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Friday, June 19, 2009

You – Mexico – And Your IRA

by Tom Phelan, Rocky Point Real Estate

It is estimated there are 45 million IRAs (Individual Retirement Accounts) in America. These 45 million IRAs hold $4 trillion even after the recent Stock Market and Banking debacles.

Most Americans with IRAs do not know they can use IRA funds to purchase real estate, including foreign real estate. Yes, even Mexican real estate inside its “Restricted Zones” where the fideicomiso or Bank Trust is used can be purchased.

“Why haven’t I heard about this?” you ask.

Wall Street controls 97 percent of four trillion IRA invested dollars (it was six trillion a few months ago). Its agents, Stock Brokers and Financial Planners aren’t about to educate you and lose lucrative commissions from buying and selling products to your IRA.

Also, most Realtors® don’t know an IRA can buy real estate. This is painfully evidenced by the minuscule amount of Realtor® IRA held property, the very product they sell.

If Wall Street isn’t going to tell you and your Realtor® isn’t going to tell you, who will?

Ah, the very point of this article. Most IRAs were created by Wall Street Affiliates who will not accommodate an IRA buying real estate. You need to open a Self-Directed IRA to gain total control. Transferring IRA funds to a Self-Directed IRA Custodian is simple and not subject to taxes or penalties, and can cost as little as $50.

Note, however, there are several variants of the Self-Directed IRA and the recent Individual 401(k) that are best discussed on an individual basis.

Okay, you have a Self-Directed IRA that can buy real estate. Don’t throw caution to the wind like “investors” did a few years ago; mailed hefty Earnest Money checks to Realtors® they had never met, in cities they never visited, for developments they had never seen.

Due diligence is mandatory. That being said, IRA opportunities abound including Mexican real estate. With the recent deflation of the “Real Estate Bubble” (35 percent to 60 percent), the timing could not be better.

My preference has always been beachfront real estate. True, your IRA could snap up a San Diego or Cabo San Lucas beachfront Condo reduced from $2.5 million to $1.5 million, but how many of us have millions in our IRA?

My wife and I chose a beachfront condo in Puerto Peñasco on Mexico’s fabulous Sea Of Cortez because of the beauty, affordability and proximity to Phoenix (4-hour drive).

Most foreign-owned condos, homes and beach lots in Puerto Peñasco were bought by Arizonans, but with the new Costera highway cutting the drive from San Diego to 4.5 hours and Los Angeles to 6.5 hours, investing here is now much more attractive to Californians who no doubt will soon join Arizonans to enjoy Puerto Peñasco.

Come take a look, you’ll be glad you did.

For information on Rocky Point Real Estate visit www.PhelanTeamRockyPoint.com. For more information on how an IRA can buy real estate contact Tom Phelan at YourIRA@yahoo.com.