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Investment Options: Getting the Most Out of Your IRA

If you are new to self-directed accounts or are looking for ideas of your investment options, this is the article for you.

Posted on March 2, 2023


You’ve taken the first step! You have opened a Self-Directed IRA, a type of individual retirement account that allows you to invest in a wider range of assets beyond the traditional investment options, and you are now ready to do your first investment. Where do you start and what are your options? While Self-Directed IRA custodians like Quest do not sell investments (they simply allow you the possibility to find the investment yourself),  we provide education to help you make the best decision for your situation!

If you have recently opened your account or are considering what diversification possibilities are out there, Quest wants to provide you with ideas of your investment options. While you are not limited to any of these, below are the top 5 categories you can invest into with a Self-Directed IRA.

Commercial Real Estate Investing

You can use your Self-Directed IRA to purchase real estate, like commercial properties and even land. When considering commercial investment options, it's important to evaluate the location, condition, and potential investment, like any associated costs such as maintenance, repairs, and property management fees.

  • Multifamily/Apartment Buildings: You can invest in an apartment building that contains multiple units, ranging from a few to hundreds of units. These properties generate steady rental income and are typically managed by a property management company.
  • Duplexes, Triplexes, and Condos: You can purchase a property that contains multiple units, such as a duplex or a triplex. Smaller than apartment buildings, duplexes still offer the potential for rental income. It’s also possible to invest in a building that contains multiple condominium units, which can be rented out to generate income and typically require less maintenance and management than other multifamily properties.
  • Vacation Rentals: You can purchase an Airbnb, VRBO, or other vacation rental home in a popular vacation destination to rent to vacationers. This investment option can generate higher rental income during peak vacation seasons. Remember, you must abide by all rules involving prohibited transactions and disqualified persons. If your IRA owns the vacation rental, you cannot stay in the vacation rental personally, nor can anyone who is disqualified.

Private Entities

You can invest in private companies or startups with your Self-Directed IRA. This can be a risky investment, but it also has the potential for high returns.

  • LLCs (Limited Liability Company): An LLC is a type of business entity that combines the liability protection of a corporation with the tax benefits of a partnership or sole proprietorship. One of the key advantages of an LLC is the protection it provides to its members. With LLC investments, members are not personally liable for the debts and obligations of the business, which can help protect their assets.
  • Joint Ventures: A real estate joint venture is a business arrangement in which two or more parties come together to undertake a specific real estate project or investment. In a joint venture, the parties typically pool their resources, expertise, and capital to pursue a common goal, such as developing a new property or acquiring an existing one. Joint ventures can take many forms, and the specific structure and terms of the agreement will depend on the goals of the parties involved. It is important to carefully consider all potential risks before entering a real estate joint venture, like who you are doing business with.
  • Limited Partnerships: A limited partnership is a type of partnership in which two or more individuals or entities come together to invest in a real estate project. There are two types of partners: general partners who are responsible for managing the partnership and making all the day-to-day decisions related to the real estate project and limited partners who do not participate in the day-to-day management of the partnership but instead, they receive a share of the profits and losses of the partnership based on their percentage of ownership.

Single Family Real Estate Investments

Single-family investment options refer to investments in residential properties that consist of a single dwelling unit, usually designed to house one family. They can be great investment options for active investors, such as the following:

  • Property Rentals: You can purchase a single-family home as a rental property and generate income by renting to tenants. You can either manage the property yourself or hire a property manager to handle the day-to-day operations.
  • Fix-and-Flips: You can purchase a distressed single-family home, renovate it, and then sell it for a profit. This strategy requires a higher level of expertise and experience in home renovations and real estate market trends.
  • Subject-to and Lease-to-Own Property: You can purchase a single-family home and offer it to tenants under a lease-to-own agreement. This option allows tenants to rent the property for a specific period with an option to purchase the property at the end of the lease term.  

Private Loans

You can lend money using your Self-Directed IRA. This type of investment can generate regular income through interest payments without requiring the investor to be very active. These are passive loans in which an investor lends money to a borrower who uses the funds to purchase a property. There are secured loans and unsecured loans that can be done at Quest.

  • Secured Loan: A secured loan is backed by collateral, typically the property that is being purchased by the borrower. Generally, it will mean if the borrower defaults on the loan, the lender has the right to foreclose on the property and recover their investment. Secured loans are generally considered less risky for lenders than unsecured loans because the collateral provides a way to recover their investment in the event of default. This makes secured loans more attractive to lenders and can result in lower interest rates for borrowers.
  • Unsecured Loan: An unsecured loan, on the other hand, is not backed by collateral and is based solely on the borrower's creditworthiness, income, and other financial factors. Because there is no collateral involved, they are considered riskier for lenders than secured loans.

Real Estate Notes

Notes can be created from scratch or they can be bought after the agreement was created. As mentioned above, real estate notes, also known as promissory notes or simply "notes," are a type of passive investment option that allows an investor to loan funds to someone with set terms.

  • Performing Notes: A performing note is a loan in which the borrower is current on their payments and is paying back the loan according to the terms of the agreement.
  • Non-Performing Notes: A non-performing note is a loan in which the borrower is delinquent on their payments, and the loan is in default. These notes can offer the potential for higher returns but also carry a higher level of risk.
  • Owner-Financed Notes: An owner-financed note is a loan in which the seller of a property provides financing to the buyer. The buyer makes payments directly to the seller, who acts as the lender.
  • Wrap Notes: A wrap note is a loan in which the buyer takes out a new loan that wraps around an existing loan. The new loan combines the existing loan with additional funds and is paid to the seller, who acts as the lender.


Cryptocurrency, like Bitcoin, Ethereum, and Litecoin, can be a good investment for self-directed investors. Cryptocurrencies provide diversification and have the potential to generate significant returns in a short amount of time due to their volatility. However, it's important to note that this also means they can experience rapid and significant losses. Some other risks include lack of regulation and security concerns. It's important to do thorough research and understand the risks before investing in cryptocurrency.

You now know some of the most common Self-Directed IRA investment options and can feel confident starting your next investment. Of course, investing requires due diligence, research, and knowledge of the investment you are considering.

If you still need to open your account, you can reach out to a Quest Self-Directed IRA Specialists and we can help. Be sure to give us a call and ask about our current promotions; you just might get your first transaction fee waived! Schedule your consultation today!

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