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How to Invest in Real Estate

The first step is always to fund your self-directed account, so you have available funds to invest. Once you've found an investment, NDTCO will need a few simple documents to execute the transaction.

Investment Timeline Overview

STEP 1: Fund Your Account - Timeframe: 1 to 2 weeks  

  • Prepare your self-directed account by funding via contribution, transfer, or rollover. 

STEP 2: Source your investment - Timeframe: varies

  • You find the investment property and do due diligence.

STEP 3: Make an offer - Timeframe: 1 to 2 days

  • You make an offer to buy the property

STEP 4: Submit Buy Direction Letter - Timeframe: varies

  • You will need to initiate the investment by completing the BDL and uploading required documents

STEP 5: Earnest Money - Timeframe: ~2 business days

  • Once documents are ready, earnest funds will be sent

STEP 6: Investment Closing - Timeframe: varies

 

Getting Started

Make an Offer 

Offers must use the IRA titling below to indicate the buyer. DO NOT put the contract in your personal name. If an offer/contract has been made in your personal name, we can accept an amendment to the Contract showing that the owner is the IRA. Or, the purchase process can be restarted, including a new offer/contract. Do not pay the earnest money personally. If Earnest money needs to be paid before the IRA can pay it, have a non-disqualified party pay the earnest money and the IRA can reimburse the non-disqualified person once funds are available. 

Once you have a fully signed contract, complete an online Real Estate Buy Direction Letter. Copies of all signed documents for the transaction can be uploaded to NDTCO while completing your online Real Estate Buy Direction Letter. A New Direction Transactions Specialist will be assigned to your Real Estate transaction and work with you and your title company to provide guidance and corporate documents needed for your IRA investment.  

Titling 

When investing with your retirement account, all paperwork for that investment must indicate the IRA as the buyer and NOT the IRA holder (you). The account can sign the offer/contract and anything PRIOR to closing or insurance docs. 

Please complete all investment documents using the following guidelines:  

  • BUYER/OWNER NAME  
    NDTCO, as custodian, FBO Account Holder First Last Name IRA  
  • BUYER’S ADDRESS  
    New Direction Trust Company  
    1070 W. Century Dr.  
    Louisville, CO 80027  
  • DO NOT SIGN ON THE INVESTOR’S / BUYER’S SIGNATURE LINE ON CLOSING DOCUMENTS OR INSURANCE POLICIES.  
  • You, as the IRA holder, are NOT an authorized signer for the IRA. Only authorized signers of New Direction Trust Company can sign for insurance documents and closing documents.  

Titling for Partnerships 

If you partner your IRA with a disqualified person or with another IRA, you must establish the percentage of ownership at the beginning of the investment and that percentage cannot change throughout the life of the investment. Those percentages will be used to divide up the incoming revenue and pay all expenses throughout the life of the investment, including earnest money. The vesting would be shown as follows, assuming a 50/50 split:  

  • NDTCO, as custodian, FBO Account Holder First Last Name IRA, as to an undivided 50% interest, and First Last Name, as to an undivided 50% interest.  
  • NDTCO, as custodian, FBO Account Holder First Last Name IRA, as to an undivided 50% interest, and NDTCO, as custodian, FBO First Last Name IRA, as to an undivided 50% interest.  
  • Titling for Inherited IRA Accounts: NDTCO, as custodian, FBO Account Holder First Last Name, Bene – Account Holder First Last Name, Dcdt IRA  

Escrow (Earnest) Money 

Once we have received a fully executed vested contract and a completed Real Estate Buy Direction Letter, NDTCO will issue earnest money, also referred to as a down payment or deposit. Completed paperwork is subject to a 3-business day review period once NDTCO receives it.  

For those who need earnest money sooner, with the actual offer, there are a couple of options:  

  • You may have the broker issue an earnest money promissory note.  
  • You may have a non-disqualified person pay it and your IRA can reimburse them later. For the reimbursement of Earnest Money and verification of payment, New Direction Trust Company will ask the title company for a receipt of payment.  

Disclosures and Amendments 

Account holders may sign all the amendments and disclosures through the purchase process for the IRA, including the Contract. Copies of all signed documents for the transaction should be submitted to NDTCO. Upload copies of all signed documents for the transaction to NDTCO while completing your online Real Estate Buy Direction Letter or through the portal in the messaging center.  

Closing Procedures 

Due to IRS, State, and Procedural regulations regarding real estate transactions, the custodian is responsible to ensure certain guidelines are observed. To satisfy these requirements, NDTCO will need:  

  1. An executed Contract  
  2. A completed Real Estate Buy Direction Letter  
  3. Complete/correct closing documents 
  4. Proposed Deed  
  5. Wire Instructions  
  6. Title Commitment  
  7. Loan documents if the property is leveraged  

In order to ensure a smooth closing and timely funding, ALL complete and correct documents must be received by NDTCO at least 3 full business days prior to funding or closing date. Forms received after 12:00pm Mountain Time will be considered as having arrived next business day.  

Once we receive the paperwork we will review, sign and send documents overnight (with tracking) to the closing. We will also prepare and process the funding and send a wire so funds arrive at the title company on the day of closing. We DO NOT attend closing. Please work with your title company to ensure NDTCO receives a complete set of fully executed and recorded documents. Fully executed and recorded documents should be uploaded through the portal, under messages.