More and more people are trying to learn how to invest in real estate these days. With difficult times looming in the shadows, investing their self-directed IRA in real estate is an option to consider. Being a lesser known IRA, active investments are required for its account owners.
There are other investment options for account owners such as gold, mutual funds, bonds, and stocks. One of the challenges with real estate is learning the tricks of the trade like how to buy investment property. Learning which type of property to invest in, the rules and regulations, and implementing the proper strategies before, during, and after investing in real estate are crucial steps.
We’ve come up with an infographic that shows you just how to invest in real estate using your self-directed IRA.
How To Invest In Real Estate Using Self-Directed IRA
Your self-directed IRA can hold residential or commercial real estate, real estate owned (REO) properties or real estate investment trusts (REITs). Use this information to start real estate investing now.
Types of Real Estate Investments
- Parking Lots
- Office buildings
- Grocery stores
These are real estate properties with grounds and a building made suitable for dwelling. Investors have the option to buy an old house, improve it, and then sell at a higher price. Apartment buildings are also considered a commercial property.
REO properties and REITs
Thinking about buying a foreclosed home? Know the difference between a foreclosure, pre-foreclosure, and a short… https://t.co/RRSqJ37nPL
— Todd Realty (@ToddRealtyInc) August 24, 2017
Real Estate Owned (REO) properties are usually owned by financial institutions that are not directly in-line with their business. Real Estate Investments Trusts (REITs) are usually commercial properties and often times trades in the form of stocks.
- Foreclosed Real Estate
Rules and Regulations
There are ground rules that need to be established when investing in real estate. Some rules may be plain and simple as there are consequences to the actions that some may take. There are other rules that nullify family or other people who may have vested interests in the property.
1. Don’t engage in any transactions that are prohibited
2. Disqualified persons for transactions include:
- your spouse
- lineal descendants
- investment advisors
- a corporation that you own 50% or more of
3. Prohibited transactions can result in a tax penalty
Strategies for Investing
Applying the proper strategy is crucial in order for the property to thrive. One example is to find someone who would want to partner up on investing or applying for a bank loan.
1. Partnering: use personal funds or other IRA
2. Leverage: apply for a loan
3. Options: choose to buy and sell real estate
Like this? Check out this video:
Do you know of other ways on how to invest in real estate using your self-directed IRA? Let us know in the comments section below.