IRA investors have impacted the lives of many people, but rarely do you see investments that touch so close to home. For one western New York investor, it was the creative use of his self-directed IRA that saved his brother from losing his home and, in another investment, revitalized a run-down building in his hometown.

Joel spent 35 years working in “almost every facet” of the building industry. His experience selling materials, inspecting structures, and constructing buildings translated well into real estate investing with his self-directed IRA.

In the early 2000s, Joel learned it was possible to invest in real estate with a self-directed IRA from a friend in the industry. As he described it, “I couldn’t believe this existed. It was (and still is) the best kept secret in the industry.” Little did Joel know at the time, but years later this knowledge would be called upon to help a family member.

Loss of Employment Becomes the Start of Something Bigger

Joel lost his job of 35 years in 2004 and, after working several jobs over the next few years, decided to start his own business in 2007. His new business did fairly well (facing challenges many new businesses face), but he felt he could do better if he had more capital. It was difficult to obtain financing from banks to pursue the real estate investment opportunities he identified.

This was the catalyst for Joel to make a change and consider investing on his own with a self-directed IRA.

In 2009, Joel bought a small, neglected, vacant lot with his Traditional IRA. “The investment was easier and less complicated than any purchase I had ever done in the past,” Joel said.

After recently looking into the Erie County registrar of deeds, Joel stated, “I’m happy to say I see thousands of IRA transactions in the county records since I first started. I’d like to think I may be part of the reason for some of those that followed.”

Joel has since used his real estate knowledge and desire “to find a way to get it done right” to make several alternative investments in his IRA – perhaps none more important than the one that helped his brother.

IRA Capital Saves His Brother’s Home

Joel’s brother, also in the construction industry, built a beautiful new home for himself several years ago. A few years later, he received a private loan from a high-interest private lender. Before long, the high interest rates were overbearing and the lender called the loan due, threatening to foreclose on the home.

Joel realized his IRA capital could provide a solution and issued his brother a $100,000 promissory note to repay the initial loan and save his home. The promissory note used his brother’s home as collateral and provided a reasonable payment plan that would allow his brother to stay in his home.

Joel worked with his attorney to draw up an amortization schedule with interest rates between 3-5% – thus keeping it at a fair market value. Joel’s IRA received monthly payments, returning tax-deferred to his account, until his brother paid off the note a few years early. This investment provided a stable return for Joel’s IRA, but more importantly, he was able to help his brother with his IRA capital in the process.

“You saw it with the secondary market after the foreclosure crisis a few years ago,” Joel said. “People are able to work with – and help – other people while still earning money in the process.”

Joel’s point is well taken. As evidenced in the stories on this website, IRA investors have worked with many homeowners on the brink of losing their most valued asset – helping a family and their own retirement alike.

Turning a Run-Down Building into a Community Favorite

Joel’s IRA investments didn’t stop there. His investment activity would continue and, as fate would have it, another of life’s challenges spurred the opportunity.

Joel was in a serious car accident in the fall of 2012, suffering injuries that limited him from continuing his passion in the building industry. “I was feeling lost, even worthless, after my injury because I could no longer work like I used to,” he wrote in his entry.

“I needed a project to focus on that would let me use the skills I built over the years,” he stated in the interview. “Were in not for my IRA, I might still be in that state of mind.”

Earlier that year Joel’s IRA purchased a run-down, mixed-use building in the Buffalo area. After the accident, it became the conduit for the passion and expertise he gained over decades in the industry.

Initially, the building contained a residential apartment in the upper unit and a commercial space in the lower unit. In the 1960s the lower unit housed a popular soda jerk restaurant and many other businesses since. The entire building, and the lower unit in particular, had been neglected by the owner.

The owner was a woman who inherited the property but had no interest in using the building, or frankly, keeping up with expenses. Acquiring the property with his IRA allowed her to exit the property without losing it in foreclosure and provided the investment upside he was seeking.

“By the time I got it, the lower unit lost its commercial status, much to the dismay of the many residents in the area asking if I planned on returning the historic soda jerk restaurant to its previous glory,” Joel said.

Instead, Joel used his IRA to embark on a $99,000 renovation that would transform this two-unit building in his community.

His project completely gutted the lower level, replacing copper pipes found busted when he acquired the property. He also found personal growth, learning how to conduct – and then ordering – his first asbestos abatement after over 30 years in the building industry.

“As you can see in my account activity, my IRA was paying electricians, plumbers, contractors, asbestos companies – it really took a team effort to get this thing renovated.”

Fortunately, Joel was able to rent the top unit after a few minor repairs – providing rental income to his IRA that helped supplement the renovation of the lower unit. (All income and expenses related to the investment must flow to, and from, the IRA – learn more in Step 5 of the IRA Investment Process).

He even went to the town zoning board of appeals to determine how to convert the lower unit to a residential dwelling.

“I think they loved the idea. The town zoning board of appeals and the town inspectors seemed to be big fans of the renovation,” he said. As the zoning board requested, his IRA paid to have the blacktop parking space in front of the property removed and replaced with a new lawn, opening the door to be rezoned as a double-unit residential property.

Today, this previously run-down, vacant property is home to two families and is a welcome addition to the Buffalo community. Furthermore, the rental income is providing a healthy return to Joel’s IRA and the value of the property has more than doubled.

“When I first heard about Equity Trust Company a couple of decades ago, I didn’t believe any of this was possible. I wondered why I never heard about it,” Joel said.

Clearly, Joel’s family – and a community in Buffalo – are certainly glad he did.

Return to read more investor stories of impact.

The above case study is for educational purposes only. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. Information included in the above case study was provided by the investor and included with permission. Equity Trust Company does not independently verify all information provided by third parties.