Opening a Self-Directed Roth IRA to Invest in Real Estate

[Scott Graham]

Hi BP!

I am currently between jobs and I am in a position to roll my 401K over to a new investment account. I am considering opening a Self-Directed Roth IRA.

I am looking to speak with someone about their successes and failures with using a Self-Directed Roth IRA as a way to invest in Real Estate.

I am attracted to this account because one pays the taxes on the front end opposed to a Self-Directed IRA or a 401K where one is required to pay taxes on the back end. Ultimately, I want to pay taxes on the seed - not the crop.

One of the companies I am interested in working with is Equity Trust.

If you have advice, guidance or a recommendation of someone to talk to please let me know!

All the best,

Scott

[Brian Eastman]

@Scott Graham

Depending on your situation a self-directed IRA or Solo 401(k) would be a great vehicle for investing in real estate. Contrary to the prior poster, I would recommend just about any provider other than Equity Trust. They are slow, expensive, and do not believe that customers are the reason they are in business.

For investing in real estate, a plan that offers checkbook control will be vastly superior to a self-directed IRA held by a 3rd party custodian. With a custodian, every interaction needs paperwork, processing review and issuance of a check. Real estate is too time-sensitive and interactive for that 3rd party model to be effective.

You could look into a Roth held IRA LLC or if you qualify by being self-employed, a Solo 401(k) plan that has a Roth component. Either way, your comment of wanting to pay tax on the seed and not on the crop is absolutely solid.

There are several quality providers of both 3rd party custodial services and the checkbook style plans here on BP.  Do some reading and get on the phone.  You'll be able to tell who brings expertise to the table and has your best interests in mind pretty quickly.