Many people think an IRA can only be used to invest in stocks or mutual funds. However, there are many investment options when investing with an IRA that many investors are unaware of, even real estate or bitcoin. It is not complicated to invest an IRA in real estate and it can be an awesome way to grow your retirement accounts. You have to make sure you use a self-directed IRA when investing in certain assets with an IRA. When choosing a company to hold your IRA, you need to make sure they can help guide you through the process.

What are self-directed IRAs?

IRAs are Individual Retirement Accounts. They were created in 1974 to help people control their own retirement plans. The government gave many tax benefits to IRAs to encourage people to invest their money. The more money people invest, the better the economy does. Self-directed IRAs have been around since 1974 as well, but most banks and brokerage firms do not offer true self-directed IRAs even though they may say they do. It is legal to invest in real estate with an IRA, but it is not as simple as investing in stocks and most banks and brokerages do not allow you to buy real estate with an IRA. There are many companies that do allow you to buy real estate in an IRA so do not give up when your large brokerage account says you can’t do that.

Self-directed IRAs can be invested into a number of assets including:

  • Real estate (homes, apartments, condos, commercial property, billboards, offshore real estate, trust deeds, notes and more)
  • Contracts of sale
  • Foreign sales corporation stock
  • Gold bullion, palladium, US Treasury gold and silver coins
  • Limited liability companies (LLCs)
  • Limited partnerships
  • Securities, CDs, stocks, bonds, mutual funds
  • Tax lien certificates
  • Crypto Currency
  • Much More

How hard is it to set up a self-directed IRA?

It is not difficult to set up a self-directed IRA; you just have to find the right custodian. With a little help, you can easily roll over assets from a regular IRA into a self-directed IRA. However, you cannot simply start buying real estate with money in your IRA; there are many regulations and rules. When you buy real estate or other assets with a self-directed IRA, you are not buying the asset, the IRA is. All the money has to come from the IRA and all money you make has to go back into the IRA.

Since the IRA has to buy the asset, you must have a custodian handle the transaction for you. There are companies that are set up to act as custodians and walk people through the process of buying assets with a self-directed IRA. IRA Innovations is a great company that I use and helps investors buy real estate, notes, and other assets with their IRA. They can also help with transferring your money over to a self-directed IRA.

Why would you want to invest money in an IRA?

IRAs have tremendous tax benefits and that is why so many people use them for retirement plans. Traditional IRAs allow you to deduct contributions from your taxes on the money you put into your IRA. You will have to pay taxes on that money when you withdraw it from your IRA in retirement. The retirement age is considered 59 ½ by the United States government.

If you withdraw money from your IRA before 59 ½, you have to pay all income taxes plus a ten percent penalty in most cases. If you withdraw money early for college, a first home purchase, medical expenses, health insurance, or disability you may be able to avoid the 10 percent penalty. Always check with your attorney or accountant for specific questions regarding IRAs or legal questions.

If you invest in a ROTH IRA, you pay taxes on the money you invest into the IRA. The advantage of a ROTH IRA is that if you wait until age 59 ½, no taxes are paid on the money as it is withdrawn. There are income restrictions on a ROTH IRA so check with your accountant!

The great thing about a ROTH IRA is you can invest $50,000, turn it into $500,000, and only pay taxes on the $50,000.

Can you invest in real estate with a 401k?

Self-directed investing is not limited to an IRA; you can also use a self-directed 401k plan to invest in real estate or other assets. You may be able to convert your 401k to an IRA. You may also be able to borrow against your 401k to invest in real estate as well! Check with your accountant to see what options you have!


If you have an IRA or a 401k and want to invest in real estate, you do not have to cash out the retirement accounts and in the process pay huge tax penalties. You can convert those accounts to self-directed IRAs or 401ks and use the money from your retirement accounts to build a nest egg. I personally prefer the flexibility of investing outside a retirement account.



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