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Using Retirement Funds

What about my retirement funds? Can I really use my IRA to invest in real estate?


Yes you can! Most individuals with retirement funds set aside in an IRA or ROTH IRA have never even considered the possibility of investing in real estate with these funds. This is simply because most people do not know that you are allowed to do this. Most of us have been taught that you are limited to stocks, bonds, mutual funds, money market accounts, CD’s and the like. In fact the truth is that there are many things you can use this money to invest in, such as: homes, apartment buildings, condos, commercial real estate, vacant land, businesses, and even notes.

The first step is to set up a self-directed IRA, and choose a custodian that is willing to allow you to use your money in a truly self-directed manner. You have the freedom to choose whether you want to buy properties to flip, or loan money to an investor, or purchase some rental units to hold for the long term. You can even loan the money out to refinance a property in exchange for a mortgage, where you would receive monthly payments directly into your IRA account

You custodian will assist in the transfer of funds to complete these transactions. All profits, and monthly payments will be directly transferred back into your IRA, where you receive tremendous tax benefits.


ROTH IRA vs. Traditional IRA

If you have a ROTH IRA, the return on your investment is absolutely tax free, and after you reach the age 59 ½, you can withdraw this money tax free. With a traditional IRA, you will be paying taxes once you begin withdrawing the money in your retirement. You are obviously much better off having a Roth IRA, and this is a powerful strategy to grow your net worth tax free for life!

If you are not satisfied with the returns you are currently receiving in the stock market, why not diversify and invest some of your hard earned money into something tangible, extremely safe, and where you are guaranteed a return of at least 6-12% APR?

Some restrictions do apply when investing IRA funds in a self directed manner:

  • You cannot purchase real estate for yourself to live in, or your parents, grandparents or children
  • You cannot loan money to yourself
  • You must invest the money in a manner that is in the best interest of the IRA account
  • You cannot receive personal benefits from your IRA, such as paying yourself, or using the property as office space for your business

More information about self directed IRA’s can be found at these websites:

Google- Search for “self directed IRA”
Article in Money Magazine
Wikipedia defines Self-Directed IRA's (a free DVD is available at this website, I highly recommend it)

A great book to read on this subject is: "IRA Wealth" by Patrick W. Rice

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