How Savvy Real Estate Professionals Close More Sales With Real Estate IRAs

Americans have more than $7.5 trillion in their individual retirement accounts. The investments in those accounts may be underperforming, or your clients may be interested in diversifying their retirement portfolio with real estate. With the tightening of lending practices, self-directed IRAs are a great source for funding transactions. Smart real estate professionals understand the advantages of self-directed retirement plans. In fact, real estate is, by far, the most popular investment in self-directed retirement plans, and single-family homes are the top real estate assets.

We see hundreds of transactions processed monthly and this continues to grow annually. But as a real estate professional, how do you work with these investors? Where do you find them? How do you sell to them? The answer is that some of these people are probably already in your database. Your client database is a gold mine of information. After all, Americans have more than $7.5 trillion in their individual retirement accounts. Chances are, most (if not all) of your clients have an IRA of some sort.

Nowadays, people research any investment before making a purchase. By the time your clients contact you, they have a good idea of what a Real Estate IRA is, and what they want to purchase. Most of the Real Estate IRA investors we deal with open a self-directed IRA when they have already identified the property.

Real Estate Agents, Are You Prepared?
Would you be able to talk about Real Estate IRAs if you were approached by a client regarding this topic? Credibility goes a long way.

Having that conversation is a great way to reconnect with clients who may not be ready to buy or sell their house, but might benefit from buying an investment property in an IRA to boost their retirement savings.

Entrust has attended many real estate events and talked to thousands of real estate agents. Most of them did not know that real estate could be purchased with retirement dollars for investment purposes. “How come I did not know about this?” is the most frequent question we are asked. The answer is simple: Most big custodians that offer retirement plans promote products such as stocks, bonds and mutual funds; therefore, investors are not aware that you can hold real estate. In fact, in some cases custodians will tell you that real estate is not allowed.

When talking to these agents, we discovered that some had turned away clients that brought up the topic because they didn’t think they could assist them, and, therefore, lost the sale.

One of the most popular questions you will get from your clients is, “Can I live in the house I buy with my IRA dollars?” The answer is no. We hear this almost on a daily basis. Real estate in an IRA is for investment purposes only and not for primary residence use. The real estate investment lives in a tax-free or tax-deferred account as long as you comply with IRS rules and regulations. The income and expenses flow in and out of the IRA. It is important that you know the intent of purchase when assisting a client. You can save them and yourself a lot of time.

Education Is Key to Grow Your Real Estate Business
As real estate (i.e., actual properties) and alternative investments in IRAs become more popular, real estate agents will be faced with the challenge to assist their clients with these types of real estate transactions. Educating yourself will be the key to success. You do not need to have an IRA designation or be an expert in IRAs; however, you do need to know how to answer the basic questions when it comes to Real Estate IRAs and have an established working relationship with a reputable company that can assist in educating your clients on the opportunity.

Educating yourself about the potential benefits of Real Estate IRAs will set you apart from the competition. Sharing that education with your existing clients opens new opportunities for you to grow your business and help position yourself as their trusted resource on this topic. Arming clients with this tool will help you stand out and it will help them save for retirement with investments they know and understand. It’s a win-win.

Mastering the opportunities in Real Estate IRAs can help you: