Hotel development is a billion dollar business and usually involves teams of investors and years of planning before any construction or renovation work begins. Hotel development is a commercial real estate enterprise and if the rooms are empty there is no commerce, if the rooms are full and the hotel’s management team is lousy, your hotel could stumble along barely squeezing out a profit. Either situation is horrible for the investor.
Many traditional IRA custodians disallow participation in such commercial real estate deals. To use funds from your IRA you will need to have a self-directed IRA and checkbook control. This is absolutely true for properties located on foreign soil. Opening a self-directed IRA is quite simple. You just need to shop around for companies offering them and check out their fee structures.
Though it has been warned against thousands of times, some investors still get too anxious to make a profit and skip the step where they make an exhaustive study of a deal before they fork over their money. You should know something about everyone involved in the deal, the specifics of who will be doing the construction or renovation, the reputation of the management team, the room rates, the occupancy expectations, the local economy, and any other bit of information that may affect your investment.
At Asset Exchange Strategies, LLC we have had conversations with potential self-directed IRA clients many thousands of times and the myths continue to live on after 20 years in the business. Some things like Sasquatch or area 51 seem to perpetuate in people’s minds without any substantial evidence the concept is correct or myth. Let’s […]
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