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Riding the Foreclosure Wave with your Real Estate IRA

November 5, 2012

According to a recent article published by CNBC entitled “Buy Foreclosures With Your IRA”, many investors are beginning to take advantage of the downturn in the market by investing in foreclosures through their self-directed IRA. The article notes that Cincinnati resident Rich Pregel, an investor with experience in the real estate industry, decided to invest his money in a commercial foreclosure through his self-directed real estate IRA. Pregel is now generating almost $80,000 a year after expenses on an initial investment of $140,000 by renting out his commercial property. Pregel bought the property for a good price, put some money into it to get it up to rentable specs, and now says it’s like a no brainer. Since his IRA owns the property, all expenses that go into the property must come from his IRA account and the rental income received goes back directly into his self-directed Roth IRA tax-free.

Last month, Florida overtook Illinois as the state with the highest foreclosure rate in the country, according to RealtyTrac, a company that publishes the largest database of US foreclosure, auction, and bank-owned homes. Also according to RealtyTrac, one in every 318 housing units in Florida received a foreclosure filing last month, compared to one in every 730 homes nationally.

While this does not bode well for Florida homeowners’ credit scores, it does offer a potentially profitable investment opportunity for those looking to grow their retirement funds and diversify their portfolio. Many of these distressed and foreclosed properties in Florida can be purchased for a steal, and with the power of a self-directed IRA behind the investment, the gains go back into the retirement fund either tax-free or tax-deferred, depending on your IRA.

To take advantage of the foreclosure wave and invest in foreclosures with your IRA, it must be a self-directed IRA. To do this, you need the assistance of a qualified and experienced self-directed IRA custodian to facilitate your self-directed investments. Give our Florida self-directed IRA administrators a call today at 407-367-3472 to learn more about self-direction and Florida real estate IRAs!