SELF-DIRECTED IRA (SDIRA) LENDING
Unlock real estate investment opportunities with a non-recourse Self-Directed IRA loan.
The demand for rental property across the United States is growing.
Market data supports that this trend will continue to grow. This demand creates an opportunity for self-directed IRA investors to grow wealth and experience financial success by investing in real estate. Purchasing rental property in your IRA creates a new avenue for financial possibilities, which can add significant value to your retirement portfolio.
Self -Directed IRA (SDIRA)
Did you know that your Self-Directed IRA can obtain a non-recourse loan to purchase real estate?
A non-recourse loan is one in which the Self-Directed IRA or the account holder are not liable for repayment of the loan. The is no recourse against the individual account holder(s) or the balance(s) of your IRA funds. In the event of default/foreclosure, the lender can only look to the property held in the IRA as the sole source of repayment. The non-recourse lender cannot pursue other assets owned by the account holder or the IRA.
Benefits of owning rental/investment property in a Self-Directed IRA
While traditional and Roth IRAs are an excellent way to help you save for the future, your investment options are often limited to stocks, CDs, bonds, and mutual funds. A Self-Directed IRA is different. Rather than restricting you to traditional investments, a Self-Directed IRA allows you to expand your options to real estate, joint ventures, and more. With a Self-Directed IRA, you have the freedom to explore these alternative investments and the chance to grow your retirement portfolio. The investments you purchase with loan proceeds can produce the income needed to reach your retirement savings goals.
In addition to increased portfolio diversification, using a Self-Directed IRA to purchase real estate can have the following benefits:
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You’ll be investing in physical property instead of a volatile stock market.
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IRA Real Estate loans allow you to invest in tangible assets that can produce steady income
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Real estate may give you better returns over the long term than traditional investing
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Profits are reinvested in your IRA to grow your earnings further
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You can safely invest without jeopardizing your IRA because personal liability is removed
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Credit review is more flexible than traditional mortgage loans and traditional loan requirements don’t apply
Discuss your individual situation and IRA loan needs with a Cogent Bank Self-Directed IRA loan specialist today!
Begin your non-recourse loan application with Cogent Bank today!
Self-Directed IRA non-recourse loans are for investment purposes only. A Statement of Business Purpose and Occupancy, declaring that the property is or will be used for business or investment purpose only, is required prior to closing. These can vary depending on the loan amount, loan characteristics and property location.
At Cogent Bank, we are your non-recourse lender of choice!
Cogent Bank provides non-recourse financing for the following property types:
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Single family detached & single family attached
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Planned unit developments (PUDs) & Townhomes
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2-4 unit properties
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Warrantable condominiums*
*Must meet FannieMae/FreddieMac condo requirements and Florida condos must be built after 2002.
Cogent Bank offers the following non-recourse IRA loans:
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Purchase
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Refinance
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Fixed rate
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Adjustable rate
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Interest only
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*Minimum loan amount of $100,000 required
Given that a mortgage loan held by your Self-Directed IRA is both non-recourse and held for investment purposes, the Self-Directed IRA account balance must include reserves to cover a certain number of months of mortgage payments in the event of non-payment of rent or vacancy. Reserve requirements for your non-recourse loan with Cogent Bank can vary depending on your loan amount and loan to value, but typically 6-12 months of reserves for principal, interest, taxes, insurance and any association fees are required to be held in your Self-Directed IRA.
Fees and expenses for a non-recourse loan are similar to a traditional mortgage and may include:
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Appraisal fee
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Origination fee
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Processing fee
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Settlement fee
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Title Insurance
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Document recording
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Property Insurance
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Property taxes
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Transfer taxes
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Survey
Contact a Cogent Bank Self-Directed IRA loan specialist today!
Frequently Asked Questions
Who is eligible for IRA financing with a non-recourse loan?
A self-directed IRA that has the required down payment and contingency reserves available. This is subject to Cogent Bank underwriting approval, which will include satisfactory review of the subject property appraisal, calculation of subject property rental income and expense amounts and corresponding ratio and liquidity verification.
Can I use my IRA to purchase rental/investment property with a non-recourse loan?
Yes, with at least 35% or more of the purchase price vested in a self-directed IRA, the IRA can purchase rental property using a non-recourse loan. This is subject to eligibility and loan approval, including an acceptable real estate appraisal, as determined by Cogent Bank. Depending on the loan amount, loan to value and loan characteristics, down payments can vary and can be up to 65%.
Can I do a cash out refinance of a rental/investment property already owned in my self-directed IRA?
Yes, but the IRA must have owned the property for a minimum of 12 months, and all funds must be distributed back into your IRA. This provides you will the ability to purchase more assets with your IRA.
If my self-directed IRA recently purchased a rental/investment property without a loan, can I do a cash out refinance?
Yes, if the subject property was purchased without financing within the last 6 months, delayed financing is acceptable and not subject to cash out seasoning requirement of 12 months.
What other non-recourse loan options are available?
In addition to cash out and delayed financing, Cogent Bank offers rate and term refinances for rental/investment properties already held in your IRA. Ask your Cogent Bank self-directed IRA loan specialist for details.
Can the subject property be held in a LLC?
Yes, but please consult with your tax and/or legal advisor or self-directed retirement account administrator to confirm the entity structure requirements applicable to your individual situation.
Can my self-directed IRA obtain a non-recourse loan for personal use?
No, the IRS prohibits personal use of real estate, present or future with self-directed IRA funds. Please consult with your IRA custodian and/or tax advisor for additional information.
Can I use my self-directed IRA to purchase a property I already own and personally use?
No, IRS regulations prohibit transactions that are considered self-dealing. Please consult with your IRA custodian and/or tax advisor for additional information.
How do I pay for property related expenses and mortgage payment on a non-recourse IRA loan?
All expenses and payments associated with the property owned by your self-directed IRA must come from your self-directed IRA account. These types of expenses could include, but are not limited to: repairs, contractors, property taxes, insurance and HOA fees. Please consult with your IRA custodian for further information.
Does rental income for a non-recourse IRA loan go back into my IRA?
Yes, all income generated by a self-directed IRA owned real estate must be returned to your self-directed IRA. This ensures that you retain the tax-deferred or tax-free status of the investment. Please consult with your IRA custodian for further information.
Can Cogent Bank set up my Self-Directed IRA?
No, you will need to select your own IRA Custodian.
Is there a prepayment penalty if I pay my loan down or if I pay my loan off early?
No pre-payment penalty for when the loan is paid down < 20% in the first year or in full after 1 year.
Does Cogent Bank offer non-recourse loans in all 50 states?
Yes, Cogent Bank will finance eligible rental/investment properties in all 50 states. Reach out to a Cogent Bank self-directed IRA loan specialist today for details.
UNLOCK INVESTMENT POTENTIAL WITH A SELF-DIRECTED IRA LOAN
Expand your retirement savings potential through a Self-Directed IRA (SDIRA) loan for real estate investment. At Cogent Bank, we specialize in non-recourse loans, providing you with financing solutions designed specifically for SDIRA investors. Our team understands the unique requirements of self-directed investing, helping you secure funding while protecting your retirement assets.
Whether you’re purchasing your first investment property or expanding your real estate portfolio, Cogent Bank offers competitive loan options tailored to your needs. With expert guidance and a streamlined lending process, we make it easy to take the next step in building your financial future.
Ready to invest? Contact a Cogent Bank SDIRA loan specialist today to learn more.
OUR LOCATION
Downtown Orlando
420 S Orange Ave. Suite 850,
Orlando, FL 32801
