Besides the cabins that are being updated for rental, the town’s 24-room hotel is being converted into 12 bridal suites. Keddie’s other lodge will either remain as a hotel or be transformed into a convention center.
The investors are also working on reopening the town’s lone restaurant and adding actual train cars to it as an homage to the town’s beginnings. A restaurateur from Sacramento has donated about $250,000 worth of items from eateries he’s closed, including everything from appliances to fixtures.
In addition, a wedding chapel, gift shop, theater and coffee shop are in the works. Away from the town center, an amphitheatre is being planned for concerts and old movie screenings.
“It’s a fun project, and as you know, it’s all IRA money, so it has to build on itself,” John explains. “I can’t put anything into it. So that’s what it’s doing. The people we put into the town are working on it; they’re building it themselves. From the rent that they pay us, we buy materials they need to continue the rehab. So it’s working on itself; it’s building itself up.”
The rebuilding project has gotten favorable response from the county officials and anyone else with clout that John has approached.
“We’ve been having phenomenal support from the town,” he says. “These are the people who could say ‘No, you can’t do that.’ But they’re not; they’re helping us. They want it to come back just as much as we do.”
Once it’s near the point of opening for business, the town may be sold to other self-directed investors, which John predicts will produce a healthy profit for his and the other investors’ IRAs.
Winning with smaller investments, too
John self-directs his funds into other profitable investments as well, including buying discounted mortgages and acting as a “private bank” by modifying payments for struggling homeowners.
John benefits because profits generated from the loan go right back into his IRA – tax-free. The homeowners benefit because they have more manageable terms than they would through a traditional bank.
Whether it’s a house or a town, John is building his nest egg on his terms and keeping every cent he makes.
“I like to create win-win situations,” he says.
1Can my IRA purchase real estate that I currently own?
No. This is considered a prohibited transaction (see IRC 4975). You may not purchase a property, or interest in a property, that’s currently owned by a disqualified person, which includes yourself.
2Am I restricted to only purchasing residential property with my IRA?
You are not limited to residential real estate. Your IRA can hold various investment properties such as commercial buildings, vacant land, condominiums, mobile homes and apartment buildings, in addition to residential property.
Case studies are provided for illustrative 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.
