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Understanding Self Directed IRA For Real Estate

Self Directed IRA For Real Estate

Individual Retirement account (IRA) allows individuals to save money for their retirement in a tax-advantaged way. When there is saving, there is the idea of investment as well, and one of the most misunderstood and least discussed is the self-directed IRA. People usually confuse self-directed IRA with other types of IRA, like SEP IRA and Roth IRA. But self-directed IRA is a category of its own and is completely different from other IRAs.

Before we dive deep into the technicalities of the IRA, let us first understand what does Self-directed IRA means.

What is the Self-Directed IRA?

The self-directed IRA is basically an “individual retirement account” in which the investor, which is you, will have complete control and responsibility for all the investments in your account. While typical IRAs that are offered through different financial institutions tend to limit your investment options – we are talking about bonds, mutual funds, and stocks. With a self-directed IRA, you can easily invest in a huge range of investment opportunities, such as real estate.  

Self-Directed IRA For Real Estate

Planning to invest in real estate? Wise move – but before you do that, we need to know a few things. First things first, you need to set up a self-directed IRA. Some reputable companies and firms offer individual investors the ability to set up their own self-directed retirement account. Because of the complex nature of the IRAs, we recommend that you have a custodian that will take care and provide you with all the information and guidance as you navigate yourself through the uncharted territory of the IRS tax code.

What Do You Need To Know About IRA Custodians?

Just like real estate agents, IRA custodians could also have complicated fee structures. Therefore, we advise you to do your research and understand all there is to (potential fees and expenses) before you contact a custodian as it could heavily impact your overall return on investment.

Benefits of Self-Directed IRA investment in Real Estate

You’re the one in-charge

The name says it’s all, “Self-directed” IRA makes you the one who is running the show. You’ll be solely responsible for handling your financial future. With some help from a trusted accountant and a real estate IRA, you will be able to make the right decision that will keep you happy in the later part of your life.

Higher ROI potential

When you invest in real estate through Self-directed IRA, you’ll have more flexibility regarding the overall amount that you want to invest, which means there is the potential for higher ROI.

Investing in real estate is a dream for everyone, and the self-directed IRA is the perfect route to do so. With financial freedom, you’ll be the one making decisions and controlling your own financial future so you could see a happy ever after.