Using a Self-directed IRA
Investing with a self-directed IRA (SDIRA)
Did you know you can use your IRA to invest in real estate? Many investors are unaware of this option, and your financial advisor may push back because moving money away from them affects their commission and assets under management fees.
A Self-Directed IRA (SDIRA) allows investors greater control over their retirement funds by enabling them to invest in a wider range of assets beyond traditional stocks, bonds, and mutual funds. You can invest in:
- Real estate (residential, commercial, or rental properties)
- Precious metals
- Private equity or venture capital
- Limited partnerships
- Cryptocurrencies
- Tax liens
- Other non-traditional assets
The mechanics of using a self-directed IRA require that the funds are held by a custodian (think Charles Schwab, but for alternative investments). The custodian is responsible for maintaining the account, executing transactions, and ensuring compliance with all IRS regulations.
A self-directed IRA is exactly what it sounds like—you have control, allowing you to diversify and craft a strategy that works best for you. From a tax perspective (note: we are not tax professionals, so be sure to consult with one), SDIRAs grow tax-deferred. If it’s a ROTH self-directed IRA, it provides tax-free growth.
What options do you have with a custodian? We prefer to use Advanta, who is very easy to work with. You can find out more here: https://www.advantaira.com/partners/cash-flowing-properties/
At the end of the day, a self-directed IRA can be a very effective tool for investors looking to diversify beyond traditional investments, but you’ll need to weigh the pros and cons.
If you would like to talk about investing in real estate with your IRA, let’s set up a call.