The Many Ways to Participate in a Real Estate IRA

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When retirement investors say they want to invest their IRA in real estate, it can mean several different things. While most account holders think of real estate investing as purchasing rental homes, self-directed IRAs can participate in real estate in a nearly endless amount of ways, from the most well-known types of property to the very specific.

A self-directed IRA can offer the flexibility of investing in all different types of real estate. Your IRA can purchase residential real estate, from single-family homes to apartment buildings. If you are more familiar with commercial real estate, you can use your expertise to invest in office buildings and other properties. If your background lies in agriculture or development, your IRA can purchase farm land or raw land.

IRA investors can invest in apartments, condos, townhomes, duplexes, and vacation condos; all of which can be rented out to any non-disqualified persons to grow your retirement savings. Knowing and understanding the vast array of options can help you make the best possible decision for your retirement goals.

The most common means of investing in real estate with a SDIRA is for the account to purchase and own property outright. This is usually done by account holders who are able to fund the full purchase price of the real estate from their account. If the cash isn’t available, account holders can apply for a non-recourse loan.

If you’ve got your eye on a rental duplex near a hip new part of town, but your account doesn’t have enough funds to purchase the property outright, and you’d rather not take out a non-recourse loan, there are several options available. Your IRA can partner with other entities, such as other IRAs, the account holder’s personal finances, other individuals, or a company(LLC, C-Corp., etc.), to fund the purchase of the duplex. The IRA would then be considered a “tenant-in-common” with the other entity or entities. Self-directed IRAs can also invest in real estate indirectly. Your account can buy private stock in an entity which purchases and owns real estate.

Another available option is to make real estate loans via promissory notes to individuals or entities that can then purchase the property. For instance, if you have a close friend looking to extend a loan with their personal funds or their IRA, they could finance some of the purchase price of the duplex you wish to buy with your IRA. Self-directed IRAs allow you to use your expertise and experience to make the real estate investment that is right for you.

One of the final variables in real estate investing involves your overall strategy for the property once you’ve purchased it with your IRA. This is one more area where self-directed IRA account holders have many options. Once you’ve acquired that duplex in a hip part of town with your IRA, it can be rented to tenants to generate rental income for the IRA. If you think the duplex could use some updates to satisfy the more upscale taste of future renters, you can also fix-and-flip or fix-and-hold the property. Self-directed IRA real estate can be purchased for wholesale, and properties can be held for appreciation in value.

For individuals who want to incorporate real estate investing into their retirement plan, a self-directed IRA can provide a wide range of possibilities. From purchasing rental property to developing raw land, your account allows you to use your expertise and decide which real estate strategies are the best for you. Give us a call at 877-742-1270 or send us an e-mail at to discuss the possibilities.