How to BUY REAL ESTATE with your IRA | Shannon Ryan
Self-Directed IRA's - I've heard about them. I've talked about them. But I have NEVER met anyone that's actually done it... Until Now!
Here is some info you need on the process.
Choose a Self-Directed IRA Custodian:
Traditional IRAs are typically managed by financial institutions that offer a limited range of investment options. To invest in real estate, individuals need a self-directed IRA, which allows for a broader range of investment choices.
Choose a reputable self-directed IRA custodian that supports real estate investments. Some well-known custodians include Equity Trust, PENSCO, and Millennium Trust Company.
Fund the Self-Directed IRA:
Contribute funds to the self-directed IRA. This can be done through direct contributions, rollovers from other retirement accounts, or transfers from an existing IRA.
Identify Investment Properties:
With a self-directed IRA, you have the flexibility to invest in various types of real estate, such as residential or commercial properties, rental properties, or even real estate crowdfunding platforms.
Perform thorough due diligence on potential properties to ensure they align with your investment goals.
Make Purchase Offers:
Once you've identified suitable properties, your self-directed IRA custodian will facilitate the purchase on behalf of the IRA. All transactions must be conducted through the IRA, and the title of the property will be held in the name of the IRA.
Manage the Property:
Any income generated from the investment (e.g., rental income) must be deposited directly into the self-directed IRA. Likewise, expenses related to the property must be paid from the IRA funds.
Understand Prohibited Transactions:
It's crucial to be aware of IRS rules regarding prohibited transactions. For example, you cannot use the property for personal purposes, and you cannot personally benefit from the property until you reach retirement age.
Comply with Regulations:
Ensure compliance with all IRS regulations and guidelines related to self-directed IRAs. Failure to comply can result in tax penalties.
Consider Financing:
If your self-directed IRA doesn't have sufficient funds to cover the entire purchase, you may consider financing the property. However, this can trigger unrelated business income tax (UBIT), and it's essential to understand the implications.
It's highly recommended to work closely with a qualified tax professional or financial advisor who has experience with self-directed IRAs and real estate investments. They can help you navigate the complexities of this investment strategy and ensure compliance with all applicable regulations.
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Thanks for watching, and we'll see you in the next video!
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Keith Collins
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Shannon Ryan
Realtor, SRS | Benchmark Realty
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(615) 397-8281