Self-Directed IRAs (SDIRA) for Real Estate Investing:

[Mohamed Youssef]

Beyond simply purchasing rental properties in a self-directed IRA, several lesser-known strategies have proven remarkably effective. I've helped clients implement these approaches with impressive results.

One particularly powerful technique involves using SDIRA funds for private lending rather than direct ownership. A client recently structured a deal providing 65% LTV financing for a fix-and-flip operator at 12% interest with 2 points, all returns flowing back into the tax-advantaged environment.

Another approach gaining traction: partnering SDIRA funds with personal funds to acquire properties too large for the retirement account alone. This requires careful structuring (typically using tenancy-in-common arrangements) to maintain compliance while leveraging limited retirement funds.

For those concerned about UBIT (Unrelated Business Income Tax) from leverage within IRAs, some investors have successfully used options strategies, securing rights to purchase properties using minimal SDIRA funds, then selling those options for profit or exercising them when additional funds become available.

The compliance requirements remain stringent (prohibited transactions can invalidate the entire IRA), but the growth potential justifies the administrative complexity for many investors.

Who's actively using a self-directed IRA for real estate? Any unique strategies you've implemented successfully?

[E.J. McCaffrey]

I agree that investing with a QRP is a powerful wealth-building strategy. However, anyone considering it must understand the critical rules and restrictions, particularly those related to prohibited transactions and self-dealing. Unfortunately, I’ve seen many clients who failed to educate themselves properly, ultimately causing their QRP to be disqualified.

The information provided is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication