IRA Real Estate Investment
In many markets property is at a 30-year low. Countless publications are writing about buying real estate over stocks. Because they know they get a better return in real estate. So, why are so many still risking their retirement savings?
Because many simply don’t know any better.
We are not financial advisors. We are not giving you financial, tax, or legal advice. It’s for informational purposes only. So please consult your own professional advisors.
The Self-Directed IRA for Real Estate
There’s something called a Self-Directed IRA. They’ve been around for a while. And many are realizing that their IRA’s aren’t performing satisfactorily. But many are getting better returns from IRA real estate investment.
Enter the “self-directed IRA”.
A self-directed IRA is simple. It’s a retirement account that has the same tax benefits as a normal IRA. But offers flexibility to what you invest in.
A Self Directed IRA allows you to invest in…
- IRA Real Estate Investment (commercial, income generating rental property, rehabs, etc.)
- Promissory Notes secured by mortgages (i.e. – private lending)
- Tax lien certificates
- Limited partnerships
- Sub-C corporations
- Real estate options
- Some types of precious metals
- … and the normal investments like stocks that your normal IRA can invest in
Basically, IRA investing 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?
Yes, there definitely are. There are restrictions on what you do with the IRA real estate if you buy and hold… what types of precious metals… and often times the “custodian” of the SDIRA has restrictions on what they think you can and should invest in.
A custodian? Whats that?
Self-Directed IRA Custodians
The US 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. But, at the same time… they don’t want people setting up these SD-IRAs and just doing whatever they want.
So there is a barrier they have to have in place. And that’s the custodian.
The custodian is usually the Self-Directed IRA company. An entity you have your IRA with. They act as the “go between” when you’re going to make an investment. Many custodians have guidelines on what you can invest in. How long it will take for you to profit… etc. Some custodians are more passive. They’ll actually have a checkbook you can write checks from.
You should do your homework and find the custodian that’s right for you. Here’s a few that we know and respect:
- Guidant Financial (expensive, but gives you true checkbook control, which is huge) – https://www.guidantfinancial.com
- Equity Trust – http://www.trustetc.com/
- Entrust – http://www.theentrustgroup.com/
Do some research to find the right fit for you.
Some have more expensive fees than others… and some give more flexibility than others.
What To Ask A Self-Directed IRA Company Before Doing An IRA Real Estate Investment?
Ready for an IRA Real Estate Investment? Before you sign on with a SD-IRA company… ask them a few key questions.
- What are your fees? – Fees can vary wildly. Some charge an annual fee based on the value of the account, some charge an annual fee, some charge large setup fees, etc. Find out what works for you. But, the idea is that by being able to invest in real estate with your IRA… you’ll more than make up for the fees you’re paying with your higher returns.
- What’s the process for approving an IRA Real Estate Investment? – Some companies can take up to 30 days+ to fund an investment after you send it in for approval. Some SD-IRA’s give you what’s called “true checkbook control”, where you actually get a checkbook where you can write checks from your IRA account… which gives you immediate access to the funds (i.e. – to close a deal quickly). Checkbook control usually is a tad more expensive to set up than an IRA account that requires all investments to go through the sometimes lengthy custodian approval process, but again… find out what’s best for you.
- Are there any restrictions on what I can invest in? I want to make a IRA real estate investment and make private loans. – Some SD-IRAs with larger more traditional companies like Schwab and SmithBarney put restrictions on what your account can invest in. Some don’t allow real estate… while others do. Just ask.
- Is my retirement account eligible to “roll over” into a SD-IRA? – Not all retirement accounts can be rolled over into a self-directed IRA. 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.
- How long will it take for my account to be up and running and have funds available for investment? – Some people wait way too long to get this process rolling. Do you know you want to make an IRA real estate investment? Get the ball rolling on a SD-IRA account asap. Some companies may take over a month to set your account up. So, 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 you need them.
Getting An IRA Real Estate Investment Working For You
A self-directed IRA real estate investment is a great option. If you think so? Then dive in! Take some time to educate yourself on the pros and cons. The SD-IRA links above are a great place to start. They have all kinds of resources to learn more about self-directed IRAs. And how you can use them to invest in real estate.
Do you have questions about working with an investor? Just connect w/ us through our contact form or call us anytime. We offer profitable investment properties in Southern California and So Cal. Also, for those qualified investors who want to explore private lending… contact us and we’ll talk about how we work with private lenders as well.
Happy investing! We’re here as a resource! So don’t hesitate to connect with us anytime.