Investor Network

Well, you’re wrong.

Small accounts under $25k in size have several investment options available, provided you know where to look for investors. Of course, there are even some areas in the country where an account that small will be enough to buy up some real estate. That being said, these markets aren’t the choice markets where you’ll stand to make any sort of a profit, so you’re best bet is to look for likeminded investors to pool your money with and use to buy property in a market with more potential.

Luckily, there are still many opportunities available in the hotter markets, and some of these investments have the potential to earn you even more money than your retirement fund would do just sitting and being invested in Wall Street paper assets. For example, you could loan money from your IRA at a fixed rate or even create an equity participation note to an investor in need of funds to fix up a property. Fixer-uppers with more earnings potential than money-pit potential aren’t always easy to find though, and you’ll need the help and guidance of an expert in your search. Securing the note with a bank on the property to be rehabbed is also important when trying to protect your investment. This is exactly what an IRA counselor equipped to self-direct your retirement funds is hired to do.

Purchasing an option on a property is another mode of self-direction. Of course, doing so requires a great knowledge of the market that the property is in. Still, the potential yield is great. Just consider what snatching up an undervalued property in a popular or up and coming market, rehabbing the property and putting the property to work by way of rent and then ultimately selling the property at the fair market value could do for your retirement fund.  Of course, there’s also the potential downside that you won’t find an interested buyer before the option expires. Again, this is why a knowledgeable IRA counselor with experience in the local markets and in self-directing IRA assets is essential to ensure success.

Of course, there is also the more traditional route of buying a property and its existing mortgage from a seller interested in getting the property off of their hands swiftly and at a potential loss. In so doing, the title to the property will fall under the ownership of the IRA and the IRA holder will need to pay the existing mortgage. Again, this is a good option if the property can quickly be put to work and/or resold at a profit without significant overhead or loss potential.

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