Investing in Real Estate With Your Self-Directed IRA

Dated: 07/09/2018

Views: 79

Investing In Real Estate with Your IRA

With investing in real estate proven over time as the most solid investment, the time could never be better than now to secure your future, and fund your retirement. That’s right! Frequently, the Wall Street Journal, New York Times, and countless other publications, are publishing stories about big Wall Street companies jumping in, and buying real estate rather than stocks. Why? Because they realize they earn a higher return on their investments.

However, with this being the case, the unanswered question is “Why do most Americans continue to solely rely upon, and trust their own futures and retirements in IRA’s, 401k’s and the stock market?

Well the answer is simply, they do not know any better!

The Self-Directed IRA for Real Estate

There is something called a Self-Directed IRA (SD-IRA).  They are common in today’s financial market, and many people are beginning to convert their normal IRA’s over, to maximize their earning power. Therefore, as a future retiree, it is important that you also look into other ways to earn better returns with your IRA’s.

Enter the "Self-Directed IRA".

A Self-Directed IRA is simple! It is a retirement account that has the same tax benefits as a normal IRA. However, it gives you greater flexibility in directing the investment of your tax-deferred savings.

You can invest in...

  • Real Estate (I.e., Commercial, Rental Property, Tenancy-In-Common, 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
  • Stocks and Bonds

Are There Any Restrictions?

Yes! There are restrictions on what you do with the real estate if you buy and hold, along with the types of precious metals for which you can invest. You are also required to have a "Custodian" of the SD-IRA, who additionally has recommendations and/or restrictions regarding various types of investment.

What is an SD-IRA Custodians?

Great questions!

Self-Directed IRA Custodians

The US Government created the SD-IRA loophole to help investors like yourself take more control over your investments, while simultaneously realizing familiar tax benefits. However, they do not want taxpayers setting up these SD-IRAs and being free to do whatever they wish.

Which brings us to the SD-IRA Custodian!

The Custodian is usually the SD-IRA company hired by you to manage your IRA account. They act as the "go between" on your investments.  SD-IRA Custodians generally have guidelines regarding recommended and/or restricted-investments, with indications on the average time it will take to actually see your return on investment (ROI). Some SD-IRA Custodians are more passive, and offer you a checkbook to write checks from your SD-IRA to make investments. You should do your homework and find the SD-IRA Custodian that is right for you!

What to Ask a Self-Directed IRA Company before You Work With Them

Before you select your SD-IRA Custodial 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, with some charging setup fees. Find out what works for you. However, the idea is that by being able to invest in real estate with your SD-IRA... you will more than justify the fees you are paying with your higher rate of return.
  2. What is the process for approving an investment? - Some companies may take upwards of 30+ days to fund an investment after you send it in for approval. While others may offer "True Checkbook Control", which gives you immediate access to the funds (I.e. - to close a deal quickly).  However, you will find that “True Checkbook Control” is usually more expensive. In either case, all investments must go through a custodial approval process.
  3. Are there any restrictions on my investments? - Some SD-IRAs with larger, more traditional companies like Schwab and Smith Barney put restrictions on investments. Some may not 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 are eligible for rollover into a SD-IRA.  However, most are…and even some 401K accounts are eligible. Inquire with your financial advisor, or ask the representative at the SD-IRA Custodial Company you select to work with.
  5. How long will it take for my account to be up and running? – It can vary from company to company. If you know you want to use your IRA to invest in real estate, you should get the ball rolling by getting your IRA or 401K rolled over into an SD-IRA as soon as possible. Some companies may take weeks or even over a month to have your account setup complete and ready to invest. 
    Therefore, do not wait until you have found a great real estate investment deal to get started. Get started today, so that your funds are ready to invest when you need them.

Getting Off the Sidelines, and Getting Your Money Working For You

If you feel an SD-IRA may be a great way for you to invest a portion of your retirement, you should take the time to educate yourself on the pros and cons of a SD-IRA.

If you have any questions on how you can work with our team as an Investor... contact Jimmy D. Williams today at 469-217-7188 or via email at We are ready, willing and able to offer solutions to your real estate needs.

**“We are not licensed Financial Advisors, and by no means are the opinions expressed in this blog meant to act as financial, tax, or legal advice.  This is for informational purposes only. Consult your own professional Tax or Financial A

Blog author image

Jimmy Williams

Jimmy D. Williams is a successful Realtor and Real Estate Investor, who specializes in real estate acquisition and profitable liquidation. Working with Sellers, Buyers and Investors, Jimmy collaborate....

Latest Blog Posts

Preparing to Sale Your Home

Selling your home doesn′t just mean hiring a realtor to stick a sign out front. There are a lot of preparations you should make to ensure you get the best offer possible in the shortest time

Read More

Rent to Own Investing

The 3 Main Reasons Why Rent-to-Own Investing Can Be Difficult in Dallas/Ft. Worthby Jimmy D. Williams on January 18, 2018From flips to rentals, from new builds to rent-to-owns, there

Read More