self directed ira for real estate

Investing In Real Estate With Your IRA

Most Americans trust their retirement accounts, whether it be an IRA or a 401k, in the stock market. There are other ways to invest using your retirement account.

The Self-Directed IRA and Real Estate

Self-Directed IRAs have existed for some time and in the past several years people have realized that their IRAs are not earning. People have started to look for other ways to earn better returns with their IRA. Enter the Self-Directed IRA.

A Self-Directed IRA is a retirement account that has the same tax benefits as a normal IRA but allows more flexibility in where it can be invested.

These investments can include, but are not limited to…

  • Real estate (commercial, income generating rental property, rehabs, etc.)
  • Promissory Notes secured by mortgages (i.e. private lending)
  • Tax lien certificates
  • Limited partnerships
  • LLC’s
  • Sub-C corporations
  • Real estate options
  • Some types of precious metals

What are the restrictions?

There are restrictions on what you do with the 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 will allow you to invest in.

Self-Directed IRA Custodians

Self Directed-IRAs allow investors take more control over their investments while at the same time getting tax benefits. To keep this freedom in check, there exists a custodian. The custodian is usually the Self-Directed IRA company through which you have your IRA. They act as the “go between” when you’re going to make an investment.  Many custodians have guidelines on what you can invest. Some custodians have more expensive fees while others may be less flexible. Find a custodian that is right for you. Here are a few that we know and respect:

What to Ask a Self-Directed IRA Company

Before signing on with a SD-IRA company, ask a few key questions.

  1. What are the fees? Fees can vary wildly. Some companies will charge an annual fee based on the value of the account while others will charge large setup fees.
  2. What is the process for approving an investment? Some companies can take up to thirty days to fund an investment after it is sent in for approval. Some SD-IRAs give you what’s called “true checkbook control,” giving 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 custodian approval process.
  3. Are there any restrictions on what I can invest in? 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 investments while others do.
  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.
  5. How long will it take for my account to have funds available for investment? If you know you want to use your IRA to invest in real estate, do not wait until you have found a good investment. Sometimes starting a Self-Directed IRA account can take over a month to set up.

Get your Money Working for You

If you feel that 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 (443) 863-9808. We offer discount investment properties in Baltimore and surrounding areas to investors