Today’s REI Classroom Lesson

Today, Clay Malcolm joins us to talk about the ability to find properties online and invest using your IRA.

REI Classroom Summary

From websites that specialize in auctioning off properties to websites that do the research and due diligence on properties, it’s becoming easier to invest in real estate through online platforms.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.

Clay: Hi, everyone and welcome to the REI Classroom. My name is Clay Malcolm and today we’re going to be talking about real estate that’s purchased through online environments.

Mike: This show was sponsored by passiverental.com.

Clay: Okay. A couple things that have happened in recent years are, the Jobs Act obviously was passed, and has been taking hold in terms of its various titles and activities over the last couple years, making investments more publicly known. Also, financial technology, so the online technology that you use for your banking or investments has also gotten a lot better and faster, and more convenient for everybody. So these two pieces of financial innovation have combined to really create an environment where a lot of online platforms are being created to offer investment assets, and real estate is among them.
The online platforms are different in as much as some of them are offering you a particular discreet property. Meaning that you look at that property, they will often offer you some due diligence information, and you choose from amongst the offerings there if one of them makes sense for you. That’s a really handy tool in terms of distance investing, since the online platform can synthesize the data from properties all across the country so that you don’t have to travel to all of them. So there’s an interesting mix there.
Some of them are also offering equity-based or lending-based participation in real estate. Meaning that the IRA that is going to go out and purchase this asset is actually either participating in a loan or participating in an entity like an LLC or some other corporate entity that is then going to go out and buy the property. A couple of things to think about in terms of this as it applies to your IRA investing in real estate.
One is, from an IRS perspective, first and foremost, it’s okay. The IRS is happy to have your IRA buy these assets and keep the tax advantages, just the way that you would on a more one-off basis. The second thing, though, and this is a little bit trickier for some people to understand, is that there’s a lot of business models and business model practices that come into play when you are using your IRA to purchase an asset like this online. What I mean by that is that the online platform has a business model and your IRA provider has a business model, and those two have to meet and mesh in order for you to have your IRA buy one of these assets.
Now, the technology has started a little bit rudimentary, but is coming along quite fast. So in the not too distant future, all of these assets are going to be really, really easy for you to acquire with your IRA. But in this interim time, where Title III of the Jobs Act is still coming about and some of the financial technology is still being hammered out, you’re going to find a little bit of a mixed bag. So one of the things that I’ll encourage you to do is find a site that you think that you like, that’s giving you the information that you want and the one that makes you understand the investment that you’re going to be getting into. Then, start talking to them and your IRA provider about their ability to mix their two business services.
So that will put you in a position to go ahead and find IRA real estate all over the country, or all over the world even, and take advantage of the fact that the technology has really grown over the last several years. Thanks for joining us on the REI Classroom. We’ll see you next time.

Mike: Passiverental.com is your source for turnkey, done-for-you, rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with the financing for your next property. Invest the easy way today and get started by visiting passiverental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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Clay Malcolm
Clay Malcolm is the Chief Business Development Officer for New Direction IRA. In this role, he oversees marketing, education programs, and facilitates the training of business development and client representative teams. Clay has shared his expertise regarding self-directed IRAs and HSAs at speaking engagements across the United States. Currently, he teaches continuing education classes for CPAs, CFPs, and real estate professionals as well as presenting informational sessions for retirement investors looking to acquire precious metals, real estate, private equity, and more. Clay received his Bachelor of Science degree in communications from Northwestern University.