Case Study: Raising Capital with Self-Directed IRAs Investment Sponsor Success Story
Written By: Daniel Gleich
Key Points
- Retirement accounts hold a widely untapped source of funds that Investment Sponsors can use to raise capital.
- With the flexibility of a Self-Directed IRA (SDRIA), your investors have the exciting opportunity to diversify their portfolio and potentially receive greater returns.
- Madison Trust is a highly rated, reliable, and knowledgeable Self-Directed IRA custodian with a dedicated Sponsors Team that can help streamline the movement of your investors’ retirement money into your fund.
In the dynamic world of real estate investing, securing funds efficiently can make all the difference. One widely untapped source of funds is retirement accounts. In fact, there is approximately $37.5 trillion held in IRAs and 401(k)s in the United States. Many investors are unaware that their retirement funds can be invested beyond Wall Street and into alternative investments such as real estate, precious metals, and more with a Self-Directed IRA (SDIRA).
A growing number of investors are seeking to diversify their portfolios beyond the generally volatile stock market. Investment Sponsors and fund managers can seize this opportunity to raise capital for their fund.
It is crucial to work with the right Self-Directed IRA custodian - one who is reliable, knowledgeable, and highly rated. Madison Trust, the industry’s highest rated Self-Directed IRA custodian, has proven to help Investment Sponsors raise over $850 million for their funds though a streamlined investment process. Madison Trust has also helped thousands of investors diversify their portfolios and receive tax-free (Self-Directed Roth IRA) or tax-deferred (Self-Directed Traditional IRA) growth.
Follow the case study below of a successful Investment Sponsor who worked with Madison Trust's Sponsors Team.
Case Study: Background
An Investment Sponsor is looking to raise capital to provide investors an opportunity to invest in multi-family properties. He has found a few properties in thriving areas and is looking to raise $4 million.
The Initial Hesitation
Initially, the Investment Sponsor reached out to investors on his own. However, several investors turned him down, stating their retirement money is tied up. Some investors mentioned that they cannot take funds out because of early distribution taxes and penalties. Others are generally limited by their brokerage houses to only invest in stocks and bonds.
Staying persistent and positive, the Investment Sponsor conducts research and discovers a retirement account called a Self-Directed IRA. He finds that this retirement account allows for the investment in alternative assets, such as a multi-family property, unlike a standard IRA typically.
While continuing his research, the Investment Sponsor becomes hesitant. He recalls hearing stories of investors struggling to find a trustworthy Self-Directed IRA custodian. Some had to deal with long call queues, while others faced high fees.
With the fast-paced nature and urgent deadlines of a real estate investment, the Investment Sponsor knew he needed a reliable and efficient SDIRA custodian. He is also seeking an SDIRA custodian with dedicated representatives that can help navigate the complexity of a real estate investment and resolve issues promptly.
The Solution: Enter Madison Trust's Sponsors Team
After much due diligence, the Investment Sponsor schedules a call with a member of the Madison Trust Sponsors Team. Together, they explore the essential factors that make an ideal custodian: a good industry reputation, exceptional customer service, and a wealth of self-directed investing experience and knowledge.
With these qualities as well as understanding the potential challenges of raising capital, Madison Trust steps in as the bridge between the Investment Sponsor and his investors. The Madison Trust Sponsors Team leverages Self-Directed IRAs to enhance real estate investments, setting a new standard to the industry. From the very first conversation, the Investment Sponsor saw the game-changing potential of working with the right Self-Directed IRA custodian.
A dedicated representative on Madison Trust’s Sponsors Team assisted throughout the entire investment process, from investor account setup to placing the investment. They fielded questions about the self-directed investing process and pre-approved investment documents for a hassle-free investment experience. They also offered helpful resources like account navigation phone calls. They also discussed the Checkbook IRA and Self-Directed IRA LLC account options.
Within an impressive two-week timeframe, Madison Trust onboarded 30 investors, raising nearly $5 million in capital - exceeding the Investment Sponsor’s expectations.
Conclusion: Let's Tie It All Up
The collaboration efforts between the Investment Sponsor and Madison Trust Sponsors Team made it possible to increase his AUM. They provided a way to access investors' widely untapped retirement funds and helped navigate the complexities of a real estate investment. Having industry expertise, reliable support, and transparent fees and processes can potentially lead to remarkable results. With Madison Trust’s Sponsors Team, the dream of seamless and successful real estate investment can become a reality.
Have Questions for Our Sponsors Team?
Schedule a call with one of our dedicated Sponsors Team Specialists to learn more about this exciting opportunity to raise capital.
