Use Your Self Directed Retirement Funds to Buy U.S. Real Estate
About Geremy Heath:
- CEO of Texas all cash home buyers
- Originally from Australia
- Fixes and flips distressed properties
- Based in San Antonio and Austin, Texas
- Fixed over 150 properties in 6 years.
Something Unrelated to Real Estate Investing:
Before he arrived in the US he spent 2 months in Nepal trekking in the Himalayas and climbed to the base camp of Everest
Nuts and Bolts:
Geremy moved to the US from Australia and started a career in real estate fixing and flipping properties and is the CEO of Texas all Cash Home Buyers. He starts by making a cash offer to the home owner and can close a deal within 7 days. Once the property has been renovated it can be sold onto a qualified buyer. Of all the deals Geremy does, 75% are sold onto a retail buyer and 25% onto investors before rehab.
Geremy has three key ways to ensure success for business owners in the US; firstly you need good mentors who will lead you into good relationships with other people. Secondly you need quality systems which are cost and time effective, and lastly you need personal focus to see your goals and not be distracted.
Geremy has a lot of experience working with Aussies looking to get started by using a self directed super fund (this is an IRA in the US). The first step is to hire a good accountant and set up a self managed superannuation fund which costs between $1000-$1500AUD and set up a separate bank account for this fund. The next set is to move any other funds over to the self managed fund which takes between 4-6 weeks and once this has completed you can invest in self directed funds in the US.
Many of the investors that Geremy works with don’t just buy the property outright, instead they lend their money and act as a bank. The process from property purchase to rehab and sale takes about 6 months so the investor will get their money back after this time and have the option to reinvest within 30 days. If you’re looking to invest Geremy recommends that you look for a loan to value ratio of 70% or lower as this will be a secure investment.
Flipping houses like this is a good business model because it’s resilient to market cycles; these cycles are slow whereas Geremy’s investment deals are completed in 6 months. Also as acquisition costs adjust with the market the building costs will remain the same which secures a safe building business in the US.
Top investing tips:
- Most successful habit – Following the tips in the book Miracle Mornings by Hal Elrod.
- Most influential tool in you RE business? – The simple checklist.
- Most exciting project at the moment? The San Antonio King Williams district project where Geremy is restoring houses to their original glory.
- Most influential person in your career? Tim Taylor a real estate mentor and Michael Medy a life coach.
- Best deal to date? – Not a specific deal but the capacity of the rehab factory and his sustainable income.
Contact – www.texasallcash.com and +1 210 698 6166 or firstname.lastname@example.org
Benefits of Using your Self Directed Retirement Funds to Buy U.S. Real Estate:
Using your self-directed retirement account (SDRA – here in the US they are called IRA’s) to buy real estate, remains the most popular way to diversify your retirement portfolio.
Advantages for buy real estate:
1. Diverse investment options,
2. Tax advantages,
3. Control over the asset, unlike investing in the stock market.
4. and the potential for large, consistent returns.
Follow these four steps to get started:
1. Open and Fund a Self-Directed IRA
Contact your CPA for advice on how to open and fund a self directed retirement account. There are many business out there that help with the ‘set-up’ process.
Once your account is established, it must be funded with the amount necessary to move forward with your real estate investment of choice. If you have an account, you can transfer/rollover funds from an existing retirement account, or you can fund a new account through a contribution.
2. Analyze Your Goals and Funding
There are several ways you can invest your retirement funds depending on your goals: Here are a few examples:
- Direct Purchase – Within a direct purchase transaction, your IRA pays cash for the investment property. The title to the property will therefore reflect the name of the SDR account.
- Partnering – When the investment amount exceeds your investment funds, you are able to partner your SDR funds with either personal funds or with other SDR funds. You can also partner with another person’s funds, such as a spouse or parent. Once you decide to end the investment, you then divide costs and earnings according to the amount that each party initially contributed.
- Leveraging – With leveraging, your SDR funds can be used to purchase a property with a non-recourse loan and the leveraged property is then held in your retirement account.
- LLC – Another investment option is to purchase ownership in a limited liability company, or LLC. An LLC provides further tax advantages while at the same time reducing the liability associated with individual partners. Once investing using an LLC, your SDRA then holds interest in the LLC or land trust. The title of the property is also held in the name of the LLC.
3. Explore Your Investment Choices
Take the time to explore the different types of assets within the world or real estate. Take the time considering all of the necessary factors when moving forward with an investment and how it applies to your ‘investment goals’: Here are just a few choices:
- Residential real estate – apartments, single- and multi-family homes, mobile homes, condos, etc.
- Commercial property – office buildings, movie theaters, gas stations, etc.
- Improved and unimproved land (leveraged or unleveraged)
- Trust deeds and mortgage notes
- Real estate options
4. Direct 3rd Party Company to Make the Purchase
Once your account has been established, the company that which you set up the account will be the third party administrator between you and the assets held within the account. When you have chosen a real estate investment and investment strategy, you will need to submit a Buy Direction Letter informing the 3rd party to purchase the investment through your account.
Following the purchase, all expenses associated with the investment must be paid from SDR funds, and all profits stemming from the investment must flow directly into the SDRA for your future use.
Until Next Week Happy Investing!