self directed ira for real estate

Investing In Real Estate With Your IRA

We are all aware of the crisis that has hit the real estate markets. In many areas it is at a 30 year low. However, we have also heard of many stories from the Wall Street Journal, New York Times and numerous other publications about giant Wall Street companies buying real estate properties rather than investing in the stock market. Why, you must wonder? Because these investors know that they will get a better profit in a few years.

So why, most of us wonder, are most US citizens still investing their own retirements such as their IRAs, 401ks with the stock market?

It is because many individuals are not aware that the situation in the real estate market can turn any day.

Please note: we are not financial advisors and any information provided in this article is for the sole purpose of informing the readers. It should never be taken as a financial, legal, or tax advice. If you want assistance in making financial choices, please contact a professional financial advisor.

The Self-Directed IRA for Real Estate

Many of you may not be aware of the Self-directed IRA. It has been around for a while and in the past few years many individuals have realized that their IRA’s are not giving them as much profit as they expected. It is sometimes even costing them money from their own pocket. Many individuals have started looking for other means to earn better profits with the same IRA by using “self-directed IRA”.

The process of self-directed IRA is simple. It is a retirement account that offers the same tax benefits as a normal IRA. However, the difference between the two is that the individuals are free to decide how they want to invest their IRA.

A self-directed IRA can be invested in the following:

  • Real estate properties such as commercial, rehabs, rental homes, etc.
  • Promissory notes which are secured by mortgages such as private lending.
  • Tax lien certificates.
  • LLC’s.
  • Sub-corporations.
  • Real estate options.
  • Limited partnerships.
  • Assorted types of precious metals.
  • Stock market.

With self-dedicated IRA, the users have more options to choose from.  They can purchase real estate properties for investment purpose or become a private lender in real estate. The choice is up to them.

Does The Self-Directed IRA Come With Any Restrictions?

Yes of course there are some restrictions that are applied when investing with self-directed IRA. There are set boundaries on what you do with the real estate properties purchased through IRA, the types of precious metals that you can secure, and sometimes the “custodian” of the self-directed IRA controls what you should invest in.

What’s a “custodian”?

Great question.

Self-Directed IRA Custodians

The self-directed IRA came into existence to help the investor’s gain more control over their investment options as well as get tax benefits in return. However, the US government didn’t want people using the self-directed IRA’s illegitimately. This is why they created custodians – to manage the system.

The custodian is usually the self-directed IRA Company that you have your IRA with. They act as the mutual party when you make an investment. However, many custodians have strict rules and regulations set in place on what you can invest in, the duration of the approval process, and many other things. There are some custodians, though who issue you a checkbook which you can use to write checks from your self-directed IRA to make investments.

Those looking for a self-directed IRA company should do a thorough research to find the custodian that meets your requirements. Here are some helpful resources:

Check out the websites above and select the IRA Company that works best for you. Some of them ask for hefty fees while others provide their clients with more flexibility. Chose the one that you find right!

What To Ask A Self-Directed IRA Company Before You Work With Them

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

  • Q 1 – What are your fees? The fees for a self-dedicated IRA company vary widely. Some companies charge annually while others charge their clients for setup of the account. Look for a company that allows you to invest in real estate using your IRA. This will increase your likelihood of making more profit.
  • Q 2 – What is the procedure like for investment approval? This also defers from company to company. Some ask for more than 30 days to fund an investment while others provide their clients with complete checkbook control which allows them to write checks from their IRA account. This gives them instant access to funds where they can secure deals quickly and don’t have to wait for the approval from the company.  However, the companies that give full checkbook control are a bit more expensive and have lengthy approval process – so look for one that best suits your needs.
  • Q 3 – Are there any limitations on what I can invest in? If you are also looking for investments in real estate properties or maybe private loan, then do find out if the company has any restrictions. Companies such as Scwab and Smith Barney limit their clients to what they can invest in. many companies don’t allow investing in real estate…. Some do – so make sure to ask before signing the deal.
  • Q 4 – Can I “roll over” my existing retirement account to Self-directed IRA? Some IRA accounts can be rolled over but not all. Before deciding to make the switch, consult your financial advisor and talk to a representative of a self-directed IRA to know your choices.
  • Q 5 – how long does it take to set up the account and for funds to be available in order to make an investment? Some companies have long waiting period for the process to get started. If you wish to start using your self-directed IRA account instantly and start investing in real estate properties, then look for a company that takes minimum time to set up your account. Some companies take months while others take months. So get started now and get your funds ready to invest and make a profit.

Getting Off The Sidelines And Getting Your Money Working For You

If you also believe that a self-directed IRA is a good way to invest a part of your investment, then start gathering information about self-directed IRA companies now. Sometimes it’s better to investment in things we are aware of rather than the stock market which is highly unpredictable. Check out the above websites for more information about these companies.

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:  (561) 370-8335.  We offer discount investment properties in Palm Beach County and surrounding areas to investors like you who often buy them and keep them as rentals.  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.

Feel free to contact us anytime for more information regarding investment in real estate properties. We are here to help you any time of the day. Happy investing!