Investing 401 k Ira or Sep Funds into Real Estate

Real Estate Investments through Self-Directed IRAs

Most brokerages limit the type of investments you’re allowed to buy in your IRA. If you’re interested in including real estate as part of your IRA to diversify your portfolio, you may want to consider creating a self-directed IRA. It is not an entirely complicated process once you do your research on the subject, but you must follow the laws regarding a self-directed IRA or face penalties.

If you decide to go this route, be prepared for a lot of “due diligence.” As with any real estate transaction, this can be a very lucrative investment. But without proper research and knowledge of the real estate market, you can place yourself in a very risky situation. Your best bet is to ensure to enlist the aid of professionals who are knowledgeable in this type of transaction. However, it is also helpful to have general knowledge of any form of investment transaction you are involved in. The professionals you choose to work with (like those at Brooke Realty) should be able to provide you with a basic understanding of the entire process.

You’ll start the process by opening a self-directed IRA or self-directed Roth IRA with a custodian or administrator. A simple internet search will turn up several companies that will handle this type of investment. Understand however that a custodian is a neutral party to the transaction, and by law can’t advise you on how to invest, or in what properties (or other investments) to invest in. Request a list of fees before hiring anyone, as they can very by company.

Investing in income-producing properties takes a lot of time and effort. You need to know if the right market fundamentals are there. For example: the rental demand for your property and rental price must be there, the condition of the property must warrant the investment. This research is generally done by a real estate professional, which you can find at Brooke Realty.

While you generally require around at least $3,000 or less to buy a mutual fund, a real estate investment will generally cost a considerably greater amount. You need to ensure you have enough money in the account, or have the proper financing worked out for your purchase. If you require outside financing, you’ll need to contact a loan professional to determine what loan best fits your needs. You should also ensure there is enough money in your account for all other expenditures such as taxes and management fee.

Should you have any questions or need further information, please don’t hesitate to contact me. Or you may visit our website at