You’ve built your career helping your clients build long-term wealth through real estate. What if you could use your knowledge to strengthen your own financial future? With a self-directed IRA, this is exactly what you can do.

What is a Self-Directed IRA?

A Self-directed IRA (SDIRA) is simply an IRA. What sets it apart are access and control; and with an SDIRA, both are unlimited. Your investment options go beyond the typical stocks, bonds, and mutual funds offered by banks. Instead, you can diversify your retirement portfolio with alternative investments, like real estate.

Investing with an SDIRA also does not mean that you are committing to a certain type of real estate. Popular options include landscaped or undeveloped land, single-family homes, commercial real estate, multi-family homes, or even mortgage notes. Just like with your clients, your real estate expertise is your greatest asset.

Choose the right type of account

Being a real estate agent means that there is a good chance that you are self-employed. In addition to the necessities like taxes and health insurance, you are also responsible for planning your retirement. With an SDIRA, you have as much control over this as you have over the rest of your small business.

There are a number of accounts that could meet your needs, each with their own tax benefits, contribution limits, and eligibility requirements. Traditional IRA, Roth IRA, SEP, and SIMPLE plans can all be self-managed so you can use them to invest in real estate and other alternative assets. To find out how they work and how they differ, see our Account Guide.

How to invest in real estate with an SDIRA

When you guide yourself, your practical experience becomes the foundation of your retirement strategy. And your SDIRA is the ship that executes it. The process of buying real estate with an SDIRA is not much different from a standard transaction. However, there are a few rules and regulations you must follow to keep your account in good standing.

Here’s a quick rundown of how it goes:

  1. Open an SDIRA. As mentioned, you can choose from several different types of accounts. Consult your tax advisor if you are unsure of what is best for you.
  2. Fund your SDIRA through a transfer, rollover or cash contribution. If you want to transfer funds from an existing IRA or employer-sponsored plan, you can do so with a transfer or rollover. You can also start by making a cash contribution and grow your account year after year. Learn more about the different funding methods here.
  3. Find the right property and determine your buying strategy. Some popular options include direct purchase, partnership, leverage, or through a limited liability company (LLC).
  4. Ask your SDIRA provider to initiate the transaction. Make sure the contract is titled with the name of your SDIRA as the buyer. For example, “The Entrust Group FBO (For the Benefit Of) [Client Name] [Account #123456]. “Once the contract is executed, your supplier uses your SDIRA funds for the deposit deposit.
  5. Close the escrow. At this point, you will submit any remaining documents like a grant deed, title report, or closing cost statement to your SDIRA provider. They will then send the funds to complete the transaction.

At the end of these steps, the investment property belongs to your SDIRA. This means that all income and expenses related to the property will go through your SDIRA; not your personal funds.

What should you do next?

Learn more about the process of investing in real estate with an SDIRA. Get your free copy of our 5 steps to investing in real estate guide today.



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