Buying Real Estate With A Self Directed IRA (SDIRA). Details

Little Known Secret – Buy Real Estate with a Self Directed IRA

IRA’s have become one of the de facto investment strategies to save for retirement and to build a tax-deferred investment portfolio. With trillions of dollars invested in an estimated 50 million IRAs, those numbers are only expected to grow in the future. Although most people who use IRAs see these investment vehicles as a place to purchase stocks, bonds, and mutual funds, they can actually be used in other more non-traditional ways.

calloutA SDIRA provides investing alternatives to saving for retirement and is offered by many financial institutions. Using a SDIRA for real estate let’s you take advantage of all the great benefits for both the SDIRA and owning income property.

While only a small number of investors know that their SDIRAs can be used for real estate, trillions of dollars will be put into non-traditional assets over the next few years as the word gets out. To have your entire retirement resting in the stock market is never a great idea, and adding real estate to your SDIRA gives you much more control than you’d find in the volatile stock market. Although there are always regulations regarding SDIRAs, the Federal Government only stipulates that only collectables and life insurance cannot be owned within the SDIRA.


Benefits of SDIRA’s & Real Estate

When you own real estate through a SDIRA it comes with many great benefits:

Benefits of Real Estate Investing

Steps to Using a SDIRA for Real Estate

Purchasing real estate through a SDIRA is simple and only adds a few extra steps to the real estate investment process. Here are the typical steps to follow:

  1. Open a SDIRA. This usually takes 2 – 4 business days.
  2. Fund the SDIRA. This can be done via 401k or traditional IRA (1 – 4 Weeks)
  3. Research and find an investment property. (Days Vary) The time this takes varies from person-to-person, but requires a fair amount of research. Finding the right neighborhood, evaluating homes, and looking for a property that will help you achieve your financial goals can be time-consuming. See our guide to finding the right investment property.
  4. Place an offer. After you’ve found a potential property, the next step is to submit an offer. To do this within the SDIRA, you must list the SDIRA as the buyer of the home and have a custodian for the property.
  5. Place your earnest money deposit. When you use a SDIRA, you must make all payments from the funds in your retirement account, and not from any other personal accounts.
  6. Close Escrow. This process generally takes between 30 – 60 days. During this time, appraisals, inspections and a variety of other steps occur.
  7. Generate Income and Protect Your Asset. You’ll need to find a tenant, make sure regular maintenance is performed on the property, track your return on investment, manage insurance and hire someone to take care of property management.
  8. Retire Comfortably. Take distributions from the cash generated from your properties.

Why You Should Use a SDIRA for Real Estate

sidebar copySo why should you use a SDIRA for real estate? Besides the great tax advantages, there are many other upsides. First and foremost, financial experts continuously talk about the importance of diversification. Diversification acts as a means to help protect your overall portfolio so that all of your eggs aren’t in one basket.

Many investors can recall the financial downturns in the late 1970’s as well as those in 2008 and subsequent years. Those who trusted the majority of the retirement assets to the stock market learned the importance of diversifying their portfolio. The stock market made serious swings during those times and took awhile to rebound.

If you owned a single family investment property during this same time period, you could have weathered the storm by holding onto your asset and continuing to collect rent from your tenants. Even though the property may have gone down in value, it was still generating income while the economy recovered. Having all your assets tied up in one single kind of investment is never wise, and adding diversity to your portfolio will make sure you are prepared for any economic hiccups in the future.

About HomeUnion®

HomeUnion® is committed to helping investors find unique real estate opportunities through pre-vetted properties in neighborhoods around the country. We make remote real estate investing easy by helping you through every step of the way from finding properties, to managing all aspects of your asset, and by keeping the goal of maximizing your returns in mind.

Would you like to learn more about how you can use your SDIRA to fund your next income property? Call one of our real estate Investment Solutions Managers today at 866-250-5610.

Investors who invest with Mynd/HomeUnion will now have:


   A greater suite of services to select from

Property Management icon - homeunion and Mynd

   Access to local property management in 20 markets from Mynd


   A single point of accountability for all your real estate investments


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