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Invest Your IRA in Investment Property

Consider Diversifying Your Retirement in a Self Directed Property IRAReal estate ira investing, self-directed plan.

Today, I decided I would take a few minutes to talk about what is probably our most popular investment, real estate.  There are lots of reasons why real estate is the most popular thing to invest in through your self-directed IRA.  First, most of our clients either own their home or are in the process of purchasing or renting a home, so they’ve already got a good grasp of what is involved in a real estate transaction.

Also, with real estate pricing being very low for much of the country, now might be the chance of a lifetime to cash in on some amazing deals.

Diversity & Balance Define Productive Retirement Plans

Diversification is an integral part of any balanced portfolio. Establishing a self-directed or real estate IRA allows you to diversify your portfolio in more ways than you ever thought possible.

  • For established or aspiring real estate investors, self-directed IRAs offer the opportunity to invest in an asset class they know and trust.
  • For those using a self-directed IRA to purchase real estate, you can use leverage in your IRA through non-recourse loans to acquire property (not possible in with IRAs that are not truly self-directed).
  • Self-directed IRAs can be established even when you already have an existing employer or IRA plan.
  • An investor. Finally, you have a choice of what you can invest in – seize the opportunity!
  • List Provided by By Erika D. Napoletano   Self-Directed and Real Estate IRAs – Top 10 Reasons to Start One Now. Published in

What are the Differences In the Purchasing Process?

Purchasing property in your IRA is not all that different from purchasing property as an individual.

The first step is to set up your self directed IRA so you can purchase real estate IRA.

Once your self directed IRA is set up and funded, the next step is to identify the property that you wish to purchase and negotiate a purchase price.

Next, you and the seller have agreed on the terms of the investment.

Technically, the purchaser of the property is your IRA custodian who purchases the real estate on behalf of your IRA. Therefore, make sure to have the title company (or whoever is preparing your title documents) correctly title the property in the name of the real estate IRA by making sure all of the closing documents show the purchaser as “Sunwest Trust Custodian FBO your name IRA.”

Always Consult Your Tax & Legal Professionals

We recommend that you have a CPA or Attorney review the documents with you to make sure that all the terms of the contract are what you intended them to be when you negotiated with the seller.  It’s also important to have a CPA or Attorney make sure that the investment will not be considered a prohibited transaction.

After reviewing the documents with your attorney or tax professional, have the purchase agreement sent to Sunwest Trust for signature.  Instruct Sunwest Trust to sign the documents and return them to the title company or whoever is closing your real estate purchase.  If earnest money is needed, you will need to direct us to send the earnest money to the title company.  Earnest money is considered part of the purchase.  Make sure that you do not pay the earnest money out of your pocket because this will be considered commingling funds and therefore a prohibited transaction.

If you have additional questions about IRA prohibited transactions, read our article: When Investing With an IRA Always Remain Vigilant of IRA Prohibited Transactions

Time to Seal the First IRA Real Estate Deal

Once you have scheduled your closing date, make sure to have the title company send the documents to Sunwest Trust for signatures.  If the title company needs the original documents back, please make sure to give Sunwest Trust time to sign the documents and get them returned promptly.  We can always send documents via FedEx if necessary; just instruct us on what you would like us to do. The signed documents will serve as your proof of investment and we can either wire the money to the title company or send them a check, whichever you would prefer.

I hope this content was helpful. For more valuable content, check out our checklist of how to purchase or sell real estate out of your IRA.

Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.