Investing Your IRA in Real Estate Yields Higher Returns On Your Money. Here’s How To Invest in Real Estate Using Self-Directed IRA’s…
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Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on investing in real estate using self-directed IRA’s
What is a self directed real estate ira?
To invest in real estate with your IRA, you must first create an account that supports investments in non-traditional assets. These types of accounts are commonly known as self-directed IRAs
A self-directed IRA is technically no different than any other IRA (or 401k). A self directed IRA is unique because of the available investment options.
Most IRA custodians only allow approved stocks, bonds, mutual funds and CDs. A truly self directed IRA custodian will allow those types of investments in addition to real estate, notes, private placements, tax lien certificates and much more. These are the type of custodians you want managing your real estate ira.
Self directed IRAs are not for everyone, they are for those who want to create wealth using their knowledge of investments outside of stocks, bonds, and CDs.
Two Types of iras:
– Traditional IRAs
– Roth IRAs
Main difference is how you pay your taxes. Traditional is tax deferred, and Roth isn’t.
What kind of investment properties can you invest in with a real estate ira?
– Single Family and multi-unit homes
– Apartment Buildings
– Rental Properties
– Commercial Property
– Improved or unimproved land
– and much more…
*There are some restrictions which can be found here.
How does a real estate ira work?
– Very similar to the way you currently invest in real estate
– Setup a IRA Custodian who handles self-directed IRAs
– Identify your IRA Investment
– Ensure Correct Title – (name of company) custodian FBO (your name IRA)
– Request Funds to Purchase IRA Investment
– Self-directed custodians hold your IRA funds in their account
– Direct those funds on your behalf when you wish to make an investment.
– Any purchases made must be done under the IRA
– All payments/profits related to investment in your self directed IRA must be made out to your IRA
– All expenses related to your investment must be paid from your self directed IRA
– Fill out a ‘sell investment form’ which allows you to sell your investment on behalf of your IRA.
– Funds from the sale are then returned to your self directed IRA—tax-free!
– All transaction records are documented by the IRA custodian for safekeeping
– Custodial and Transaction fees – .5 of value in account and $5-200/transaction
Investing in Real Estate related assets is a great method for rebuilding your retirement fund (ira, 401k), especially when other options have failed to produce adequate growth. If setup correctly, you can open yourself up to many investment opportunities in real estate, as well as take advantage of all the tax benefits. When you ask yourself, “where can i find the money”, a good place to start are people who have IRA set up, but are uninformed of how to invest it. That’s where you come in.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you’ll be automatically notified when we upload more quick video tips for you. Take care and good investing.