Should You Use Your Self-Directed IRA to Buy Investment Properties While Interest Rates are Low?

The ability to invest in real estate is one of the most common reasons why retirement savers first start becoming interested in the self-directed IRA. An individual retirement account with a self-directed IRA custodian such as Quest Trust Company individuals to out their retirement funds to work in investments that traditional IRA custodians simply wouldn’t allow.

Adding to the desirability of investment real estate for retirement savers is that interest rates on mortgages and other types of borrowing continue to be quite low.


Even if interest rates are low, you may not be able to derive the benefit you hope from borrowing money to buy real estate with your self directed IRA. This is because the tax laws that authorize individual retirement accounts put some limitations on how those accounts may be used. In particular, the activities of IRAs must be related to the fundamental purpose of the account, and that means to make investments. Borrowing money to make investments, however, is called out as an activity that’s at odds with the fundamental investment purpose.

As a result, when an IRA borrows money, the investment gains that result from that borrowing are considered to be unrelated business taxable income (or “UBTI”), which means that you’ll face a current year tax bill because of your investment borrowing. In many cases, this can greatly reduce or even exceed the advantages you gain by taking out a mortgage.

Investment Quality

If you choose to borrow money within your self-directed IRA in order to invest in real estate, be sure you are doing so because you are presented with a quality investment opportunity, rather than simply because interest rates are low. You should have a plan for how each piece of property you acquire is going to become a productive part of your portfolio, and your anticipated timeframe for that to occur.

Note that this doesn’t necessarily mean every piece of investment property you acquire needs to be productive right away. “Fixer uppers” are certainly appropriate for investment; just be sure you take into account any repair or remodeling costs into your financial analysis.


Regardless of how you choose to use your self-directed IRA to acquire investment properties, you should have a comprehensive understanding of the costs and fees that come with holding the property. For example, many real estate investors will tell you that as they build larger portfolios of property, they find that their costs on a per property basis tend to decline. This is because they are able to leverage certain economies of scale when it comes to property managers, repair and maintenance professionals, and other types of support they need in maintaining those properties.

Low interest rates can be a factor in deciding whether or not to buy investment real estate with your self-directed IRA, but it should not be the only factor.

Understanding SEP IRA Tax Rules

retirement accountsMost working adults are at least somewhat familiar with the two most popular types of personal retirement accounts – the IRA and the 401(k). The 401(k) plan is by far the most common type of retirement program that we see at work. Unfortunately, these types of retirement plans are generally somewhat costly to administer, and the administrators of those plans really only promote them to mid-size and larger businesses.

Furthermore, many of the plans are limited to only certain types of mutual funds, which significantly reduces the ability of retirement savers to select exactly the types of investments they want to hold. For small businesses (even sole proprietors), setting up a 401(k) is likely to be a less than ideal way to provide additional benefits to themselves and their employees.

Fortunately, there is another option – the SEP IRA. SEP IRA stands for “Simplified Employee Pension IRA,” and it’s an account type that combines the best of both worlds; the higher contribution limits of employer-sponsored plans with the tax benefits and low costs and investment flexibility of IRAs. Here are some of the key SEP IRA tax law basics.

The SEP IRA Must Not Be Preferential. All employees must receive the same benefits under an SEP IRA. This means that a small business owner cannot open up this type of retirement plan only for themselves. If they choose to open the plan they must set up an account and make the same types of contributions for all eligible employees.

Additional Employee Requirements. In addition, employees other than the business owner must also meet several additional requirements. The employee must be at least 21 years old, must have worked for the employer for at least three of the past five years, and must have received at least $500 in compensation during the year.

Tax Treatment of Contributions and Withdrawals. Contributions to a SEP IRA are similar to those of a traditional IRA when it comes to taxability. That is, contributions are generally tax-deductible, and withdrawals are generally taxed at the account holder’s then current marginal tax rate.

