Buying Income Property with a Self Directed IRA

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If you’re an income property investor, then you probably want access to as many funding options as possible.  One such option is a self-directed IRA (Investment Retirement Account, which is similar but different from 401k investing).  Unlike a traditional IRA that limits your investment options to stocks, bonds, CDs and annuities, a self-directed IRA opens the door to a much broader range of possibilities such as real estate, commodities, absentee-owned businesses, and more.  In fact, the only investing limitation with a self-directed IRA is that you cannot invest in life insurance or collectible items like coins or baseball cards.

The concept of a self-directed IRA is long overdue in my opinion.  I have long been down on stocks, mutual funds, and bonds because the returns are too small and you have no say or control over your investment.  Conversely, using your IRA to invest in a money-generating asset like real estate (or a Laundromat, car wash, vending network, etc.) over which you have full control is a much better idea in my opinion.  Additionally, you can combine your self-directed IRA with an IRA loan to refinance investment properties you already own.

If you currently have a regular IRA, in order to invest in alternative investment vehicles you will most likely have to move into a self-directed IRA which probably means moving to a different company.  But don’t ask your current financial planner, as he/she may discourage you in order to keep collecting fees from you!  There are plenty of companies out there that specialize in self-directed IRAs so just do a quick Google search and check out your options.  Whatever company you choose will guide you through the transfer process.

The bottom line is that nobody is going to be getting rich off the stock market anytime soon.  By leveraging your existing financial assets – like your IRA – to diversify into better investment vehicles, you can get a better bang for your investing buck.