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How to Invest in Real Estate Using a Self-Directed IRA

09 October, 2018

How to Invest in Real Estate Using a Self-Directed IRA

Stocks, bonds and mutual funds might have been the way most people traditionally invested money for retirement, but ongoing stock market volatility has caused more people to invest in real estate using a Self-Directed IRA account. Read on to learn how easy it is to use funds from your retirement account to buy income producing investment property and discover why this smart alternative investment strategy is steadily gaining popularity among investors of all ages, backgrounds and income levels.

“Real estate is REAL; it is tangible, finite and has historically been a multigenerational builder of wealth”, wrote Kiplinger. Rather than an alternative retirement investment, real estate can be a key vehicle for growing one’s IRA account”. 

Historically, banks, brokerage firms and even insurance companies worldwide have always controlled the type of investments that are presented to most 401(k) and IRA account holders. Typically, they offer traditional investment options, like publicly traded stocks, bonds and mutual funds, but with the increase in access to technology, today’s investors can research and make sound investment decisions without relying solely on financial advisors, including buying real estate with an IRA account. 

Why Invest in Real Estate?

Why Invest in Real Estate?

First of all, ask yourself if you want your entire retirement in the hands of Wall Street money managers? I’m going to assume you answered “No”, considering the dismal long-term returns and ongoing stock market volatility investors have always faced. Although stocks and bonds definitely have their place in a well-balanced portfolio, it’s also important to diversify with proven, reliable income producing investments like real estate. By investing in real estate with a Self-Directed IRA, you still get all the benefits that come with having a retirement account, without the constant worry of following how the stock market is doing. 

  • Tax Deferred Gains
  • Hedge Against Inflation
  • Secure, Proven Ongoing Income
  • More Control Over Your Assets
  • Protection from Stock Market Volatility
  • Reliable Return on Investment 

“Real estate provides diversification and the potential for better returns, more quickly, than traditional investments”, wrote Kiplingers.

Also Read:

Stop Letting Stock Market Volatility Deplete Your Investment Income

How to Buy Real Estate with IRA Accounts to Generate Retirement Income 

Income Producing Real Estate Investment Outperforms Stocks and Bonds

Here’s How It Works the Self-Directed IRA

Here’s How It Works the Self-Directed IRA:

First, you will need to transfer funds from your existing traditional IRA, Roth IRA account, 401(k) or other retirement account to a custodian that specializes in Self-Directed IRAs, because most traditional brokerage firms won’t move funds to non-traditional investments like real estate. Make sure you maintain excellent records and fully understand each investment property’s realistic opportunity and risks. Two trusted custodians who are able to handle Self-Directed IRAs include Provident and IRA Services Trust Company. 

Rules you need to know before investing directly in real estate using funds from a Self-Directed IRA:

  • No Self-Dealing (Selling or Buying to or From a Related Party)
  • No Hands-On Improvements Permitted (Use a Professional Property Manager)
  • Property Must Be Used for Investment Purposes Only
  • If Sold, All Proceeds Must Go Directly Back into the IRA Account

Do you have questions about buying real estate with an IRA? Post them in the comments!

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Topics: Real Estate IRA Alternative Investments Stock Market Learn How