OVERVIEW
Investing in real estate for the purpose of growing retirement wealth or turning retirement savings into income has been growing in popularity. A critical element of self-directing investments in real estate is finding a knowledgeable IRA custodian with the expertise needed to assist with the investment transaction as well as the ability to provide the necessary administrative and reporting services.

Millennium Trust Company provides the highest level of administrative expertise as well as exceptional service and support to those individuals wishing to self-direct a portion of their retirement funds into real estate.

REAL ESTATE IRAs
Investors have identified a wide range of real property that can be held in IRAs, sometimes known as ‘Real Estate IRAs’. The type of property chosen is usually based on location, previous experience or cash flow analysis. Examples of real estate-related investments made by individuals in their individual retirement accounts include:

  • Raw land
  • Multi-family units
  • Farms
  • Commercial property
  • Resort property
  • Pre-construction investments
  • Residential property
  • Private funds
  • Condominiums
  • Real estate development companies

It is important to ‘do the math’ when considering an investment in real estate using retirement funds. Internal Revenue Code requires that any expense related to an IRA-funded real estate investment must be paid directly by the individual retirement account. Expenses related to the real estate investment include, but are not limited to, closing costs, annual real estate taxes, fees, insurance, utilities, maintenance, repairs and possibly renovations. An individual investor must also determine the best investment approach: direct purchase of the property by the individual retirement account; as a tenant in common with other Millennium investors or possibly leveraging the investment through a non-recourse loan.

LEARN THE RULES
When it comes to using IRA funds to invest in real estate it is critical that the investor understand the current rules and regulations in order to avoid prohibited transactions with disqualified persons that could lead to immediate distribution of the IRA with taxes and penalties incurred. A prohibited transaction is any improper use of the IRA account by the account owner, beneficiary or any disqualified person (spouse, ancestor, lineal descendant and any spouse of a lineal descendant). Examples of prohibited transactions include borrowing money from it, selling property to it, using it as security for a loan or buying property for personal use. Investors should educate themselves by reviewing IRS Publication 590 and Internal Revenue Code Section 4975, consulting with their trusted advisors or visiting our website.

BUILD A TEAM OF EXPERTS
When using IRA funds to invest in real estate or any other alternative asset, self-directed investors have learned the value of working with a team of professionals, each with their own specialty and value.

  • A financial advisor can help with determining the suitability of the investment and asset re-allocation.
  • A CPA can provide guidance on potential tax issues and IRS reporting requirements.
  • An attorney can review the real estate contract, create lease agreements for income-producing properties or help establish an entity.
  • A realtor can help locate and analyze the investment property, a task that is especially important when considering income producing properties or leveraging of the IRA investment.
  • A non-recourse lender can determine if a non-recourse loan is appropriate based on their lending requirements that include property type, loan-to-value and debt-service coverage ratio.
  • A property manager can assist with tenant services and other issues surrounding income-producing properties.
  • The investor will also need a custodian and administrator they have trust and confidence in to provide administrative expertise and cost-effective custodial and administrative services.

ALTERNATIVE ASSETS BEYOND REAL ESTATE
For sophisticated investors and their advisors, Millennium Trust Company is their choice for custodial and administrative services for a wide range of alternative assets including: real estate, futures, hedge funds, limited partnerships, private equity, mortgages and deeds of trust, precious metals and promissory notes.
 
Millennium Trust is led by a seasoned management team with a reputation for honesty and integrity and its client services teams have the knowledge and experience necessary to help individuals and professionals navigate traditional and alternative investments within self-directed IRAs and Solo 401(k) plans.
 
Whether you are an individual investor, a professional or investment sponsor, Millennium Trust Company has the knowledge, expertise and commitment to providing exceptional services and solutions to meet your every need. We pride ourselves on our ability to employ leading edge technology and customized operational support services to provide cost-effective specialized services.

CONTACT US TODAY
Please call or visit our website at www.mtrustcompany.com to learn how you can expand your investment options to include real estate.