Real Estate IRA Update: Maturing Charlotte Real Estate Market May Hold Opportunities for Self-Directed IRA Private Lending

The real estate market in Charlotte is going strong, though it seems to be reaching a mature stage for Self-Directed IRA investors.

That was the central theme of the Charlotte Commercial Forecast, a conference put on last week by the North Carolina Chapter of the CCIM Institute.

Among the trends discussed:

Population will rise in suburban areas, leading to much more condensing. Sleepy suburbs will gradually become more bustling, and they’ll attract more and more businesses like Whole Foods and Trader Joe’s, which will serve to accelerate the trend.

Prices should rise throughout the year, though we may see more unpredictability the further out we look. There is more uncertainty and more risk as we get towards the end of the year. Panelists cited a bruising presidential election year and the possibility of an interest rate hike.

They also cited potential economic turmoil in China, Russia and Latin America. But there’s always economic turmoil in China, Russia and Latin America. Nevertheless, these developments could affect the willingness of bankers and other lenders to put money to risk on real estate projects – making it more difficult to get financing as we head into 2017. This expectation prompted panelists to recommend getting deals done and financing in place sooner, rather than later.

If this environment does, in fact, come to pass, though, this may create more opportunities for certain Self-Directed IRA owners who engage in private lending. If traditional sources of finance pull back, then Self-Directed IRA hard money lenders can step into the gap, making 90-day to 3-year secured loans at very competitive interest rates against the properties being built, or cross-collateralized against nearly anything else the borrower may have to offer.

Mixed Use Development Will Increase

The commercial vs. residential district dichotomy will continue to blur. Most new developments are mixed use, with retail space, office buildings, restaurants, shortage facilities and other businesses increasingly mixed in with residential areas, and sometimes in the same buildings.

Lenders have been slow to loan on mixed use properties. It’s just trickier for large lenders to apply their strict underwriting criteria to them. Self-Directed IRA owners, however, have more freedom to pick and choose anything they lend on or purchase. If you’re lending using a Self-Directed IRA, you can apply a rational valuation to the property so you have a better idea what you can lend on it. You don’t have to abide by strict restrictions on lending criteria, like conforming lenders, banks and residential mortgage companies do.

Panelists included Mike Ortlip, senior vice president at Grandbridge Real Estate Capital; Mark Vitner, a senior economist for Wells Fargo, and Louis Stephens, managing director at JLL. You can read a more detailed account of the conference here.

American IRA, LLC specializes in working with Self-Directed IRA accounts, and has long experience in providing administrative and transaction services for people who own real estate IRAs or engage in private lending within their retirement accounts.

For more information, call us today at 866-7500-IRA(472). Or visit us on the Web at www.americanira.com.