Self-Directed IRA

Starting Out Real Estate Investing with a Self-Directed IRA

If you’ve ever invested in real estate, you’re well aware of the amount of homework involved. You have to know the area. You have to know the location, the taxes, and all of the subtle details that go into identifying a strong investment. And, like many real estate investors, you might sometimes get frustrated by just how hard it is to invest personal funds into this passion. But what if you were able to invest retirement funds into a real estate property with a Self-Directed IRA?

We at American IRA are a Self-Directed IRA administration firm, which means it’s not our role to consult with you on individual investments. But we can help prepare real estate investors for what they need to know if they’re going to use a Self-Directed IRA for real estate investments. Here are just a few tips for starting out in real estate investing by using a Self-Directed IRA:

The Benefits of the Real Estate IRA

If using a Self-Directed IRA for investing in real estate, you’ll find that there are some important rules to follow. Most notably, you should not transact with a disqualified person using your Self-Directed IRA, such as purchasing a piece of property and renting it out to someone you know. Nor can you use your Self-Directed IRA to loan someone you know money.

But these rules also come with the benefits of retirement investing, including:

  • As we note at our Real Estate investing section, “You can use a tax-deferred exchange inside your Self-Directed IRA – Real Estate IRA to defer UDIT tax.”
  • You can partner with others to acquire assets that would normally be out of your range.
  • Your property manager can collect rental income within a Self-Directed IRA, which comes to you tax-free as it remains under the protection of a retirement account.
  • You can sell property within the IRA without having to worry about capital gains taxes, thanks to the protection of a retirement account.

These benefits are great for experienced real estate investors. But what if you want to start out with a Self-Directed IRA and leverage that experience, without having the experience of investing within a retirement account?

Preparing Yourself for Real Estate Investing with a Self-Directed IRA

Now it’s time to think about how you’re going to approach your Self-Directed IRA for real estate investing. Here are a few key tips:

  • Work with a qualified Self-Directed IRA administration firm. Having all of your ducks in a row starts with working with the right people. Seek out a Self-Directed IRA administration firm that can leverage its experience to help you along the way. They won’t give you investment advice, but they’ll help you understand exactly what sorts of challenges you’ll encounter as you set this account into motion.
  • Don’t plan on working with any personal relationships. When you invest with a retirement account, you have to keep it separate from your personal funds. This is integral to maintaining the benefits of a retirement fund.

How can you get started with real estate investing? It’s often good to have some experience built up before you begin with a Self-Directed IRA. But with a Self-Directed IRA, you can essentially give your real estate investing an “umbrella” that makes it much easier to build wealth over the long term and establish a retirement portfolio.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at