What Kind of Real Estate Can a Self-Directed IRA Investor Put in a Retirement Portfolio?

Self-Directed IRA Real Estate Investing Common Questions

Investing in real estate can be a smart way to grow your retirement savings. And using a Self-Directed IRA can offer some unique benefits. But many investors have questions about how to get started and what to expect when investing in real estate through a Self-Directed IRA. In this blog post, we’ll answer some common questions to help you better understand this investment strategy—and the advantages it may contain.

Q: What types of real estate can I invest in with a Self-Directed IRA?

A: You can invest in a wide variety of real estate assets with a Self-Directed IRA, including residential and commercial properties, undeveloped land, and rental properties. However, it’s important to note that there are some restrictions on the types of investments you can make with a Self-Directed IRA. For example, you can’t invest in a property that you or a family member plans to live in. You also can’t use your IRA funds to make improvements to a property that you own personally. One key here: knowing that you have to keep retirement investment assets and personal assets separate.

Q: How do I find properties to invest in with my Self-Directed IRA?

A: Finding the right real estate investment opportunities can be a challenge, but there are a few different ways to get started. One option is to work with a real estate agent who specializes in investment properties, as they may be able to help you identify properties that meet your investment criteria. You can also search online real estate listings and attend local real estate investment group meetings to network with other investors and learn about potential investment opportunities. Ultimately, with a Self-Directed IRA, identifying properties begins with you.

Q: Can I take out a mortgage to purchase a property with my Self-Directed IRA?

A: Yes, you can use a mortgage to purchase a property with your Self-Directed IRA. However, any financing you use must be non-recourse, which means that the property is the only collateral for the loan. This can make it more difficult to obtain financing sometimes. 

Q: Who manages the property once I’ve purchased it with my Self-Directed IRA?

A: Once you’ve purchased a property with your Self-Directed IRA, you’ll need to handle it through a property manager. This is obviously an important element in keeping a Self-Directed IRA property separate from your personal investments, which is why the choice of property manager will be such a key part of your retirement investment process if you choose to go this route.

Q: How do taxes work when investing in real estate with a Self-Directed IRA?

A: One of the main benefits of investing in real estate with a Self-Directed IRA is that your gains can grow tax-free. However, it’s important to note that these tax benefits only exist within the retirement account. You have to keep the property in good standing with the retirement account, ensuring that you never use it for personal purposes—instead, you have to treat it as a separate property that your retirement account owns.

Investing in real estate assets with a Self-Directed IRA can be a powerful way to build wealth for retirement, true. But it’s important to understand the rules and regulations that govern these types of investments. By working with a reputable custodian and taking the time to research potential investment opportunities, you can make informed decisions that help you achieve your long-term financial goals.

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