Self Directed IRAs & Real Estate Investing Basics



Posted: Friday, July 03, 2009

by Mark Thompson
Equity Team

While many Wall Street investors have enjoyed substantially high returns in years past, the recent ups and downs of the US stock market have derailed many investors' retirement plans. The recent economic crisis and corporate scandal has all but wiped out many people's retirement; leaving these investors in search of a more secure and tangible investment.

Many investors are not aware of a long-standing Internal Revenue Service ruling that allows investors to put their IRA funds -- or 401(k) funds rolled into an self-directed IRA -- in a wide variety of nontraditional investment types such as real estate. The timing is excellent now to take advantage of this little-known retirement planning tool, and the possibilities opened up by it. Daily headlines in the Wall Street Journal discuss the damage done to retirement funds by the low return of stocks and bonds. Real estate investing is one such non-traditional investment for a self directed IRA.

There are three simple steps to take advantage of this high return potential

  1. Opens self-directed IRA account with a specialized custodian
  2. Transfer current IRA funds to the new self-directed account
  3. Direct custodian to invest the funds into the specified asset. After an administrative review to determine if the asset can be administered, the custodian forwards the funds to purchase the asset, and the asset comes into the ownership of the individual's IRA account.


The IRS code does not specify which types are permitted; however, typically you can purchase investment property such as

single or multifamily dwellings,

apartments,

commercial buildings,

raw land,

vacation property,

condominiums,

mobile homes

You can also lend money against these types of property.

You cannot buy a property, or invest in a secured loan, that involves yourself, a son, daughter, parent, or other disqualified party -- such as a fiduciary or your sole proprietorship.

While it might sound easy many investors find that institutions and brokers that offer self directed IRA's do not truly offer the option for the investor to direct the investment. And many investors are looking for simple solutions where they can leverage other peoples' knowledge when making investments. To find someone with both the knowledge and the flexibility the invest or must For more information (resource box call to action)

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