Self Directed IRA

Did you know that you can invest IRA accounts into real estate? It’s possible through a Self Directed IRA! It’s a bit underutilized with having an IRA working through real estate and other investments. It’s been around since 1974-same as the traditional IRA. There are some rules and regulations to follow and make sure that they qualify but once having an understanding that this is a great opportunity to have more control of your IRA money working in the nice alternative to the traditional mutual funds, stocks, bond markets.

Self Directed IRA’s have grown in more popularity in the last few years. It can be used for the following real estate, precious metals, notes, tax lien certificates, private placements…

There are many custodians to choose from and do your due diligence! Need to understand the services, fees and time frame for executing your investments.

This would be a transfer from your current IRA account to the custodian of your choosing. Here are a few options:

This could be used for when changing jobs-rollover 401(k) or traditional or Roth IRA. Overall it’s a great alternative to traditional IRA market.


Internal Rate of Return

What is Internal Rate of Return and Cash on Cash return?

Cash on Cash Return-return on invested capital… it’s the total cash earned on the total cash invested. Its quite common to use this metric for investment purposes in commercial real estate

Example: Cash on Cash = Annual Pre Tax Cash Flow/Total Cash flow

In this current market getting anywhere-7-9% cash on cash return

Depending on the asset class, it could be calculated while holding onto the property and also when the property is sold. This metric does not measure time value of money

Internal Rate of Return-interest rate that makes the net present value of all cash flow equal to zero. This is a more sophisticated way of measuring the investment. Can use excel to help calculate it. This metric a tool to help estimate the real estate investment’s probability and value over time.