Create IRA Wealth with Real Estate Notes

If you own a traditional IRA, you may be chafing under all the restrictions imposed upon what you can and cannot invest in. Switch to a self-directed IRA, and you completely change the situation and create a retirement account with virtually limitless investment opportunities.
What can you do with a Self-directed IRA?
Almost any type of investment is possible with a self-directed IRA. There are almost no restrictions, and in fact the only thing you cant do is use your IRA to purchase collectable items such as coins, or make investments that directly profit you or your descendants. Most of the inherent advantages of IRAs relate to the tax laws that govern these accounts.
-Profits made by IRA investments are not subject to Capital Gains Tax
- Enjoy tax-deferred status on all your IRA holdings until you reach the age of distributions (59 1/2). You are only taxed on money you withdraw from the account.
-All profits stay in your IRA and remain untaxed until withdrawn
Its even possible to create an IRA trust and appoint the trust as a beneficiary of your IRA. This allows you to leave tax-free money to your spouse or to children, and is particularly helpful if one of your beneficiaries is a minor. Creating a trust is also a good way of ensuring there will be enough money to pay estate taxes.
Roth IRAs have Further Advantages
Roth IRAs are very similar in terms of what you can buy and sell. However, the tax laws are slightly differentwith a Roth IRA you are subject to different tax types than with a self-directed IRA. If you own a Roth IRA, the profits made by your account are not subject to tax; however the contributions you make to the account are not tax-deductible as they are with a traditional or self-directed IRA. Once you reach the age of distributions, however, every withdrawal is tax-free. Another advantage of the Roth IRA is that there are no minimum distribution rules, so once you reach 59 1/2 there are no restrictions on how much money you can withdraw, or how much you can leave in your account.
The Power of Passive Income
A real estate note represents the financial agreement made between the lender and the borrower of mortgage money, and includes information relevant to the terms and conditions of the contract. These notes are often bought and sold on the secondary mortgage market. Notes are an excellent source of passive income (income that requires no effort to maintain once the investment is made), and for this reason private investors will often lend money to real estate buyers, in effect creating their own notes. Real estate notes are a source of long-term passive income, and this is one of the main reasons why they are an ideal investment for IRAs. After the note is created or bought by the account, payments are made directly to the account, where they remain untaxed and earning interest, potentially for decades. Real estate notes are an ideal investment for another reason. The property market constantly changes, and property prices increase and decrease accordingly. Notes, on the other hand, do not change their face value according to the way the property market moves, so they are a lower-risk investment.
Who can buy Real Estate Notes?
Anyone can buy real estate notes, including private investors. There is excellent profit potential, with the possibility of buying notes for as little as 70% of face value. Private investors can also create notes by lending money to would-be property buyers who prefer not to borrow from financial institutions. Because the risk of such a loan is greater to an individual, the interest rate on them is higher than for a bank mortgage, meaning the profit potential is even greater.