Non-Recourse Retirement Account Loan
The Investor’s Source LLC is not a tax or investment advisor, and is not qualified to provide tax or investment advice regarding IRAs or any other investments. Please consult with a professional tax advisor before deciding on any of the investment options discussed below or anywhere else in this website.
The Investor’s Source LLC Non-Recourse Retirement Account Loan can assist you in purchasing real estate within your self-directed retirement account (hereafter referred to as IRA) – leveraging funds you have in that account with a non-recourse, hard-money loan. We can lend you up to 65% of the ARV of the property.
A non-recourse Loan, as required by the IRS, is one in which the lender’s only recourse – should you default in paying it back – is to go after the equity in the property itself. The lender cannot come after you personally, nor the funds in your retirement account.
Buying real estate in your IRA with a Non-Recourse Loan vs. buying it using non-retirement funds has numerous advantages:
- As mentioned, the leverage a Non-Recourse Loan provides to your IRA
- The current (and/or future) tax advantages of investing in an IRA and having your money grow in a tax-free environment (please consult your tax advisor)
- Avoiding the early withdrawal penalties that could be incurred by "breaking" your IRA to purchase a property personally. For example, if you needed a significant down payment to purchase a property and had funds available in your IRA you could:
- Draw those funds from your IRA and pay the early withdrawal penalty or-
- Use those same funds WITHIN your IRA with no penalty!
- It is easier to qualify for than our personal hard money loan – there are no income or assets requirements (although we do pull a personal credit report) and we do require at least 20% of the loan amount in cash reserves in your IRA account (to cover property contingencies).
To purchase properties in an IRA you will need to establish a self-directed IRA through a licensed custodial company. You can find many such companies through a web search of “Self Directed IRA.”