Considerations

Hard money lending can be a great place for self-directed IRA or other retirement assets. There are, however, a few things to be aware of before you commit:

• Hard money loans can be illiquid. If you are nearing or over age 70, pay attention to your required minimum distributions. You must make these RMDs, even if the borrower pays the loan late. You may want to earmark RMD money to come from another source besides the hard money lending part of your portfolio.
• RMDs do not always have to be taken in the form of cash, some self-directed IRA investors that do hard money lending have elected to take their RMD in the form of the actual loans themselves. In fact, you can even take a portion of the loan as your RMD thus becoming partners with your IRA on that loan. (For Example: You can take 25% of the loan as your RMD. You would then own 25% of the loan and your IRA would own the other 75% of the loan.)
• Your ability to contribute new money to your self-directed IRA or other retirement account is limited each year. For self-directed IRAs, for example, you are limited to $5,500 in new contributions. Anything over that must be rolled over into the account from another qualified retirement asset, or you will have to borrow the difference.
• You cannot lend money to yourself or certain family members, via your self-directed IRA. You therefore cannot make a hard money loan to any property in which you, your spouse, your ascendants or descendants and their spouses has an interest. Similarly, you cannot lend money from your self-directed IRA to any project in which any legal, accounting or financial professional who advises you on your self-directed IRA investments has an interest. Read More→

Across the country there are cities which have high percentages of underwater houses. Cities like Tampa, FL have as much as 43 percent of area home mortgages seriously below its formerly established market value. Fortunately for investors there are numerous areas like Tampa which have a large volume of homes with a mortgage balance exceeding the home’s value by at least 25 percent.  REIAComps helps to quickly see the number of foreclosure sales of these types of houses in your market month after month.

By looking at REIAComps valuation and sales data, we were able to actually verify the two market areas with a higher percentage of foreclosure than Tampa. They are Las Vegas, NV and Lakeland, FL. According to the local Tampa newspaper, The Tampa Tribune one additional factor is this market condition restricts the number of homes that can be listed for sale and exacerbates a region’s temporary shortage of homes on the market. Read More→