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real estate in your ira
self directed ira for real estate

Real Estate In Your IRA: Can I Buy Wholesale Investment Properties In My IRA?

Yes! You can buy real estate with your IRA. So, why are most Americans still trusting their own retirements… IRAs… 401ks…ETFs… with the stock market?

The answer is, they don’t know any better and don’t know how.

Real estate investing is one of the best long-term wealth creating engines we have available to us as investors looking for a better return on our saving. Want evidence? Go and look back over the past few years and you can read all over Financial Times, Wall Street Journal, New York Times, and countless other trusted news and online publications and the many stories about big Wall Street companies jumping in and buying real estate rather than stocks… Go and google the big names like Blackstone buys 30,000 homes or large private equity companies raising billons of dollars to buy more single-family rental properties.

Why? The smart money knows they can get a better return.

Now, let’s dive into the good stuff of how to do it yourself…

The Self-Directed IRA for Real Estate

There’s something called a Self-Directed IRA. It’s not a new concept as these investment vehicles have been around for a while… just not very known. However, in the past several years, many investors have realized that their retirement savings and IRAs aren’t earning them adequate returns (sometimes even losing money). So, those people (maybe this is you) have started to look for other ways to earn higher and better returns with IRA investing.

Enter the “self-directed IRA”.

A self-directed IRA is a simple concept. It’s a retirement investment account that has the same tax benefits as a normal IRA… but, you have more flexibility in choosing and directing what you want your IRA to hold as investments.

Can I Buy Real Estate In My IRA?

Yes, and more! You can invest in…

  • Real estate (commercial, income generating rental property, rehabs, etc.)
  • Notes secured by mortgages (i.e. – private lending)
  • Property Tax liens and certificates
  • Limited partnerships (LP)
  • LLC companies
  • Sub-C corporations
  • Real estate options
  • Some forms of precious metals
  • … and the normal investments like stocks, mutual funds, and ETFs that your standard IRA can invest in

Basically, this opens it up so you can buy investment real estate like wholesale houses for sale with your IRA… or be a private money lender in real estate like the Gator Method proposed by Pace Morby. Or do a BRRRR method investment popularized by Bigger Pockets.

Real Estate In IRA: Are There Restrictions?

Yes, absolutely there are. There are restrictions on what you do with the real estate investment 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? What’s that?

Great questions.

How To Invest Your IRA In Real Estate: Enter The 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 investing carelessly by buying and selling speculative assets.

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

The custodian is usually the Self-Directed IRA company who you have your IRA with. They act as the “go-between” when you’re going to make an investment. Many IRA custodians have guidelines on what you can invest in, how long it will take for you to actually make your money work for you once they approve the investment… etc. Some custodians are more passive… and let you actually have a checkbook where you can write checks from your SD-IRA to buy real estate with your IRA.

You should do your homework and find the custodian that will allow you to invest your IRA in real estate. Here are a few that we know and trust:

Do some research to find the right fit for you and your financial and investing goals.

Some have more expensive fees to invest your IRA in real estate than others… and some give more flexibility on IRA real estate investing than others.

Questions To Ask A Self-Directed IRA Company Before Using Your IRA to Buy Real Estate

Before you sign on with an SD-IRA company… ask them a few key questions.

  1. 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.
  2. What’s the process for approving an investment? – Some companies can take up to 30 days+ to fund an investment after you send it in for approval. Some SD-IRAs 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.
  3. Are there any restrictions on what I can invest in? I want to invest in real estate 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.
  4. Is my retirement account eligible to “rollover” into an 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.
  5. 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. If you know you want to use your IRA to invest in real estate… get the ball rolling on getting it rolled over into an SD-IRA account asap. Some companies may take weeks or even over a month to have your account setup complete and ready to invest. 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 Off The Sidelines And Getting Your IRA Money Working For You

If you feel a self-directed IRA may be a great way for you to invest to buy real estate for a portion of your retirement savings (rather than the volatile gyrations of the stock market)… then dive in, 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. They have all kinds of real estate investing resources to learn more about self-directed IRAs to buy real estate investments with your IRA).

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: 469-213-2831. We offer discount wholesale houses in Dallas and surrounding areas like Dallas and Fort Worth to investors like you who often buy them and keep them as rental property investments. Also, for those qualified investors who want to explore private money lending… contact us and we’ll talk about how we work with private money lenders as well.

Happy investing! We’re here as a resource for you so don’t hesitate to connect with us anytime.

*** Disclaimer we are not financial advisors and by no means should this overview be meant to act as financial, tax, or legal advice. It’s for informational purposes only. Consult your own professional advisors before you make any financial choices like this.

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