Lease Options Using your Self Directed IRA

As an investor, you will be very happy to know that it is not necessary for you to have the full price of a property in your IRA in order to make a real estate investment. Using lease options, you can make an investment even when you don’t have the cash. If you want to find out how you can do this, then you first need to understand the parts that make up a typical lease option.
The first one is the cost or purchase price of the property you wish to buy. The homeowner, of course, wants the most possible money for his or her property. The investor, however, wants to buy the property for as little as possible. It’s easy to come to a fair compromise though. You simply have to look at the reasons that the home might have less potential value, such as needing repairs or being in a bad neighborhood. Your job is to make these problems look worse than they are to the homeowner.
The second thing to consider is the terms of the agreement. The terms state how long of a time period the buyer has to actually purchase the house and also how long the seller is legally required to sell the house. If an agreement can be reached that gives the investor adequate time to acquire the whole price or even to lease the house and eventually pay the homeowner, there is no problem involved for anyone.
Finally, you have to think about the options consideration. This is the money that the investor is required to pay the homeowner right away. If you can pay this, even if it is not the full amount, you can easily “save” your claim on the house. You might even think of it as a deposit of sorts. As long as you meet the long term requirements of the agreement, you will eventually acquire the house as your property.
When using your IRA to do this, however, a great chunk of the money will come from both the IRA and from the sale of the property. This will make you the one who earns the real profit, all of which can go right back into your IRA. Your IRA simply assigns the contract just as the investor would. You might even be able to qualify for “transactional funding,” which would allow you to close on the property once you have found a buyer.
So, there you have it. It’s incredibly simple to use lease options and your self directed IRA to make a very nice profit for yourself. Just make sure that you read the fine print before you sign anything and that you always do your research and know what you’re getting into. Your best bet whenever you have any amount of uncertainty is to work with a professional who can guide you through the process from start to finish. That way you won’t make any mistakes that leave you out in the cold.

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