$96K Profit from One Investment: Power of Smart Research

Real estate investment strategies can vary widely, and some approaches can lead to unexpected and noteworthy outcomes. One such example is Brad, a real estate investor from Indianapolis, who turned a modest $823 investment into over $97,000 in just a few years—all tax-free in his Roth IRA.

The beginning: A small investment with big potential

Brad’s journey began with thorough research and strategic planning. He was particularly interested in investing in tax liens, recognizing that they could be a powerful way to grow his Roth IRA with a relatively small initial outlay. After conducting due diligence on various markets around Indianapolis, he identified a promising opportunity: a half-acre parcel located near a major hospital.

The area was clearly in the path of progress, with new office complexes being developed to support the hospital system. Brad saw that the parcel, adjacent to a medical office building, had significant potential. He hypothesized that the land would eventually be needed for additional parking by the medical office developer—a bet that would soon pay off handsomely.

The Purchase: Securing the tax lien

Brad attended a tax lien auction, where he successfully bid $823 on the tax lien for the parcel. This amount was transferred directly from his Roth IRA to the county to secure the lien. At this point, the tax lien certificate was held by Equity Trust Company as custodian for Brad’s Roth IRA.

Securing the tax lien was only the first step. Over the next two to three years, Brad had to go through a legal process known as “quieting the title,” which would allow his Roth IRA to gain full ownership of the property. This process incurred additional costs, including legal fees, bringing the total investment to around $3,000.

The payoff: Turning a lien into a lucrative sale

Once the title was secured, Brad’s Roth IRA officially owned the half-acre parcel. Understanding the value of his asset, Brad engaged in multiple negotiations with the medical office developer, who initially offered a lower price for the land. However, Brad’s patience and confidence in his investment paid off when the developer, needing the land for additional parking, offered $97,500 for the property.

The entire $97,500 was deposited back into Brad’s Roth IRA, completely tax-free. After deducting the $3,000 all-in investment, Brad’s net profit was over $94,000. This was not only a significant return on investment but also a powerful demonstration of how smart research and strategic planning can turn a small amount of capital into a substantial profit.

Lessons learned: The power of patience and research

Brad’s story illustrates several key lessons for real estate investors, especially those using self-directed IRAs:

• Thorough research is crucial: Brad’s success was largely due to his diligent research. He identified a property in a high-growth area and correctly predicted its future value to developers.
• Patience pays off: Rather than accepting the first offer, Brad held out for a better deal. His patience allowed him to maximize his profit.
• Leverage the power of tax-advantaged accounts: By using a Roth IRA, Brad was able to grow his investment tax-free, significantly increasing his net profit.
• Small investments can lead to big returns: Brad’s initial investment was modest, but with the right strategy, it grew exponentially. This is a reminder that you don’t need a large amount of capital to make a significant impact on your financial future.

Expanding your horizons: Beyond tax liens

While Brad’s story focuses on tax lien investing, it’s worth noting that there are many ways to grow a Roth IRA. From private money lending to outright property purchases, the options are vast. Brad’s experience is just one example of how a small amount of money, when wisely invested, can lead to substantial wealth accumulation.

Special self-directed IRA offer for National REIA members only

In addition, Equity Trust Company is a national sponsor of the National Real Estate Investor Association (NREIA) and is offering NREIA members and its affiliated chapter members a special introductory self-directed account offer.

NREIA members can open an Equity Trust account for a discounted rate of $99 and receive bonuses worth $720 or more:

• National REIA GOLD Level membership (includes priority processing and an experienced client service team dedicated to members) for one year
• Digital download of #1 ranked book on Amazon - Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing
• More exclusive wealth-building education

John Bowens, CISP, is Director, Head of Education and Investor Success at Equity Trust Company. Visit www.TrustETC.com for more information.