SEP IRA Contribution Limits. Calculating the annual contribution limits for a SEP IRA is more complicated than doing so for a Traditional or Roth IRA. The SEP-IRA is considered an employer-sponsored plan, and for each employee and the employer can contribute up to 25% of that employee’s wages to their account. The maximum annual contribution is the lesser of 25% of their annual income and (for 2014) $52,000.

For self-employed individuals who set up a SEP IRA, determining the contribution limit is more complicated. The best way to make the computation is to use IRS publication 560 (section 5), but in general the contribution limit will be approximately 18.6% of the businesses in net profit. Further complicating matters is the fact that the contribution limit is computed not from the businesses net profit but from an adjusted figure that takes into account the applicable self-employment tax.

There are a few other factors that could further effect the computation. For more information please contact Quest Trust Company or any other experienced IRA custodian.


Should You Steer Clear of Real Estate Foreclosures Within Your Self-Directed IRA?

real estate foreclosureSavvy retirement savers are likely to consider every type of investment that’s available to them. Unfortunately, individuals who set up IRAs with traditional custodians are missing out on a wide range of investing opportunities. Those who set up a self-directed IRAs with custodians such as Quest Trust Company can invest in private equity, certain precious metals, and even real estate.

And there are many potential types of real estate investments. Depending on an investor’s account balance, their willingness to take on debt within their IRA, as well as their appetite for risk, they can invest in residential properties. commercial properties, industrial or farmland properties.

In recent years, given the number of residential properties that have faced (and continue to face) foreclosure, more investors are looking at foreclosures as having good potential for significant long-term gains. But there are a number of factors that can make investing in real estate foreclosures more challenging than a straightforward market transaction, so you’ll need to consider each of them before you decide whether foreclosures are right for you.

Long Investing Timeframe. Because there are many legal steps and obligations that must be met as part of the foreclosure process, it can take significantly longer to buy a foreclosure property than to buy a property on the open market. The timing varies from state to state, but the entire process can extend for a year or more in some jurisdictions.

No Opportunity for Appraisal or Inspection. It’s quite likely that once a property goes far enough through the foreclosure process that is ready for public auction, there will be no opportunity to conduct an independent appraisal or inspection on the property. In instances where a pre-auction inspection is allowed, it is often little more than a quick “walk through” by the prospective bidders. Since conducting your research and having a good idea of what you’re getting into is important for any investment – real estate or otherwise – this information gap must be taken into account.

Unhappy Prior Owners. With foreclosure properties, not being able to conduct an inspection is likely to be even more important than would be the case for an open market transaction. It’s not unheard of for property owners who are being foreclosed upon to stop their normal upkeep and maintenance of the home (and in more extreme cases even do intentional damage to the home and its infrastructure).

No Occupants. During those stages of the foreclosure process in which no one is living in the home, it can quickly fall into disrepair or perhaps become a target for theft. Even if there are no personal effects in the home, thieves might target copper tubing, wiring, appliances and other fixtures.

Local Market Dynamics. Finally, it’s important to realize that sometimes you get exactly what you pay for. Look behind the reasons for the foreclosure – did the neighborhood become unreasonably expensive to quickly (in which case there may be more foreclosures in the same area, thus perhaps making it harder to realize a profit on the property you’re interested in)?

Don’t automatically assume that a foreclosure property will yield large investment returns. Take all the relevant factors into consideration so that you can decide whether a particular property is right for you.

Best Practices for Tracking Your Real Estate Investments

tracking real estate investmentHow well are your stock market investments performing? Even if you don’t know the answer off the top of your head, you could probably calculate a performance measure fairly quickly. Chances are your investment broker has access to online account tools that give you all the information you need. Even if you have other types of investments in your portfolio, you may use investment management software or online service to help you track those investments.

The same holds true for real estate. Like any other investment type, you can only evaluate your real estate investments if you have all the necessary information available – in a form that’s easy to use. Here are some things to consider for tracking your real estate investments. regardless of whether they’re in a self-directed IRA or are one of your taxable investment holdings.

Tracking Your Expenses. Some investment types don’t generate much in the way of current expenses. For example, you probably pay a commission each time you buy or sell a publicly traded stock owned. Beyond that, you might not pay an annual fee to the investment brokerage that handles your account. But simply owning the stock doesn’t cause you to incur additional fees.

