START WITH THE BASICS A s an avid real estate investor, you probably have heard about self-di- What Self-Directed IRAs Are All About
rected IRAs. Self-directed IRAs are one of the most powerful tools available for building wealth on a tax-deferred or tax-free basis. If the volatility in today’s traditional investment markets has wreaked havoc with your retirement portfolio, the good news is that you have the option to use your retirement funds to invest in something you al- ready know and understand. Through a self-directed IRA, you can invest in directly owned real estate, mortgages, trust deeds, real estate-structured limited partnerships or limited liability companies and other nontraditional assets. You can use a self-directed IRA to invest in real estate in a number of ways. IRA funds can be used to buy and hold raw land, commercial buildings, condos and other residential properties, vacant lots, trust deeds or real estate contracts. Aside from a few exclusions, the custodian where your account is held has free rein to determine the types of investments it will permit. WHY INVEST WITH YOUR IRA Because IRAs offer a great blend of tax shelter and growth potential for your retirement funds, real estate in- vestment properties that appreciate over time or generate solid rental income are among your best bets in a self-di- rected IRA. Residential apartments, condominiums and single-family homes can be great options if you can find a good deal in a hot or up-and-coming market. With a self-directed IRA, your monetary gains from your real estate investments and the income generated will enjoy compounded growth while the asset is held in the IRA. HOW THE PROCESS WORKS The process for using a self-directed
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