Harleysville-Lansdale Real Estate and More: Invest in Real Estate with a Self Directed IRA

Did you know that you can invest in real estate with a Self Directed IRA?

Many people would love to take advantage of the current housing prices and low interest rates to purchase an investment property.  However, many of these same people lack the additional and significant cash often needed to purchase an investment property.  Such potential investors don’t realize that money they have currently invested in retirement accounts can be redirected to purchase real estate.  Certainly, such a decision should be reviewed with a competent financial advisor, but it may be an excellent way to diversify and grow an investment portfolio.

Most Individual Retirement Accounts (IRA’s) are held with major brokerage firms which only deal in the more traditional investments (stocks, bonds, etc.).  However, it is only the limitations or rules of the brokerage firm that restrict you to these traditional investments.  A Self Directed IRA is easy to establish and will allow you to invest in all of the investment types that are permitted by the IRS, including real estate.  

How to set-up a Self Directed IRA?

There are numerous firms that can help you establish a Self Directed IRA and act as the custodian for your account (just as a brokerage firm might act as custodian for your traditional IRA).  One good resource is EntrustCAMA.  In many cases, the necessary forms can be completed online in just a few minutes and the custodial fees are relatively low.

What other steps are needed to buy an Investment Property in a Self Directed IRA?

One of the first steps is to fund your Self Directed IRA.  You can make contributions to it just like a traditional IRA.  You can also transfer or rollover funds from a traditional IRA (or other qualified retirement plan) into your new Self Directed IRA.  If you have enough assets in your Self Directed IRA to purchase a property outright, that simplifies things, but there are also lenders who will finance property purchased within Self Directed IRA’s.

Once you identify a good investment property, you proceed with the normal steps of submitting an offer through closing on the property as you would for a personal purchase.  Because of IRS rules, however, you don’t personally sign any documents related to the purchase of the investment property.  Everything must be in the name of your Self Directed IRA and you direct the custodian to sign all necessary documents for the purchase.   In addition to a good Realtor and a qualified custodian, you should also consult with a CPA or financial advisor competent in Self Directed IRA’s.  With this team in place, you can diversify your retirement plan and take advantage of the many investment benefits that real estate has to offer.

There are terrific deals in real estate right now.  Coupled with the low interest rates, these deals make it a great time to consider buying an investment property.

Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for help buying or selling an investment property in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania. Search for Investment Property in Montgomery County, PA.  Get more information about Buying Investment Property in Montgomery County, PA.

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