Real estate investments, on the other hand, require a broad range of fees, from annual maintenance and upkeep expenses, to hazard (homeowners) insurance, to property management fees for someone to manage your property and find you new tenants whenever necessary. Identify all of the categories of expenses you’re likely to face, and use the tools that best suit your recordkeeping style. This might be a piece of dedicated financial software. or possibly a notebook and pencil.

Tracking Your Taxes. While your expenses for investment real estate may to some extent the variable (for example, you can save on management fees by managing a property yourself), your annual property taxes will be beyond your control. In addition to monitoring and measuring these taxes, you’ll want to set up a system whereby you ensure that you are never to link went in meeting your tax obligations.

Tracking Your Time. Real estate investments also differ from many other investment types in that they require a much more active management style. You might stay on top of your stock and mutual fund investments by regularly reviewing quarterly reports and disclosures, and researching those companies and funds to make sure that your original investment assumptions are still true. But there’s nothing you must actively do in order to maintain your investment positions.

In contrast, investing in real estate will require much more of a “hands-on” approach. For developed properties, this will include finding tenants, maintaining any structures or improvements on the property, and making sure all taxes and other legal obligations with respect to the property are met. Even in the case of undeveloped or speculative properties, you’ll still have to pay taxes, ensure the property and make sure that no problems arise. By tracking your time you can make sure you wouldn’t be better off with outside assistance.

Investing in real estate can be financially rewarding, but it takes more effort than buying stocks or bank CDs, Make sure your record keeping process for real estate investments helps you meet your financial goals.

Quest Trust Company Inc. Annual Ugly Sweater Networking Party Toy Drive

Quest Trust Company Inc. a leading provider of self-directed IRAs is having a toy drive to benefit Toys for Tots. Quest has been doing this toy drive the last couple of years in conjunction with the annual holiday networking party for clients, prospects and business associates. For those of you who are looking to network with like-minded investors and start the holiday season off with the great feeling of giving, donate an unwrapped toy to Quest Trust Company and they will give you $10 in Quest Bucks.

 Houston, TX (PRWEB) November 30, 2012

When the holiday season rolls around Quest Trust Company, Inc. and its employees can’t help but catch the holiday season bug for giving. For the past couple of years Quest Trust Company has been having an Ugly Sweater Networking Party in every city they have an office. The goal of these events is to provide an environment that helps educate people on alternative investments, shows people how to access alternative investments and connect investors with other like-minded investors who have done it before. Along with all the great educational benefits for attending they have attendees bring an unwrapped toy that is donated to Toys for Tots. Over the years Quest Trust Company has donated hundreds of toys to kids in the local community and they look forward to continuing that tradition long into the future.

On December 8th 2012 in Houston and Mason, Michigan and on December 15th, 2012 in Dallas and Austin, Quest Trust Company Inc. will be having their Annual Ugly Sweater Networking Party Toy Drive to benefit Toys for Tots. The event is open to the public and there is no cost to attend.

“Quest Trust Company has always had a passion for the community, giving back and working with non-profits,” said Terrance Patrick, Self-Directed IRA Specialist in Mason, Michigan. “I have been working for the Michigan office for a few years now and one of the most exciting aspects of my job is creating events like our Ugly Sweater Networking Party Toy Drive. When you get to create an event that helps people understand what their investment options are in retirement and we get to donate massive amounts of toys to local children that will put smiles on their faces during the holiday season you really feel a sense of accomplishment. If fact, that feeling I get when I know I am putting smiles on people’s faces is more than anyone could ever give me.”

Not all self-directed IRA administrators and custodians are the same. Quest Trust Company Inc. uses great free national and local events, which are open to the public, to help further the knowledge of self-directed IRAs and investment strategies within self-directed IRAs.

