Investing in Real Estate with Self-Directed Retirement FundsMarch 23, 2018 / Blog / 0 Comments
Most everyone is intrigued by the strong, double-digit returns that strategic land investing so regularly provides. When investors review the returns our past deals have given they are universally impressed and excited. But two mental hurdles that new investors often face are the lack of liquidity and cash flow that land investments typically entail. Our most successful deals never came with a guaranteed “cash back” date or annual dividend checks. Once they paid out everyone was quite happy, of course. But the investors would have prefered to receive monthly cash flow and a date by which they’d receive all principal and profits. The lack of those two items are what keep many people from ever investing in land.
Retirement funds are perfect for longer-term, non-liquid investments like land
Those of us who regularly set aside money in retirement accounts have already addressed both of those hurdles. We’re comfortable with investments that take years to mature and don’t pay monthly dividends. In the case of retirement investments that do pay monthly dividends we realize that we’re not able to use them until we retire! We can’t spend those returns on vacations, or televisions, or new cars today. Instead, we expect those investments to be profitable in the future, and history has well rewarded investors who believed likewise.
That makes retirement accounts a great source for funding long term land investments. If you have cash in a 401k, an IRA, or some other retirement-investment account, I encourage you to consider accessing those funds for land-partnership investments.
In order to do that, you need a self-directed retirement account.
Creating a self-directed retirement account for land-partnership investing.
I’ve spent some time exploring these issues with Rick Pendykoski, Founder of Self Directed Retirement Plans. Rick is a professional financial advisor who specializes in helping people set up self-directed retirement vehicles. Here is a quote from a blog post he’s written about a self-directed IRA investing in private lending. His words apply equally to other self-directed retirement vehicles (such as a 401k or 403b) and to investing in land partnerships like those offered by Arizona Land Partners:
Most people assume or believe that IRA investments are limited to stock and bonds but that’s not true. IRAs can be used to invest in a wide variety of investments including real estate, mortgages, private placements, limited partnerships, private lending and many other types of investments. So how can you use an IRA for private lending and enhance your returns? There’s not much you need to do – simply set up a self-directed IRA, vest the note for private lending, sign custodian agreements to gain checkbook-control, close the transaction and coordinate with the loan servicer to send payments.
I’d recommend you spend some time on his web site. On it he outlines the straightforward steps someone needs to take to create a self-directed vehicle for their retirement funds that will allow them to participant in a much wider variety of investment opportunities. Or, better yet, give him a call for a consultation. Doing so might just give you access to your own money in a more productive way.