t have to use a custodian to direct where they wanted their money to be appointed.  This allowed individuals to take advantage of a type of self-directed IRA, the checkbook IRA.  This gives its owners full control and allows them to place funds directly where they are needed.

Those who use a checkbook IRA to invest in investment property have to do just that, they can’t use the property as a vacation home or live on site.  Investors who invest in this manner can purchase rental property, raw land, trust deeds or commercial property.  Those who invest with a checkbook IRA can’t take the money out of the IRA until they are 59 ½, without paying a tax penalty.

Another rule to using a checkbook IRA to purchase investment property is that the money used to purchase the property has to come from the IRA, not directly from an investor.  Another rule is that any profits need to go right back into the IRA.  Those who want to perform remodeling or maintenance work have to pay for the remodeling costs and supplies through the checkbook IRA, but are able to do so directly, without having to pay for a custodian to appoint these measures.

A real estate investment property funded through a checkbook IRA can’t be rented out to family members and like anything, there are fees associated with this investment vehicle.  An investor has to pay fees when setting up the LLC and a custodian must still be appointed, even though they aren’t required to make every single monetary move.  A checkbook IRA has fewer fees than a standard self-directed IRA and should be considered, as a way to invest a retirement account.

Those who want to invest in a checkbook IRA should become informed on all the various fees and restrictions in order to decide whether it is the best funding choice when purchasing investment property.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

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