There are so many types of retirement accounts these days that you might not have an idea of which one is right for you. The types of investments you are interested in and the amount of control you have over those investments are considerations of what kind of retirement account would be ideal. A self directed IRA real estate investment account is the best choice for individuals who don’t want restrictions with real estate-related investments.
In a standard IRA – 401(k), investment options are limited to bonds, stocks, ETFs, mutual funds, and other publicly traded assets. As a result, you have more opportunities with a self-directed account. Real estate, in particular, is a popular avenue to help people build wealth and have some financial independence.
To have the ability to do that, you need to know how to buy real estate with your SD-IRA. It’s helpful to have an account custodian who can guide to help you go through the entire process. Not all custodians offer self directed IRA real estate investment services, so be careful with your choice. It should be someone knowledgeable and experienced with this kind of investment strategy, as they’ll know all of the rules and how to go through the process properly.
Self Directed IRA Real Estate Investment With an LLC
You might have to create an LLC account to hold the SD-IRA assets. An LLC is a legal entity that allows you to have “checkbook control” over the real estate investments in your IRA. In addition to more control and flexibility, using an LLC account to invest in real estate provides a level of confidentiality that you wouldn’t ordinarily get from an IRA in your name.
What are some specific options when it comes to a self directed IRA real estate investment? There are several commercial and residential investments you will want to look into, including foreclosures, rentals, tax liens, land, and so forth. However, you can use some restrictions, such as the real estate you purchase for investments only. Neither you nor anyone in your family can live in the property or use it for business purposes or even as a vacation home.
Also, any rental income you receive on the property will flow back into the IRA. No deductions (including property taxes) are allowed because the IRA owns the property.
This article is just a quick overview of what to expect with a self directed IRA real estate investment account. You can learn more about your options – including how to get a custodian and open up an account – at Rocket Dollar. It’s an excellent service that will help you every step of the way.