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Buying Real Estate with your IRA retirement account for a return on investment

BrokerIPTV: We are talking with Amy Sheflin today, marketing coordinator of The Entrust Group and welcome. Thanks for being with us.

Amy Sheflin: Thank you Dan.

BrokerIPTV: We started talking about in a previous segment about buying real estate with a retirement account and do people really know that this is a potential option or is this new information that people are just starting to get wind of?

Amy Sheflin: Well, that is an interesting question because it has been around since the IRA was created in 1974. It has been a permitted asset, but I think for the large part people have not known about it. Now, the reason for that is up for discussion, but one of the reasons is the securities market has had such a corner on the IRA that most people only think about buying stocks and bonds with their IRAs. They don't think about these other options, but a lot of people are getting frustrated. They are not really happy with the returns they are getting. The Internet has come around since then. They are looking for other options and now they are finding out yes, real estate is one of them, so...

BrokerIPTV: I imagine the subject of dipping into their retirement account scares some people.

Amy Sheflin: Well, yeah and it is important to realize that what we are offering is actually an alternative even to dipping into your retirement account to buy real estate because the money stays within the retirement account. It keeps all those advantages, all the tax deferred or tax free advantages of being in the retirement account because the money stays in there. The property is actually owned by a retirement account, which is kind of an interesting thing to get your mind around, but it really has worked well for a lot of our clients.

BrokerIPTV: All right. Pitfalls people should know about if they are thinking about using part of their retirement account to purchase real estate?

Amy Sheflin: It is very important that you remember that it is not you personally that is buying the investment property. We did have one client that... actually it was an accident; he went to buy his investment property, made the offer in his name, made it all the way through to the closing, property was held by him. Now, you wouldn't think that would be a big problem except the IRS has a rule you cannot buy and sell property between your retirement plan and yourself. So, now this great investment that he wanted in his retirement plan was not held by him. He couldn't sell it to the retirement plan. He kind of had to go back to the drawing board. So, I encourage every one, educate yourself from the get go, make sure it is set up properly, and then you don't have anything to worry about.

BrokerIPTV: All right. What is the hesitation in some people to take this step that you hear?

Amy Sheflin: The hesitation we hear most often right now is that a lot of people are fearful of two things, one is the market right now, some people feel it is a little uncertain and I like to encourage people to think about the fact that in every market there is an opportunity and in fact, this week I was reading my news magazine and I saw a quote from Warren Buffett that I think sums it up perfectly and he said when others are greedy, be fearful; when others are fearful, be greedy.

BrokerIPTV: Amy thanks. Really appreciate you being here.

Amy Sheflin: Thank you Dan.