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Investment real estate
can be held in your Self-Directed IRA as another form of tax-sheltered
retirement investment (consult your tax advisor). Using debt financing to
purchase these investments allows for diversification without tying up all of
your IRA funds.
NASB offers a unique financing program designed for the non-recourse financing
requirements for purchases of rental property and the application process is
easy. Loan approval is generally within 48 hours of receipt of a full and
complete application. Financing is subject to a satisfactory appraisal,
intention of property, and verification of IRA funds for closing.
Frequently Asked Questions
1-4 Family
Multifamily
Product
5/1 ARM and 30 Year Fixed
5/1 ARM and 30 Year Fixed
Max LTV
70%
65%
Max Term
30 years
25 years
DSCR**
1.0x
1.3x
Min. Loan Amt.
$50,000
$50,000
Ineligible Properties: Speculative
purchases, residential with large acreage, raw land, farms, manufactured or log
homes, non-warrantable condos, Condo-Hotels, Co-ops, Time Shares, hotels,
senior or assisted living facilities, non-franchise restaurants, entertainment
properties, mini-storage. Square footage must be 750+ (per unit) for Condos and
900+ (per unit) for all other properties.
*Condominiums: Loan to Value for Condos will be between 50%-60% and the
net operating income must exceed the annual debt service (annual principal and
interest mortgage payment) by 20%. Condos must meet the following minimum
criteria to be considered Warrantable. The project building must be 100%
complete, including common areas. The units within the building must be 60%
sold and 33% of all building units must be owner occupied or 2nd homes (versus
tenant occupied). Condos not meeting these criteria are not eligible under our
non-recourse program. IRA Condo QuestionnairePlease complete before signing purchase contract.
* Price appreciation: If the real estate has sold within the past 3
years and the property has appreciated more than 10% annually, the DSCR must be
1.2 times and the LTV will be 50-65%.
** DSCR: Debt service coverage ratio = net operating income / annual
debt service
Requirements for IRA Debt Financing:
Purchase transactions for investment property only;
IRA/SEP assets to be managed by a custodian in a self directed IRA or SEP.
IRA assets must be verified for purchase and reserves. IRA reserve requirement
may be up to 20% of the loan amount, to be available in the event of
insufficient cash flow to pay operating expenses and mortgage payments;
Current detailed Rent Roll or copies of signed leases;
Most recent asset statement verifying IRA assets for purchase and reserves;
Purchase/Sale contract, signed by the IRA account holder and the custodian. The
contract must show the buyer to be in the name of the IRA;
Appraisal fee required at the time of loan application for 1-4 family;
To learn more about investing in real estate through a Self Directed IRA,
contact one of these companies: (*Click on the PDF logo next to the
Custodian/Administrator to print off their Real Estate Investment Authorization
Form)
NASB is not affiliated with any of these companies. Each is provided for
reference only. IRS Publication 590
North American Savings Bank, F.S.B. is not an investment advisor, and is
not qualified to provide advice on IRA rules, regulations, or eligibility
requirements. Please consult with your tax and investment advisors.
