self directed ira for real estate

Investing In Real Estate With Your IRA

Right now, many real estate markets are at their lowest in 30 years. Big companies on Wall Street are buying real estate instead of stocks, as seen in articles from the Wall Street Journal, New York Times, and more. They know that real estate can offer better returns.

So, why do most Americans continue to trust their retirements—like IRAs and 401ks—to the stock market?

The answer is simple: they may not know there are better options.

Before we get into the details, please remember that we are not financial advisors. This guide is for informational purposes only. It’s important to talk to your own financial experts before making big decisions like this.

The Self-Directed IRA for Real Estate

A Self-Directed IRA has been around for a while, and many people have realized that their traditional IRAs aren’t making any money, or even losing value. So, they are looking for better ways to use their IRAs.

This is where the “self-directed IRA” comes in.

A self-directed IRA is a special type of retirement account that offers the same tax benefits as a regular IRA, but gives you more control over your investments.

You can invest in:

  • Real estate (like commercial properties, rental homes, flips, etc.)
  • Promissory Notes secured by mortgages (private lending)
  • Tax lien certificates
  • Limited partnerships
  • LLCs
  • Sub-C corporations
  • Real estate options
  • Some types of precious metals
  • Traditional investments like stocks

This means you can use your IRA to buy investment properties or lend money in real estate.

Are There Restrictions?

Yes, there are some restrictions. There are rules about what you can do with the real estate you buy, what types of precious metals you can hold, and your “custodian” may have guidelines about what you can invest in.

What is a custodian?

Good question!

Self-Directed IRA Custodians

The US Government created the SD-IRA option so that investors could have more control over their investments while still enjoying tax benefits. However, they want to prevent anyone from doing anything they want with these accounts.

This is why you need a custodian.

Your custodian is usually a Self-Directed IRA company that manages your IRA. They help you when you’re ready to invest. Different custodians have different rules about what you can invest in and how quickly you can access your funds. Some custodians allow you to have a checkbook, giving you immediate access to your money for investments.

It’s important to research and find the right custodian for your needs.

Some custodians charge higher fees, while others offer more flexibility.

What To Ask A Self-Directed IRA Company Before You Work With Them

Before choosing an SD-IRA company, make sure to ask these important questions:

  1. What are your fees? – Fees can vary a lot. Some charge annual fees based on your account value, while others have large setup fees. Make sure you understand the costs, but remember, investing in real estate with your IRA should help you earn more than the fees.
  2. What is the investment approval process? – Some companies take a long time to approve investments, while others give you quick access to your funds. Knowing how quickly you can invest is important, especially if you find a good deal.
  3. Are there investment restrictions? – Some traditional SD-IRA companies do not allow real estate investments, so it’s essential to ask.
  4. Can I rollover my retirement account into an SD-IRA? – Not all retirement accounts can be rolled over. Check with your financial advisor and the SD-IRA company to see what options you have.
  5. How long will it take to set up my account? – Some companies take a long time to get everything set up. If you know you want to invest in real estate, start the process right away so you’re ready when a good deal comes up.

Getting Off The Sidelines And Getting Your Money Working For You

If you think a self-directed IRA is a good way to invest some of your retirement savings into what you understand (instead of the uncertain stock market), take the time to learn more about SD-IRAs. There are many great resources online to help you understand how they work and how to invest in real estate.

If you have questions about working with us as an investor, feel free to reach out through our contact form or call us at:  (833) 913-1377.  We provide affordable investment properties in Los Angeles and nearby areas for investors like you. If you’re interested in private lending, contact us to find out how we collaborate with private lenders too.

Happy investing! We’re here to help, so don’t hesitate to reach out anytime.