If you’ve been following our real estate thread the past few days, you remember that we’re discussing how to invest in income property through your self-directed IRA. Considering the chaotic state of the stock market these days, real estate as an investment option is beginning to look better and better. In truth, you should have turned to real estate as your first option but we won’t beat you up over that.
To get started using the tax-deferred funds in your IRA, the first thing you need to do is locate an independent IRA custodian that allows real estate investments and work with them. Remember, since the IRS doesn’t require individual retirement account administrators to offer real estate, they don’t all do it, but it does seem to be a growing trend.
How do you find one? Jump on Google and run a search for “real estate IRA” or “self-directed IRA.” In the early 1980’s, the financial industry coined the latter term to distinguish the types that allowed investments in assets other than stocks and bonds.
Do your research at this stage, because the custodian will be the one holding title to your real estate. Make sure that they actually do this sort of investing on a regular basis. Fees can vary widely depending upon the level of service you receive from the custodian. To make it easier on yourself, you might prefer to find one who will collect rents (which should be paid into the IRA), and pays the taxes (from the IRA). If your custodian doesn’t perform these services, you’ll have to contract for an outside agency to do so.
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