Paper Profits:How to Buy and Profit from Notes: A Beginner's Guide: Learn the nuts and bolts essentials of owning mortgage notes by Joshua Andrews & Quincy Long
Author:Joshua Andrews & Quincy Long [Andrews, Joshua]
Language: eng
Format: epub
Published: 2017-04-06T07:00:00+00:00
CHAPTER SEVEN
HOW TO PURCHASE NOTES INSIDE A SELF-DIRECTED IRA
The only preparation for tomorrow is the right use of today.
—Anonymous
For this chapter, I have asked Mr. Quincy Long to contribute his expertise regarding self-directed IRAs. Mr. Long is CEO and Founder of Quest IRA, Inc., a company with multiple offices to serve self-directed IRA customers nationwide. I am grateful for his expert contribution to this book.
H. Quincy Long, Certified IRA Services.
Professional (CISP), Attorney, President, and Founder of Quest IRA, Inc.
17171 Park Row, Suite 100. Houston, Texas 77084
Phone: 281-492-3434
Fax: 281-646-9701
Toll-Free: 800-320-5950
Email: [email protected]
What and Why
This chapter talks about the basics of self-directed IRAs, including the advantages these vehicles offer and how to use one for investment purposes. We will also address common questions regarding how to safely purchase notes inside your self-directed IRA.
If you have a retirement account of some kind, possibly with a current or past employer, you may be familiar with a range of typical investment offerings. Your account probably offers a limited assortment of things to invest in, including items like mutual funds, stocks, and bonds. The general process is for you to pick a few “you feel good about” and then let the market do the rest.
While there is some value in this, you can typically do much better for yourself without being an investing genius. Because you work hard to save for retirement, it seems prudent to invest those savings into things you know and understand. After all, why work hard and save money if you are not reasonably sure it will grow and be there during retirement?
What if you could invest in things you knew, felt comfortable with, and understood fully? With a self-directed IRA, you can.
What Is a Self-Directed IRA?
The self-directed IRA is not an official classification. It is merely an IRA where the owner (in this case, you) makes all the decisions about what to invest in and how to structure those investments. Investments can range in size and scope. You can purchase real estate, multifamily buildings, raw land, notes, tax liens, oil and gas, and more. There are prohibited items you cannot purchase, however, including things like collectibles, antiques, and life insurance.
Can You Switch a Current IRA to a Self-Directed IRA?
The answer is probably yes. There are seven different types of plans that can become self-directed. These are:
•Traditional IRA
•Roth IRA
•SEP IRA
•SIMPLE IRA
•Individual or Solo 401 (k)
•Health Savings Account (HSA)
•Coverdell Education Savings Account (CESA)
What Are the Advantages of Self-Directed IRAs?
These have many advantages over regular retirement accounts. A self-directed account allows you to have more options and flexibility than other types of IRAs.
Tax-Favored Treatment
As with all IRAs, 401(k)s, HSAs, and CESAs, self-directed accounts offer tax-favored treatment of contributions and gains. Gains are almost always free from taxation while they remain in the account (except for business income not previously taxed and debt-financed income within the account). Qualified distributions from Roth IRAs, Roth 401(k)s, HSAs, and CESAs are tax-free.
Control Over Your Retirement
Perhaps the most significant advantage of self-directed accounts over other IRAs is that they allow
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