Buying Real Estate With A Self Directed IRA

Estimated reading time: 2 minutes(Last Updated On: January 14, 2020)

Use your retirement funds to buy real estate? It’s certainly not something you can do with an IRA at a traditional custodian that offers only stocks, bonds and mutual funds as investments. However, you can with a Self Directed IRA from Quest Trust Company (or other non-traditional IRA custodian). It’s one of the primary, and most potentially lucrative, benefits of Self Directed IRAs.

If you want to invest your retirement savings in real estate the first thing to do is to assign a custodian, such as Quest Trust Company, to manage the self directed IRA account for you. The benefit to this approach is that you can utilize the custodian’s knowledge, FREE education workshops and experience to maximize your investment returns.

When you have a custodian for your IRA they manage the paperwork with any investment, including a real estate investment. This may mean that you spend a significant amount of time communicating and filling out all the necessary documentation. When it comes to real estate, time is money and it’s often imperative that you’re able to act quickly and complete the paperwork properly so you don’t create a prohibited transaction that will invalidate your self-directed IRA.

Real Estate Restrictions and Allowances

As with any IRA there are restrictions and prohibited transactions. The main rule to remember is that self dealing is prohibited. Self dealing implies a direct conflict of interest. For example, you cannot use your Self Directed IRA to buy a home for yourself. You can, however, use it to buy an apartment complex. The income you make on rent will be used to fund your retirement.

You can also use it to buy a vacation home and rent it to others. You cannot however, use the vacation home yourself.

You can also use your Self Directed IRA to buy any form of real estate:

  • Farmland – you can rent out the land to surrounding farmers.
  • Land – sell or rent the land to developers.
  • Mobile Homes
  • Rental Real Estate
  • Commercial Real Estate
  • Foreign Real Estate
  • You can also use it to take advantage of foreclosures, tax liens and auctions.

As long as the real estate investments do not directly benefit you or a family member, you can invest in real estate and enjoy the lucrative possibilities. Before you find a custodian or financial service company to assist you with the creation of your Self Directed IRA, make sure they offer FREE education on self-directed IRAs and real estate investments associated with these accounts. Contact Quest Trust Company for more information on our self direted IRA custodial services and education seminars.