What should I look for when selecting a self direct IRA?

[Shalante Davis]

I left my 9 to 5 and think it is time to rollover my retirement from my previous employers to a self direct IRA to help with my real estate journey. Do you have any advised on what to look for when selecting the right IRA? Or Recommendations on one?

[Dmitriy Fomichenko]

@Shalante Davis,

In order to invest in real estate with your retirement account you need a "self-directed" account (one that allows you to invest in alternative assets). Remember that it would not be you personally buying the property, but your IRA will buy the property, title will be vested in the name of the IRA, you simply control it. Can't use the property or the income for your personal benefits until you take distributions.

You have three options:

1. Custodial self-directed IRA. There are dozens of custodians offering this option, but it may not be the best to own and manager rentals as Curt explained above.

2. Checkbook IRA. Essentially this is a self-directed IRA on steroids. With this structure a special purpose IRA owned LLC is used to make the investments which allows you to bypass the custodian, eliminate transaction fees and have "checkbook control" over your IRA

3. Truly self-directed Solo 401k plan. This option is not for everyone. To qualify you must be self-employed or own a business w/o full time employees with earned income. However if you qualify it gives you tremendous benefits and several advantages over SD IRA such as contribution limits that are nearly 10 times higher, ability to take personal loan from it, exempt from UBIT on leveraged real estate and more. Here is a discussion on the topic that you may find helpful:

https://www.biggerpockets.com/...