• Eric Wang

How to Use a Self Directed IRA to Invest in Real Estate

Investors can now invest in higher performing real estate assets while benefiting from tax-deferred treatment in your IRA plan. Traditional IRAs limit savers to stocks, bonds, and mutual funds, while self-directed IRAs (SDIRAs) provide tax deferral benefits in addition to the tax benefits inherent in real estate ownership. For those who want more control over their retirement assets, implementing SDIRAs to invest in real estate is an avenue toward diversification and tax-efficiency.  

How Does the Self-Directed Path Work?

The prime advantage of the self-directed route is that you control which specific assets you wish to deploy your capital in, so long as the funds come out out of your IRA and return to your IRA upon the exit of an investment. 

Self-Directed IRA Custodians 

To start, you will need an IRA custodian specifically for SDIRA accounts. Unlike wealth managers that invest through your IRA account, custodians will not sell assets or provide investment recommendations to you as the account owner. Working with reputable custodians will ensure that your assets are safely held and administrative tasks are diligently performed. A quick online search for “self directed IRA custodian” should lead you to some dependable custodians. It’s imperative to do your own due diligence on all the rules so you won’t risk facing any financial penalties. We recommend the Entrust Group, as they have supported many of Rev Projects' investors. 

The IRA custodian will facilitate transferring the funds from you IRA directly into the real estate investment or investment partnership of your choice. They are a regulated third party that abides by your directions on the specific assets you choose to invest in. You as the IRA account holder cannot receive IRA funds into your personal account before the funds go out to the investment property--the custodian must the sole handler of the funds.

Why Invest in Real Estate With My SDIRA?

Real estate assets have a historical track record of long-run good performance, and again, the profits from your real estate transaction are deferred so long as they remain in your IRA account. Real estate serves as an alternative retirement investment, with uncorrelated growth in your IRA portfolio. And with SDIRAs, you are in total control of where your contributions are allocated, direct real estate then becomes an option. Unlike REITs, with SDIRAs you’re equipped with the freedom to acquire specific properties, analyze market trends, and determine yield potential as a real estate investor. 

Diversify your IRA investments with Rev Projects.


Becoming a Real Estate Investor

At Rev Projects, many of our investors have used an SDIRA to invest in our projects. By investing directly with us, you can take comfort in choosing the specific projects you want to invest in without managing their day-to-day operations. You take the role as a passive real estate investor, receiving distributions periodically. You can invest in multiple properties out of your SDIRA, creating a whole portfolio of diversified commercial properties including hospitality, multi-family, single-family, and more. 

Breaking into alternative assets is one of the main strategies that investors are catching onto in the search for true diversification. While stocks tend to move in step with financial markets, alternative assets have lower correlations to traditional investments, which can protect in the case of a downturn. 

For savvy retirement planners, it’s worthwhile to consider the world of alternative assets. While it’s not in every individual’s interest to ditch your account managers tied to your IRA, those hungry for more diversified opportunities will find it liberating. Rev Projects accepts investors with SDIRAs and you can get started with us to have a conversation on how to unlock your IRA funds for investment in our future offerings.