IRA Real Estate Buying

IRA Real Estate Buying

Purchasing real estate with your IRA can be difficult, especially if you do not have the right custodian. Many traditional custodians prohibit real estate transactions all together because they are more difficult than simple securities investments. Those that do allow them often charge fees for everything which can greatly increase your overall costs for the deal.

With a self-directed IRA, you can make most any kind of legal investment you want, real estate included. The other major benefit of a self-directed IRA is that you can minimize fees associated with real estate deals. If you have checkbook control of your IRA (likely through an LLC), you are free to write checks to cover any costs associated with your IRA's assets without generating penalties or fees.

Additionally, you can also enter into partnerships with others who wish to combine their IRAs with yours to make purchases larger than any one partner could afford. Such a deal is considerably more complicated and you will want to make certain that everything is setup properly and that all applicable laws are followed--but it is legal. Your most important asset in such a case will be the advice and guidance of your IRA advisor.
Selecting an IRA Advisor

Your IRA advisor and your IRA custodian don't have to be the same person (or company). Your advisor can help you set up your self-directed IRA and can help make sure you stay in compliance with the law while another company entirely custodies your IRA. Opening a self-directed IRA is usually better for people with some investment experience and some familiarity with the tax laws because your advisor may not be at your disposal.

Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)
Click here for more details on the Self Directed IRA