Real Estate IRA: The Definitive Guide to Property Investing in a Self-Directed IRA
Real Estate IRA's don't actually exist… not if you're looking at the text of the law.
But what does exist is this reality: More dollars in self-directed IRA's are allocated to real estate investments than to any other asset class…
…and it's for that reason that several self-directed IRA custodians claim to offer something called a “Real Estate IRA”. So what is a real estate IRA, really?
To start with…
Real Estate investing in an IRA is BOOMING in popularity. As the trend towards diversification AWAY from Wall Street and INTO real estate continues, real estate IRA's are going to do nothing but get bigger and bigger and bigger.
But let's be very clear: Real Estate IRA's are not right for everybody, nor are IRA's right for every real estate investment. Not even close.
Sure, the benefits are substantial:
- Astounding flexibility
- Ability to invest your retirement funds in single family houses, raw land, multi-family units, commercial property, farm land... practically anything you'd like
- Strong legal protection
- Much greater tax planning capabilities than normal IRA's
- Impressive estate planning potential
That's just a short list...
...But that flexibility makes it easy to "hang yourself" in a million different ways. And when you screw up with a real estate IRA (called a "prohibited transaction" by the IRS), odds are very high you'll lose at least half of your entire account... maybe even all of it. And that risk is particularly distinct with real estate transactions.
So yes, there's real risk. But here's the actual truth of the matter:
Conventional financial "experts" are woefully ignorant... and maybe even directly deceptive. (I hope it's the former... here's famed 'consumer advocate' Clark Howard giving very questionable advice.)
Those people have a vested interest in dissuading you from diversifying away from stocks, because their livelihoods are based on selling Wall Street's retail assets. It's a conflict of interest the size of Mount Rushmore.
So there... I've told you that the conventional financial "experts" are being deceptive about self-directed IRA's, and that self-directed IRA companies are between a rock and a hard place when it comes to really helping their clients as much possible.
That, of course, leaves me. I'm not a provider of IRA's or financial accounts of any type, so I don't have that conflict of interest. Yet I have vast and lengthy experience in the arena of self-directed retirement accounts, including the honor of providing legal continuing education instruction to California attorneys (in association with highly reputable institutions like UCLA).
Bottom line: I'm going to tell you the truth about this stuff, without any conflict of interest. And I know what I'm talking about. The truth is frequently different than popular assumptions. So let's begin:
What are your questions about Real Estate IRA's?
Enter them here and we'll be glad to assist you:
Bryan Ellis is host of Self Directed Investor Talk, America's #1 podcast and for affluent self-directed investors. He's also an expert in self-directed IRA's, solo 401k's and 1031 exchanges. You can find Bryan's writing in very highly respected publications including Forbes, Entrepreneur and TheStreet. Bryan lives in metro Atlanta, Georgia with Carole Ellis - his wife, business partner and best friend - and his 4 children ranging in age from 2 to 19.