Real Estate

What Real Estate Investors Need to Know About Self-Directed IRAs

Imagine this: you have reached retirement age, and once you embrace that first day of having nothing to do at home, it hits you. You no longer have income coming in.

Hopefully, you have planned effectively for retirement and can tap into your retirement funds as planned. But there is no reason you have to have zero income for retirement. Through real estate investment, you can actually tap into the world of real estate to continue to generate income into your retirement accounts. You no longer have to feel like a retiree without a net. With smart, well-placed retirement investments made over the years, you can grow your retirement fund and enjoy more-diversified security. Here is what you need to know about real estate investing when using a Self-Directed IRA:

  1. It is Possible to Diversify in a Self-Directed IRA

If you are a real estate investor who has always used personal funds to make your investments, then there’s good news. Maintaining real estate within a Self-Directed IRA is not nearly as complicated as you might imagine. In fact, there are some people who choose to use a Single Member LLC within a Self-Directed IRA—an arrangement known as a “Checkbook IRA”—to make the process of investing in real estate with retirement funds that much easier. These investors can simply write checks for real estate that will be held within their retirement accounts.

Do not let the idea that this is too complicated to do throw you off. There are many investors who diversify within a Self-Directed IRA by including real estate investments. And while it is true that investors can use a whole host of nontraditional retirement investments in a Self-Directed IRA—including precious metals, private stock, and private notes—our focus today is primarily in real estate.

One other important note: real estate retirement investing is not as simple as “either/or.” You do not have to choose between investing in the stock market and making investments in rental real estate. You can incorporate a broad range of assets within a Self-Directed IRA, or simply spread your assets throughout multiple retirement accounts in the way you see fit.

  1. You Can Still Use Non-Recourse Loans in a Self-Directed IRA

One of the first questions real estate investors ask about real estate investing within a retirement account: how will it be funded? After all, not everyone has enormous down payments sitting around, and many people have to budget their rental income relative to a mortgage payment to make an investment work. Here is the key: you can still utilize non-recourse financing within a Self-Directed IRA. A non-recourse loan means that the bank will not be able to come over the rest of your property and holdings in the event of a default.

  1. You Have Limitations—But They are Not Difficult to Understand

Let us be clear: there are going to be some limitations with any assets you hold within a retirement account. This also applies to any real estate you hold within your retirement accounts. For example, you will not be able to transact with “Disqualified persons,” or people you know personally. This can include business relationships and close family relations. A classic example is purchasing a piece of rental property and renting it to someone like a son or a daughter—you can do this with personal funds, but within a retirement account, it will be against regulations.

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