Real Estate in your Quest Trust Company IRA

One of the more popular alternative investments for your IRA is purchasing real estate inside your IRA. Due to the potential predictability and security of the asset, many Americans are making the decision to diversify their retirement accounts into tangible assets like real estate. With self-directed IRAs, you are able to invest in assets such as Land, Single Family Homes, Multifamily Properties, Commercial Properties, Mobile Homes and much more.

  Please see below for information on our funding steps and procedures that must be followed to fund your investment in a timely manner.

Buying Real Estate

THE FIRST STEP TO PURCHASE PROPERTY WITH YOUR IRA:

Once you have selected the property you would like to purchase within your IRA and have completed the due diligence on your investment you MUST draw up the offer/contract in the name of the IRA.

       The Buyer’s name on the offer/contract should read:

  • Quest Trust Company FBO [CLIENT’S FULL NAME] [IRA/HSA/ESA] # [ACCOUNT NUMBER]

If multiple Quest Trust Company IRAs are purchasing the property together, the name of the Buyer should read as follows:

  • Quest Trust Company FBO [CLIENT’S FULL NAME] [IRA/HSA/ESA] # [ACCOUNT NUMBER] [as to the Undivided Interest of ___%] &
  • Quest Trust Company FBO [CLIENT’S FULL NAME] [IRA/HSA/ESA] # [ACCOUNT NUMBER] [as to the Undivided Interest of ___%]

If there is a Quest Trust Company IRA and an outside party purchasing the property together, the name of the Buyer should read as follows:

  • Quest Trust Company FBO [CLIENT’S FULL NAME] [IRA/HSA/ESA] # [ACCOUNT NUMBER] [as to the Undivided Interest of ___%] &
  • [Name of NON-IRA] [as to an Undivided Interest of __%]

If a Beneficiary IRA is purchasing the property, the vesting will read as follows:

  • Quest Trust Company FBO [CLIENT’S FULL NAME] [IRA/HSA/ESA] # [ACCOUNT NUMBER], beneficiary of [descendants name], deceased
  • Please also make sure that the Buyer’s address is listed as Quest Trust Company’s corporate address (17171 PARK ROW DRIVE #100, HOUSTON TX 77084), not your personal address.
  • Once the client is ready to send the earnest money deposit to the title company, or attorney’s office, the client will need to fill out the Direction of Investment for Real Estate. Please accompany the Direction of Investment form with a copy of the purchase offer/contract that has the client’s “Read & Approved” signature.

Our clients’ “Read & Approved” signatures are solely for our internal records and grant us permission to sign off on behalf of our clients’ IRAs. We can only accept wet-ink signatures or electronic signatures sent via Adobe Sign (electronic signatures submitted via other programs will not be accepted). 

Closing on your Investment Property:

Good news! Since Quest Trust Company, Inc. is the legal entity in administration of your IRA, the client will not have to attend any closings. However, we CANNOT sign any of the closing documents from the 3rd party closing agent without the client giving their “Read & Approved” signature. Once all the proper documents are signed, Quest will work with the 3rd party closing agent to close your real estate purchase.

Should your title company or attorney have any questions regarding the investment in your IRA please have them contact any Quest Trust Transaction Manager. Our staff is very experienced in educating and working with 3rd party closing agents so please don’t hesitate to have them contact us.

THE SECOND STEP IN PURCHASING REAL ESTATE WITH YOUR IRA:

  • Complete the Required Documents to Fund your Investment
Selling Real Estate

For Selling of the Real Estate Investment we will need the following:

  • Real Estate Direction of Sale
  • Contract Signed as “Read and Approved”
  • The contract & all closing docs MUST be drawn up in the name of the IRA. The proper vesting of the IRA will read: Quest Trust Company FBO (Client Name) IRA# (Client Account Number)

We will send closing instructions to the Title Company and they will provide the following:

  • Settlement Statement
  • Closing Terms and Conditions
  • Warranty Deed
  • Wire Instructions

Forms Needed for this step:

These Closing Documents will then be sent to you for your “Read and Approved” signatures.

Once this is signed “Read and Approved” and sent back to Quest, we can execute the final signatures on all of the closing documents and send them back to the Title Company as well as Wire Instructions for them to send the funds to your IRA.

Maintenance of Real Estate

Payment of taxes, insurance, and other ongoing maintenance bills after closing

All expenses associated with the property owned by your IRA MUST come from your IRA. These types of expenses include, but are not limited to: repairs, contractors, HOA, property taxes & insurance. In order to pay expenses from your IRA, Quest requires a copy of the invoice/purchase order along with a Payment Authorization Form. Should there be recurring payments the client can complete a Recurring Payment Authorization Form and only submit an invoice when the expense needs to be paid.

Receiving Payments/Earnings from Investment

When your IRA owns an asset, all profit/earnings must go back into your IRA. These can be collected by you, but must be made payable to your IRA. IRA Earnings cannot be deposited into your personal checking/savings accounts. We encourage all earnings to be paid via the Quest Trust Website. This is a service we offer to all of our clients’ renters and borrowers for free. If your renter or borrower would like to mail in a check, please make sure they are using the correct QTC vesting. To facilitate the payments being related to different assets in your account we encourage the use of a Deposit Coupon when mailing in checks to ensure the funds are deposited correctly. We also accept bank-to-bank wires or ach’s, please ask your transactions representative for our wiring instructions should the renter or borrower wish to use this avenue of payment.

