IRA real estate investing

[Simmie Douglas]

I want to use my IRA to invest in real estate and possibly notes. Can anyone give me some direction as to where to start or recommend a custodian. Do's and don'ts? I am just beginning to explore this option.

Thanks

[Brian Eastman]

@Simmie Douglas

You can invest in both real estate and notes with IRA funds. The key thing to understand is that this concept is purely diversification for the IRA. Everything has to be done through the IRA and exclusively for the benefit of the IRA. You cannot personally benefit, other than by growing your tax-sheltered retirement savings.

There are several plan formats available. For a diverse portfolio with a need for multiple transactions and some time sensitivity, a self-directed IRA custodian will be cumbersome at best. Custodians hold funds, and act as passive processing agencies - which means paperwork, delays for processing and per-transaction fees.

A plan such as a Checkbook IRA LLC or Solo 401(k) will put you much more directly in control of plan transactions, as you will hold plan funds in a bank of your choosing and have signing authority. Another big advantage of such plans is that -with a quality provider - you will have meaningful access to education and guidance so as to stay compliant with IRS rules.

Several providers of such plans are active here on BP.  Do a bit of reading on the forums and pick up the phone and call a few of us.