Buy Real Estate With Your IRA

Invest Your IRA Funds in Real Estate

IRAs were created by amendments to the Internal Revenue Code made by the Employee Retirement Income Security Act of 1974, and have been one of the most successful Federal initiatives aimed at encouraging the creation of private wealth in United States history. The total value of IRA’s in the

Over the past 33 years IRAs have gained wide acceptance, and are now part of the portfolios of a very high percentage of American families. Along with this broad acceptance has come a proliferation of IRA mechanisms, including a number of mechanisms that are “self-directed”, meaning that the  beneficiary of the IRA chooses what to invest his/her IRA funds in.

This important option—self-direction—is the result of legislators hearing the voice of the electorate who were asking themselves this simple question: who can better take care of my money than me? And finding this answer: no one!

Most people only think of a self-directed IRA as offering securities-based investment choices, generally speaking, stocks, bonds, and mutual funds.  This is incorrect. Under a truly self-directed IRA the range of permitted investments is virtually unlimited. Which means, you can INVEST IN REAL ESTATE USING YOUR IRA FUNDS? 

What kind of properties can you buy? Well, practically anything you want—condos, townhouses, multi-family, and commercial properties to name a few. The list of permitted investment is very long, and covers virtually all types of properties and investment opportunities.

You may ask, aren’t real estate investments a risky way to manage my IRA funds?, and I think that the best answer to that question is another question :  “compared to what?” As the dot-com crash so vividly illustrated, “securities” aren’t necessarily secure.  Even broadly-based mutual funds and market-index funds were very negatively impacted by that collapse and in many cases are still trading well below their 1999-2001 peaks.  Real estate, meanwhile, has generally continued to appreciate, probably for the basic reason humorously highlighted by Mark Twain in when he sad “They ain’t makin any more of it.”  Or, as another American humorist- Will Rogers advised: “Don’t wait to buy real estate.  Buy real estate and wait.” And it is important to remember that investing in real estate does not mean you have to abandon other investment options: what this is really about is portfolio diversification!

By following certain rules and legal procedures you can buy investment property with your IRA and enjoy the many benefits that real estate provides.