IRA Real Estate Investments

With the strong real estate market and the tax-advantaged status of the IRA, combining the two is often a victorious investment strategy. The real estate market fluctuates just as do all other markets but the fluctuations are usually not as harsh and people in the market are not left holding worthless paper. Real estate is a tangible asset that will almost never become completely worthless (barring a major radiation leak).

Investing IRA funds in real estate used to be quite tricky, time-consuming, and expensive. Deals had to be passed by IRA custodians every step of the way, complicating the process, and fees had to be paid to the custodian every time the IRA made a move. While much of this is still true with many traditionally custodied IRAs, a self-directed IRA can circumvent all of it.

A self-directed IRA is simply an IRA in which the IRA owner is able to make investment decisions without having to get the custodian's go ahead. The favorite instrument for opening a self-directed IRA is the Limited Liability Company which allows the IRA owner to have absolute checkbook control over his or her IRA. This means every time you have to pay an expense associated with an IRA asset, you can write the check yourself and avoid custodian fees.

Making Money with Real Estate

The best returns in real estate comes from flipping properties. Simply put, you buy below market value and quickly sell at or above market value. This is not possible with traditionally custodied IRAs because of the time constraints and the usual requirement that real estate be held for a number of years. A self-directed IRA allows you to recognize huge returns selling probate properties, tax lien properties, or just properties on which you received a good deal.

Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)

For more details on the Self Directed IRA -ICO^SM Click Here.
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