Buying rentals with IRA

[Matthew Sutton]

I'm pretty disappointed you can't get a mortgage with an IRA...according to my research. I'd like to use the IRA and get 5 or 6 properties and not just pay all cash for one property. Any tips on how to get around not being able to get a mortgage outright with an IRA?

[Travis Hughes]

@Matthew Sutton, IRA's are tax advantaged. Holding real estate with a mortgage (outside of an IRA, just in your own name) also has tax advantages. If you hold the real estate within the IRA, most or all of the tax advantages of owning the real estate would be lost.

If you're putting all of your retirement accounts into real estate, you are also not diversifying very much.  Sure, you can diversify from market to market, but if you only own single family homes, it's still all real estate.

What I do is leave all of my retirement account money in a low cost index fund, then buy real estate outside of any tax advantaged accounts.  That way my investments are diversified between real estate and equities, and I capture the tax advantages of both the real estate and the retirement accounts. 

If you don't have the funds outside of your accounts to acquire real estate, perhaps you could make a loan to yourself or something? I don't really know anything about writing notes out of an IRA, so I can't speak to that directly. Perhaps someone else could help.