self directed ira for real estate

Investing In Real Estate With Your IRA

Remember, we are not financial advisors and by no means should this guide be meant to act as financial, tax, or legal advice. This is for informational purposes only. Consult your own professional advisors before you make any financial choices.

The Self-Directed IRA for Real Estate

Self-Directed IRAs have been around for a some time but many notice that they are not earning enough money to satisfy their retirement needs. People have started to look for other ways to earn better returns with that same IRA. This is where a self-directed IRA could be beneficial.

A self-directed IRA is simple. It is a retirement account that has the same tax benefits as a normal IRA but allows more flexibility in deciding where to invest.

You can invest in…

  • Real estate
  • Promissory Notes secured by mortgages
  • Tax lien certificates
  • Limited partnerships
  • LLC’s
  • Sub-C corporations
  • Real estate options
  • Some types of precious metals

Are There Restrictions?

There are restrictions on what is done with real estate, what types of precious metals, and often times the “custodian” of the SD-IRA has restrictions on where you can invest.

Self-Directed IRA Custodians

The US Government created SD-IRAs to help investors take more control over their investments while at the same time still getting the tax benefits. Custodians were put in place to regulate the SD-IRA.

The custodian is usually the Self-Directed IRA company that you use. They act as the “go between” when you’re going to make an investment. Many custodians have guidelines on various things such as what you can invest in and how long it will take for you to actually make your money work for you once they approve the investment. All custodians are different. Some will be more passive and allow you more control. Find a custodian that is a good fit for you. Here are a few that we know and respect:

What to ask When Looking for a Self-Directed IRA Company

Before you sign on with a 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 keep in mind that your higher returns will allow you to pay higher fees.
  2. What is 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” which allows you to write checks from your IRA account and gives you immediate access to the funds. Checkbook control is usually more expensive to set up than an IRA account that requires all investments to go through the sometimes lengthy custodian approval process.
  3. Are there any restrictions on where I can invest? 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 “roll over” into a SD-IRA? – Not all retirement accounts can be rolled over into a self-directed IRA.  Most IRAs and even some 401(k)s can be but its good to check with the representative at the SD-IRA company you are working with.
  5. How long will it take for my account to 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 it is best to get started on getting it rolled over into a SD-IRA account as soon as possible. Some companies may take weeks or even over a month to have your account setup complete and ready to invest. Don’t wait until you’ve found a great real estate deal to get started.

Getting Off The Sidelines And Getting Your Money Working For You

If you feel a self-directed IRA may be a great way for you to invest a portion of your retirement, take some time to educate yourself on the pros and cons of a SD-IRA. If you have any questions on how you can work with us as an investor, connect with us through our contact form or call us anytime at (813) 603-7103. We offer discount investment properties in Tampa and surrounding areas.