Self-Directed IRA

A wide range of investors are able to invest in mortgage funds. Depending on the fund, membership can be purchased by individuals, trusts, corporations, self-directed IRA’s, SEP IRA’s, pension plans, LLCs, etc. Investors must meet certain minimum standards of income and/or net worth for most mortgage funds and many mortgage funds require investors to be "accredited."

Investors can invest with as little as $50,000 in our Mortgage REIT, RTC VI. Additionally, we offer more specialized investment opportunities for qualified investors.

RTC VI has some leverage (but also good returns). Here are a few notes related to UBIT you might want to run by your tax professional:

• For RTC VI in 2020, the debt-related earnings were approximately 15% and the net yield to investors was 9.23%
• If $100,000 was invested for all of 2020, it would have earned approx. $9,230 before any tax. Of that, approx 15% is UBIT for about $1,384.50 in total. The $1,384.50 would be subject to tax at 15%, in that first UBIT tax bracket, for approx. $208 in taxes.  So $9,230 - $208 = $9,022 on the $100,000 investment or about 9% net of UBIT assuming that bracket for 2020 for RTC VI, before other income taxes.
• Alternatively, if $50,000 was invested for all of 2020, it would have earned approx. $4,615 before any tax. Of that, approx 15% is UBIT for about $692.25 in total.  However, as this UBIT amount is less than $1,000 and assuming this is the taxpayer's IRA's only UBIT, this is below the taxation threshold, so the tax wouldn't be due. So $4,615 - 0 = $4,615 on the $50,000 investment  or about 9.23% for 2020 for RTC VI, before other income taxes.
• Please double-check this with your Accountant as your circumstances may vary and the rules may have been changed since publication.

UBIT is "Unrelated Business Income Tax".  UBIT applies if ALL of the following are true:

• Income is derived from “trade or business” activity (i.e., sale of goods and services).
• Business activity is not substantially related to exempt status.
• Business is regularly carried on by organization.

• Limited Partnerships (LPs),
• Limited Liability Companies (LLCs), and
• Any investment that incurs debt financing and/or is involved in an unrelated business.

Mortgage funds offer security, convenience and usually, stable, predictable income. They are not FDIC insured like traditional bank accounts, but they generally have much higher yields. They are usually safer than real estate equity investments since mortgages are in a “senior” position versus real estate equity. The value of the underlying mortgages and their payment history over time is usually less volatile than the stock market.