Using a Self-Directed IRA Account to Invest in Real Estate

[Kyle Koppenheffer]

Hey BP!

I've recently switched jobs which has given my previous IRA account the ability to transfer banks. While researching REI, I've come across the idea of using a self-directed IRA account to invest in real estate. Now that I have an easy opportunity to open one, I've been liking the idea more and more. This would be my first investment.

Does anyone have any experience investing in real estate with this type of funding?  Any tips in general with this method?

Thanks,

Kyle

[Mike S.]

@Kyle Koppenheffer

Self directed IRA are a great way to diversify your investment in assets usually not available in regular IRA.

However “with great power come great responsibility”.

You would need to educate yourself about the following extremely important aspect of a self directed IRA:

- prohibited person and transactions

- UBIT and UDFI taxes

- liability risks for your IRA from its investments

- SDIRA vs ROTH SDIRA

You should also look at the possibility

of using a type of QRP plan instead to avoid the UDFI.

There are plenty of posts on the subject on BP and also a few books that will help you understand all these concepts.