“I have been working with Quest Trust Company for years,” stated Brant Phillips, owner of Houston Capital Group. “Not only do they give myself and my investors great, shall I say, world famous customer service, because they care, they also do great work in the community. Not many companies in my experience care so much about their client, prospects and business associates just as much as they care about charity work and giving back to their communities. It is a true pleasure to work with Quest Trust Company and their staff as well as attending their fun and exciting networking parties. I will see you all there!”

The Quest Trust Company Inc. corporate office is located at 17171 Park Row, Suite 100 Houston, Texas 77084. Quest Trust Company Inc. currently supports more than 5000 clients and reaches approximately 20,000 customers monthly via their social media, local and online marketing activities.


Quest Trust Company, Inc. is the leading provider of self-directed retirement account administration and education. They are the experts and authorities when it comes to “alternative” investments like real estate, notes, precious metals, oil & gas, private placements, etc. within an IRA, HSA, ESA or 401(k)s. They administer client’s accounts from across the nation but the corporate office is located in Houston, TX with branch offices in Dallas, TX, Austin, TX and Mason, MI. They currently administer over $500MM in client assets for over 5000 clients.
Those interested in learning more about self directed IRAs and Quest Trust Company, Inc. can visit Anyone interested in Quest’s free educational classes, webinars and networking events can call 800.320.5950 for more information.


Quest Trust Company, Inc. Abandons the Traditional Holiday Party for a Halloween Fright Night Mixer

Quest Trust Company Inc. a leading provider of self-directed IRAs is excited to announce the locations of the annual Fright Night Networking Mixers. These events are thrown every year near Halloween as our client appreciation event. One of Quest Trust Companys great slogans is “We make IRAs fun!” and that is what they look to do with these types of networking events for their clients and prospects.

Houston, TX (PRWEB) October 15, 2012

Quest Trust Company, Inc. is guided by a relentless need to supply the American public with the proper free education on what is truly possible with all retirement and qualified plans. Along with having a world famous staff that is some of the most knowledgeable in the industry, Quest Trust Company is dedicated to being the premier provider of third party administration services to those, individuals and employers, who are looking for a truly self-directed retirement plan and demand great customer service. For those that find Quest Trust Companys service to fit their needs, Quest wanted to say thank you with a fun event were you can wear your Halloween costume, bring your family and get some valuable information while networking with like-minded individuals in your community.

On Tuesday, October 16th, Quest Trust Company will kick off Fright Night Events in San Antonio, TX. They will then travel and host the event in Dallas, TX on Wednesday October 17th. The following week they are back in the Central Texas Area for Fright Night in Austin, TX, on Wednesday, October 24th, and then ending it with the biggest celebration in Houston, TX on October 25th.

“For years we tried having a holiday party in December and the attendance was always very minimal,” said H. Quincy Long, President/Owner at Quest Trust Company. “Around the holidays it is tough to complete with all of the family and work related events our clients have on their schedules. However, Quest Trust Company operates by the motto “We Make IRAs Fun!” so we decided to try and have a costume party as our client appreciation event one year. We coined the event Fright Night and it was a resounding success and we have been having the event ever since”

Not all self-directed IRA administrators and custodians are the same. Quest Trust Company uses these great local events, which are open to the public, to help further the knowledge of self-directed IRAs and investment strategies within self-directed IRAs.
“One of my first experiences with Quest Trust Company was at last year’s Fright Night in Houston,” stated Nate Hare, Self-Directed IRA Specialist at Quest Trust Company. “I was there as a guest of a friend who worked at Quest not really knowing what to expect. I was currently looking for a new career opportunity and when I saw the fun and excitement that Quest Trust Company generated at this event I wanted to know how I could get involved with such a great company. Not only were they teaching aspects about IRAs that hardly anyone in country is teaching but Quest makes clients and employees have a amazing fun time the whole time. It almost makes it seems like I am not working, well almost.”
The Quest Trust Company, Inc corporate office is located at 17171 Park Row, Suite 100 Houston, Texas 77084. Quest Trust Company currently supports more than 5000 customers with online accounts and reaches approximately 20,000 customers monthly via their social media and online marketing activities. At each event, Fright Night networking mixers average 100-200 like-minded investors in attendance.