Submit Your Forms: All forms can be mailed or faxed to any of our locations or emailed to realestate@questtrust.com.

Note: At this time E-signatures are NOT accepted.

If you are unsure what form to use or how to complete a form, help is only an email or phone call away!

Resources
  • Investor Awareness: Due Diligence with Real Estate
  • F.A.Q. Real Estate in your IRA.
  • AMORTIZATION SCHEDULE (IF APPLICABLE) – An amortization schedule is a table that lists each regular payment on a mortgage over time.
  • ASSIGNMENT CONTRACT Anassignment of contract occurs when one party to an existing contract (the “assignor”) hands off the contract’s obligations and benefits to another party (the “assignee”). 
  • ASSET CONVERSION FORM – This is an internal document that gives us information regarding your auction purchase and allows us to convert the asset in your account from a cashier’s check investment to a real estate investment.
  • CONTRACT – A real estate contract is an agreement between parties for the purchase and sale, exchange, or other conveyance of real property.
    • Please make sure the Buyer name is listed under the name of your self-directed account.
  • COPY OF RECEIPT – This is a receipt showing your winning bid.
  • CURRENT MONTH’S MORTGAGE STATEMENT – This is referring to a statement provided by the lender showing the current month’s mortgage that you, the Buyer, will be taking over.
  • DEED – This is a legal instrument showing the transfer of ownership of the referenced property to your IRA from the seller.
    • Please make sure the Grantee’s name is listed under the legal name of your self-directed account.
    • Please also make sure that the Grantee’s address is listed as Quest Trust Company’s corporate address (17171 PARK ROW DRIVE #100, HOUSTON TX 77084), not your personal address.
  • DEPOSIT COUPON (RETURN OF UNUSED FUNDS) – This internal form ensures that funds are applied to your account in an efficient manner.
  • DIRECTION OF INVESTMENT (DOI) FORM – REAL ESTATE – This is an internal document that gives us the information vital to processing your investmentrequest including details of how and where to send the funds and/or documents. This form allows us to send funds from your IRA and to sign any documents if needed.
  • DIRECTION OF INVESTMENT (DOI) FORM – GENERAL – This is an internal document that gives us information on an auction, including how many cashier’s checks you need, their denominations, and who to make the checks payable to.
  • FIRST PAYMENT COUPON/INVOICE – Preprintedpayment stubs that a lender provides to the borrower.
  • FINAL SETTLEMENT STATEMENT This is a document showing the itemized services and fees charged to the borrower/seller or lender for the purpose of purchasing or refinancing real estate.
    • Please make sure the Buyer’s/Borrower’s name is listed under the legal name of your self-directed account.
    • Please also make sure that the Grantee’s address is listed as Quest Trust Company’s corporate address (17171 PARK ROW DRIVE #100, HOUSTON TX 77084), not your personal address.
  • FUNDING INSTRUCTIONS – Typically, funding instructions are the wiring instructions provided by the title company or fee attorney.
  • NON-RECOURSE PROMISSORY NOTE – Here the lender is allowed to move only against the collateral used for securing the loan. A non-recourse promissory note is a note that prohibits the lender from attempting further restitution from the borrower in case of default.
  • It is important to note that this agreement must contain non-recourse language. What this means is that, in case of default, the lender cannot go after you personally or your IRA, they can only foreclose and seize the property involved in the agreement.
  • OPTION AGREEMENT – An “option agreement” is a contract used in real estate investing that gives you the right to purchase a property for an agreed upon price up to a certain time frame.
  • ORIGINAL CONTRACT – The underlining contract being assigned.
  • PAYMENT AUTHORIZATION LETTER (PAL) FORM – This is an internal document that gives us all the background information and the authority to issue payment.
  • All expenses associated with the property owned by your IRA MUST come from your IRA. These types of expenses include, but are not limited to: repairs, contractors, HOA, property taxes and insurance. In order to pay expenses from your IRA, Quest requires a copy of the invoice/purchase order along with the Payment Authorization Form (One Time). Should there be recurring payments the client can complete a Payment Authorization Form (Recurring) and only submit the invoice when the expense needs to be paid.
  • REINSTATEMENT NOTICE (IF APPLICABLE) – This is referring to a notice provided by the lender showing the catch-up amount due on the loan in order to be square on payments. This document is only required if the current mortgagee is behind on payments.
  • WARRANTY DEED – This is a legal instrument showing the transfer of ownership of the referenced property from or to your IRA.
  • Please make sure the Grantee’s name is listed under the name of your IRA (QUEST TRUST COMPANY FBO (CLIENT’S FULL NAME) IRA (CLIENT’S ACCOUNT NUMBER), not your personal name.

Submission Options

Documents completed? Submission options include:

  • Mail to Corporate – 17171 Park Row, Suite 100 Park Row – Houston TX 77084 or,
  • Email – realestate@questtrust.com
  • Fax – (281)646-9701 or (972)314-9589 or (512)610-3332

DISCLAIMER: Quest Trust Company does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.