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Self-Directed IRA For Real Estate – What to Know

self-directed ira for real estate by IRA Financial Group

Self-Directed IRA for Real Estate

In this article, IRA Financial Group explains important information regarding the Self-Directed IRA for real-estate investors.

What is a Self-Directed IRA?

This is a good question, as few IRA investors know about a Self-Directed IRA in comparison to a traditional IRA. Since the 2008 economic crisis, Self-Directed IRAs have grown in popularity, yet investors are less familiar with the types of Self-Directed IRAs, its features and rules.

Essentially, a Self-directed IRA is an IRA structure that gives you control over your retirement funds. However, not all Self-Directed IRAs are the same – we’ll go into detail on that shortly. Additionally, the Self-Directed IRA allows you to make alternative investments, such as real estate, tax liens and investment funds. As a result, you can invest in much more than stocks, bonds and equities.

Self-Directed IRA for Real Estate

Because investors can make alternative asset investments, a Self-Directed IRA is a good retirement saving vehicle for real estate investing. However, if you wish to continue making traditional investments, you can do that, as well.

There are two main types of Self-Directed IRAs. First, there’s the custodian controlled SDIRA; then there’s the checkbook control IRA LLC.

Custodian Controlled Self-Directed IRA for Real Estate Investors

The custodian controlled Self-Directed IRA requires that a special IRA custodian serves as custodian of the retirement account. The IRA custodian allows you to make alternative investments, such as real-estate. The IRA custodian will invest the funds from the individual retirement account at the sole direction of the client.

Your investments will be held in the name of the IRA custodian. For example, IRA Financial Trust Company (IRA custodian) FBO John Doe IRA is one such example.

The IRA Custodian is responsible for making all payments in respect to the IRA investments. This includes paying expenses.

Checkbook Control Self-Directed IRA for Real Estate Investors

Whereas, in the case of a Self-Directed IRA with checkbook control, real estate investments are as simple as writing a check.

First, you must establish a special purpose limited liability company (LLC) that the IRA owns and you manage. As manager of the Self-Directed IRA LLC, you have authority to make real estate investment decisions on behalf of your IRA. You can make all decisions on your own – there’s no need for custodian consent. This means you have more responsibility with checkbook control.

With your Self-Directed IRA LLC with checkbook control, you can purchase real estate by simply writing a check. Because your IRA funds will be held at a local bank in the name of the IRA LLC, you simply need to write a check straight from the IRA LLC bank or wire the funds from the IRA LLC bank account.

A primary advantage of establishing a Self-Directed IRA with checkbook control is you no longer deal with custodian fees or delays.

Checkbook Control for Real Estate Investors

The “checkbook control” Self-Directed IRA LLC is popular with real estate investors because of the high degree of control it affords them over the investment process.

Adam Bergman is the founder of the IRA Financial Group & IRA Financial Trust Company.For more information on this topic please call 800-472-0646.

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Posted in Alternative Assets, IRA Category, Self-Directed IRA