self directed ira for real estate

Investing In Real Estate With Your IRA

As you know, real estate is probably the best investment you can ever make, over the short term and long term. Recently all over Wall Street Journal, New York Times, and countless other publications there have been stories about big Wall Street companies or “hedgefunds” jumping in and buying real estate rather than stocks… because they know they can get a better return, especially with the rate of inflation we are seeing right now in the US Economy.

So, why are most Americans still trusting their own retirements… IRAs… 401ks… with the stock market?

The answer is, they don’t know any better. The traditional schooling system has taught us to get a W2 job and invest in a 401K, which gets taxed over 50% over your life…

Before we dive into the good stuff… remember, we are not financial advisors and by no means should this guide be meant to act as financial, tax, or legal advice. It’s just our personal opinion and what we have seen work from countless millionaire investors.

Make sure to seek advice from your financial advisor, or self educate as much as possible before making any substantial financial decisions.

The Self-Directed IRA for Real Estate

There’s something called a Self-Directed IRA. They’ve been around for a long time… And now many people are noticing that the stock market is not producing the returns they are hoping for (sometimes even losing money). So, those people (maybe this is you) have started to look for other ways to earn better returns with that same IRA that can also provide positive cashflow every month to provide them with some financial and time freedom.

Self-Directed IRA

A self-directed IRA is simple. It’s a retirement account that has the same tax benefits as a regular IRA… but, you have a ton more flexibility and control in deciding what you want your IRA to be invested in. If you are anything like us, you want as much control over your hard earned money as possible and do not want to leave it in the hands of a “financial advisor” who gets paid regardless if you are making money or not…

You can invest in…

  • Real estate (commercial, income generating rental property, rehabs, etc.)
  • Promissory Notes secured by mortgages i.e. – private lending (this is our favorite for investors that do not have the time or resources to handle finding properties and rehabbing them)
  • Tax lien certificates – (very interesting concept)
  • Limited partnerships
  • LLC’s
  • Real estate options
  • Inflation proof assets (gold, silver, bitcoin)
  • … and the normal investments like stocks that your financial advisor can handle for you.

Basically, this opens it up so you can buy investment real estate with your IRA… or be a private lender in real estate.

Are There Restrictions?

Of course! We live in the USA where restrictions run deep in our history. There are restrictions on what you do with the real estate if you wish to hold the asset over a period of years… what types of precious metals you can buy… and often times the “custodian” of the SDIRA has restrictions on what they think you can and should invest in. BS in our opinion!

Are you wondering what custodian mean?

Self-Directed IRA Custodians

The US Federal Government created the SD-IRA loophole to help investors take more control over their investments while at the same time still getting the tax benefits everyone longs for. At the same time… they don’t want people setting up these SD-IRAs and just doing whatever they want, because they have to make money too, right?

So there is a barrier that they have in place… and that’s the custodian…

The custodian is usually the Self-Directed IRA company or broker who you have your IRA with. They act as the “go-between” when you’re going to make an investment and make sure everything goes as planned. Many custodians have guidelines and suggestions on what you can invest in, the expected timeframe for your investment to start making you money once they approve the investment… etc. Some custodians are more lackadaisical… and provide you a checkbook where you can write checks from your SD-IRA to make investments.

You should do your research and find the custodian that’s right for you. Here are a few that we know and respect:

Don’t take our word for it though! Do your research.

Some have more expensive fees than others… and some give more flexibility than others. It all depends on what you are looking for and it is your job to decide which one makes the most sense for you.

So, What Should You Ask a Self-Directed IRA Company Before You Work With Them?

Before you sign on with an SD-IRA company… You need to make sure you know what you are getting yourself into…

  1. Fees? – Fees can vary a lot. Some may charge an annual fee based on the value of the account, some charge large setup fees, etc. Find out what is in your benefit. The idea is that by being able to invest in real estate with your IRA… the idea is you’ll more than make up for the fees you’re paying with your higher returns.
  2. What’s the process for approving an investment? – Some companies can take 30 days or more to fund and approve an investment after you send it in for approval. Some SD-IRAs give you what’s called “true checkbook control”, where you can get a checkbook where you can write checks from your IRA account, just like we mentioned above… This gives you access to the funds to be able to close a deal quickly. Having control over your checkbook is usually more expensive to set up than an IRA account that requires all investments to go through the lengthy custodian approval process, which is why it is important to find out what’s best for you.
  3. Are there any restrictions on what I can invest in? – If you want to invest in real estate and make private loans, some SD-IRAs with larger, more traditional companies like Schwab and SmithBarney, they put restrictions on what your account can invest in. Some don’t allow real estate… while others do. Make sure you find one that does allow real estate investment.
  4. Is my retirement account eligible to “rollover” into an SD-IRA? – Not all available retirement accounts can be rolled over into a self-directed IRA. With that being said, most IRAs can be… and even some 401(k)s can be. Just ask your financial advisor and ask the representative at the SD-IRA company you’re working with to confirm all of the details before you make any decisions.
  5. How long will it take for my account to be up and running and have funds available for investment? – Some people wait WAAAYYYY too long to get this process started. If you know you want to use your IRA to invest in real estate… get started on learning the process to roll over your funds into an SD-IRA account ASAP. Some companies may take weeks or even over a month to have your account setup completely and ready to invest, so the sooner the better.  Don’t wait until you’ve found a great real estate deal to get started… get started today so your funds are ready to invest when the right opportunity comes.

Get Off The Sidelines And Get Your Money Working For You!

If you think a self-directed IRA is going to be a great way for you to invest a portion of your retirement in things you know (rather than the unpredictable stock market)… then dive in and take some time to educate yourself on the pros and cons of a SD-IRA (those websites I put above are a great place to start.)

If you have any questions on how you can work with us as an investor… just connect w/ us through our contact form or call us anytime at: +1 (833) 457-1476. We offer discount investment properties in  and surrounding areas to investors like yourself who buy them and keep them as rentals or fix and flips them. Also, for those qualified investors who want to explore private lending… contact us and we’ll talk about how you can get your money working for you with private lending (often at 12% guaranteed returns).

Do not hesitate to reach out to us at any time.