# 8 – Invest Using Your IRA
# 9 – Cash to New Loan
# 10 – Gifting
SO MANY WAYS TO BUY ( PART 1 ) BRUCE KELLOGG
# 8 – Invest Using Your IRA
Now that interest yields have been low for so long , people are moving to invest in real estate using their Individual Retirement Account ( IRA ). Investments can be made in real property or personal property such as notes , coins , paintings , securities , and so on . Basically , the method is to move your IRA account to a “ custodian ” and have them buy , manage , and sell your properties at your direction . Custodians are plentiful on the internet , and they have literature galore . Leverage by borrowing from banks can be used to enhance the return in your IRA . Your custodian can steer you to banks that offer to do this .
# 9 – Cash to New Loan
The most common method of purchasing real estate involves the buyer putting up a cash down payment , then qualifying for a new , longterm “ purchase money ” loan from a bank , credit union , or mortgage broker . Sometimes , the seller will make ( i . e ., “ carry back ”) the loan . Usually an institution will fund the loan and either keep it in their portfolio , or , more often , they will bundle it with others and sell it as a security on Wall Street . This replenishes their lendable funds .
Down payments vary . Commercial loans are usually 20 – 40 % down , depending upon the lender ’ s guidelines and risk assessment . Owneroccupied , residential loans can be as low as 0 – 3.5 % with mortgage insurance usually required . 1 – 4 unit investment properties typically require 20 – 25 % cash down , but no mortgage insurance . Lenders ’ programs vary widely , including rates and fees , so comparison shopping is recommended .
# 10 – Gifting
Purchasing as described in # 9 , above , many times offers the opportunity for the borrower ( s ) to receive a gift of money toward some , or all , of the required down payment . Acceptable donors include “ a relative ”, defined as a spouse , child , or other dependent , or any other individual who is related to the borrower by blood , marriage , adoption , or legal guardianship . A fiancé , fiancée , or domestic partner can also donate .