Purchasing a property with IRA $ in Bloomfield, NM.

7 Replies

Hi, Everyone,

I'm currently looking at picking up a rental property in San Juan County, New Mexico using a 40% down IRA Loan. My report can be found here:

https://www.biggerpockets.com/calculators/shared/233005/5876b20e-b045-45dd-ad7f-a7252c05f2d4

Basically, it looks like I would "make" about $20/month and about a 4% rate of return. The guy who is helping me find a property, who also invests in the area, says that I should take depreciation into account and that my assumptions are too conservative. 1) I'm right to assume that if I buy this property with IRA dollars I can't take depreciation AND the tax deferment, right? 2) Does anyone else invest in Bloomfield, NM, Aztec, NM, Farmington, NM, San Juan County, Northwest New Mexico or a similar area and can tell me if my reserves are too conservative? Thank you!

Updated over 3 years ago

Sorry for the confusion. The property is in Cortex, Co, not San Juan County

Hi Eric

I have two rental s in Cortez and I think you might be shooting a little low with rent. I get 600 a month for a dumpy 2-2 mobile ( it's my kids so they get a break) and 1000 for a 3/2 mobile on the edge of town by hospital . Rents are surprisingly high due to supply. If the house is nice I would shoot for at least 900 and think about how to add a br or bath to get even more

It also seems like there are better values in cortez

Like this
https://m.trulia.com/property/3261710926-524-E-Arbecam-Ave-Cortez-CO-81321

And this
http://www.realtor.com/realestateandhomes-detail/925-Brookside-Dr_Cortez_CO_81321_M29598-87884

And this, which is the only property in Cortez I would be interested in right now

https://m.trulia.com/property/1044893509-704-San-Juan-Dr-Cortez-CO-81321

I just re read your first sentence (sorry about that🙄).

If you are looking in San Juan county , there are a ton of opportunities but rents vary wildly so be careful. A few areas to stay away from include Crouch Mesa (major water supply problems) and the rougher neighborhood s in Farmington.
If you are patient there are regular terrific bank owned properties and more to come (we call it the oil and gas bust). I have 2 rentals on the west side of Farmington and am always looking for my next acquisition.

I have been looking at properties here for about three years and the market seems very stable and I doubt it will ever be much of an appreciation play. Need to get property at the right price

@Eric Neal , you are correct, when you buy investment property with an IRA there is no depreciation deduction. Since the income belongs to an IRA it's not taxable so there is no income to use the depreciation to offset against. Also keep in mind that with an IRA you have to use non-recourse financing, conventional financing is not allowed because as disqualified person you are not allowed to provide personal guarantee. 

And on a side note you should never factor in depreciation to decide if this is a good investment. Depreciation is a bonus.