NASB’s VP of Portfolio Lending, Matt Allen, was the guest of the “PTC Point of View: A Retirement Podcast”, discussing how investors can use their self-directed IRAs to purchase real estate with a non-recourse loan. Presented by Preferred Trust Company and hosted by their Director of Operations, Chris Trembly, Allen touched on various aspects of non-recourse loans, including who is eligible, the process, and what types of properties are suitable. An advantage of this type of loan is that the IRA account holder is not personally liable for loan repayment. The security instruments allow no recourse against the individual account holders or the balances of your IRA funds. In the event of default or foreclosure, the lender can only look to the property as the sole source of repayment. The non-recourse lender cannot pursue other assets owned by the account holder or the IRA.
Allen stressed how non-recourse loans are ideal for those looking to diversify their investments. “If this is something new you’re looking at, and if you’ve always been into equities, stocks and bonds, and real estate, I would look at this option,” says Allen. “There’s an opportunity to diversify your asset classes within your retirement plans, but you can also use it to buy multiple properties using debt financing.”
Another great advantage to using a non-recourse loan to purchase real estate is the ability to use rental income to make the loan payments. “Using other people’s money has been around a long time, and it’s become more relevant because you acquire rental real estate and use that tenant’s monthly rent to offset that mortgage payment,” says Allen. “We find clients that start with one (non-recourse loan), get their feet wet, understand the process, and then they’ll buy two, three, or four properties with their self-directed plans.”
You can hear the entire podcast here. For more information about using a self-directed IRA to purchase real estate using a non-recourse loan, click here or call the experts at NASB at 866-753-6272.
