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Investing in real estate is a well-known way to bring diversity and balance to an investment portfolio. Adding real estate to your portfolio through a self-directed IRA allows you to bring that same balance and diversity to your retirement plans. When it comes to self-directed IRAs, real estate and related investments are some of the most common assets. If using a self-directed IRA to invest in real estate interests you, here a few IRA tips to help you make the most of your investment.


  • Pick the type of self-directed IRA for you — Consider where you are in your journey towards retirement and what your investment horizon looks like when picking the type of IRA for you. A traditional IRA is tax-deferred, allowing you to reap the benefits of compounding interest without the worry of taxes until you retire. The Roth IRA allows you to invest with after-tax money, meaning that all the income that results from the investment is tax-free.
  • Play nice with the IRS — The self-directed IRA allows investors a level of freedom they might not find with IRAs offered by brokers. However, there are rules in place around self-directed IRAs that investors must follow. There are certain prohibited transactions that can disqualify the IRA and result in penalties and fines. In addition, there are rules in place regarding disqualified persons that cannot interact directly with your assets or transactions. Attempting to outsmart the IRS is never worth the risk.
  • Consider the benefits of rental properties — Whether you invest in rental properties for a living or are interested in the prospect, rental properties can provide a steady source of income to your IRA. Seasoned investors that know a property can generate 8-10% in income per year can easily pay for upkeep from their IRA and still make gains on their investment.
  • Don’t limit yourself to physical real estate — Savvy investors know that real estate investments aren’t limited to physical assets. Investing in real estate related assets can be equally viable and profitable when done right. These related investments can take many forms. From fishing and mineral rights to tax and municipal liens, getting creative with the terms of your investment can bring rich returns for your IRA.
  • Think outside the box — More active investors can consider real estate investments that allow for slightly more liquidity. Flipping a real estate investment is one way to quickly create a return. Financing other real estate investors is another alternative method of investing. Creative investors have many options open to them.

Whether real estate is a field in which you’re a veteran or a novice, using a self-directed IRA to invest for your retirement is a serious avenue to consider. The benefits of diversification and balance to a portfolio are paired with the tax benefits afforded to a self-directed IRA.

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