Benefits of Alternative Investments

Many investors still are not aware that they can invest in alternative investments. Anything that does not fall within the definition of traditional stock and bonds can be loosely defined as alternative investments. These types of investments have many benefits related to them.

  1. Mitigate Market Volatility

Alternative investments can cushion a portfolio from market volatility when the investments are in asset classes that feature low correlation to the markets.

  1. Diversification

“Do not put all of your eggs in one basket” has been saying for decades. Investing in alternative assets allows the investor to spread the risk out. With all of the alternative investment options available, investors have a wide range of choices. Please visit to view popular alternative investment options.

  1. Returns

If investors are willing to risk a little more on certain alternative investments, they may be rewarded with higher returns. Other investments, such as real estate, can provide a relatively steady income stream for many years to come.

  1. New Opportunities

Not every investor is comfortable in their knowledge of the stock market, which can make investing more difficult. However, by investing in alternative assets, it opens up new exposures and opportunities where they may have more interest and knowledge. Our clients have the opportunity to set the terms of their returns or dividends by choosing their investments.

  1. Lower Transaction Costs

Short-term investments can require high amounts of turnover, which can lead to high transaction costs. While alternative investments may have a higher upfront fee compared to short-term traditional investments, they will not have as high of a turnover rate, keeping transaction costs lower. Depending on your expertise Mountain West IRA has 2 different fee schedules to keep costs as low as possible.

Talk to Mountain West IRA about the alternative investments available to investors. Some of the alternative investment options include real estate, precious metals, private placements, and more.

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Using a Self-Directed IRA to Purchase Property

When investing in real estate with a self-directed IRA, there are a few rules the account holder needs to be aware of so they don’t get penalized. Here are five rules pertaining to purchasing real estate through an IRA:

  1. Cannot be Owned or Rented by Disqualified Persons

An IRA cannot purchase a property already owned by the account holder. It is also prohibited from purchasing property or selling property to disqualified persons. A Disqualified Persons cannot rent the property from the IRA, this created a prohibited transaction. Visit the Mountain West IRA website to learn more about who is considered a disqualified person.

  1. No Indirect Benefits

The account owner cannot use the property the IRA has purchased for a vacation home or as an office space for themselves. Investments are for benefits at a later date, not right now. If the property in some way benefits the account holder or a disqualified person, that is considered an “indirect benefit.”

  1. Titles

Account holders need to view their IRA as a separate entity. As such, investments are titled in the name of the IRA, not the investor themselves. Properly titled investments make the transaction clear and easy to follow when purchasing real estate in an IRA.

  1. No Out-of-Pocket Expenses

Every expense related to the property in question must be paid for through the IRA. This includes improvements, taxes, home owner’s association fees, maintenance, and more. Paying for such items outside of the IRA could lead to penalties.

  1. Buying Real Estate

With a self-directed IRA, the investor does not have to purchase the property outright for the full amount. Options like partnering with others or using a mortgage are also available.

For more details on the process of investing in real estate with a self-directed IRA, visit the Mountain West IRA website.

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Investing in Private Placement in your IRA

Self-directed IRAs allow for alternative investment options not held within the stock market. Mountain West IRA allows for you to invest in Private Placements. These are either private stocks or equity within a company.  Your self-directed IRA will obtain the benefits of tax-deferred or tax-free earnings from any potential dividends.

Client Example 1: Company XYZ will allow for investors to purchase any number of private stock shares and dividends will be paid out according to contract. Mountain West IRA will require a Subscription Agreement, Certificate of Good Standing, and an Operating Agreement in addition to our investment documentation. These are private companies; you will want to do your due diligence as with any investment in a self-directed IRA.

Client Example 2: Company ABC requires a minimum investment amount of $25,000 and dividends are paid on a quarterly basis. Clients receive their dividend in their IRA tax-free or tax-deferred.  Some clients choose to reinvest their dividends into the same or other Private Placements, while others find different alternative assets to diversify their portfolio.

Please visit for more information on common self-directed IRA investment choices.  Our staff is happy to assist you with any questions that you may have regarding self-directed IRAs.

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The Basics of Mortgage Notes

To diversify their portfolio, investors sometimes need to think outside the box. This means considering alternative investments such as mortgage notes. Investing in mortgage notes allows investors to get involved in the real estate investing world without flipping houses or vetting tenants for rentals.

When an investor uses their self-directed IRA to invest in a mortgage-backed note, the IRA acts like a bank by loaning money to the borrower. The IRA then receives a note and deed of trust. According to the terms of the mortgage, the borrower pays back the principal and/or interest to the IRA each month until the loan is satisfied. Once payments have been completed, the borrower owns the property outright.

The deed of trust provides protection for the investor in the event of default, putting a lien against the property so the mortgage holder can foreclose and take control of the property if necessary. If this happens, the IRA will own the property instead of the mortgage. The investor is then free to do with the property as they see fit.

To invest in a mortgage note, the investor needs to work with a title company or real estate broker. They will help to gather all of the necessary forms for the investor to sign and send to Mountain West IRA. As the custodian, Mountain West IRA will then review the paperwork before approving the investment to make sure everything is in order.

Mortgage notes do not require as much personal involvement as directly owning a piece of real estate, making them a favorable investment to many investors. For those interested in investing in mortgage notes with their self-directed IRA, visit the Mountain West IRA website to learn more.

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Benefits of Rental Properties

Real estate is a tangible investment, which is one of the main reasons it has become a popular choice for IRA accounts. Unlike stocks and bonds, investors can actually visit their properties. Rental properties are a great way to diversify a portfolio and provide the ability to earn measurable income for the investor.

Here are some benefits to investing in a rental property with a self-directed IRA:

  • Income from Renters

The main benefit of rental properties is the direct income from renters. However, this is only true if the property is occupied. With a house, this can be more difficult, because there is only one renter and the property may remain vacant during transitions between renters. Apartment complexes, duplexes and other multifamily properties have more than one renter and therefore generally provide a more balanced income stream.

  • Income from Property Value Growth

Over time, property value traditionally increases, even with no changes made to the property itself. This depends heavily on the location of the rental property as some areas increase or decrease in value more quickly than others.

  • Sweat Equity

When a property is well maintained and upgraded when necessary, it will add additional value. This allows the owner to charge more for rent and sell if for a larger profit later, if they choose. Home improvement projects such as landscaping, repainting, and upgraded appliances can significantly increase the property value and attract potential renters.

  • Property Management

For investors who do not want to personally manage the property, a property manager can be hired to take care of finding and evaluating renters and ongoing maintenance. Many investors find having a property manager relieves the stress and day-to-day activities from the owner.

For investors interested in investing in rental properties with an IRA, contact Mountain West IRA for more information. Real estate is just one of the many investment opportunities available to Mountain West IRA account holders.

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The Basics of Limited Partnerships

In a partnership, which is a type of unincorporated business organization, multiple individuals, called general partners, manage the business and are equally liable to the debts of the business. Investors can invest their Self-Directed IRA in these businesses. These investors are then called a limited partners. They simply invest in the business but are not involved in management.
Limited partnerships are an investment option for Individual Retirement Account holders with Mountain West IRA. The partnership does not pay income taxes, but the individual partners have to report their share of business profits or losses. This means the investment is subject to Unrelated Business Income Tax. However, this is only if the IRA earns more than $1,000 in unrelated business income.
Although the investment might require the IRA to pay taxes, it requires little involvement by the owner since they are not involved in management. This is one of the benefits of this type of private placement investment. One important advantage when investing as a limited partner is the liability limitation. If the business goes bankrupt or is sued, the investor is only responsible for their own investment and not the debts of the business. General partners have a much greater liability.
Some rules regarding partnership investment with a self-directed IRA include:
• The partnership agreement must permit an individual retirement account or a qualified plan to be a partner
• The partnership must comply with the appropriate state law, have a determinate life, and be assignable
• The partnership subscription agreement must be signed by the investor as having been read and approved, and will be executed by Mountain West IRA on their behalf
Research and learn about Unrelated Business Income Tax and the company itself before making any investing decisions related to limited partnerships. Visit the Mountain West IRA website to learn more about private placements such as limited partnerships.

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