InvestorLoft Real Estate Investing Blog

It’s no secret – real estate is a great investment. People invest in real estate and sometimes don’t even know it. Many employer-sponsored retirement plans have REITs as investment options and they’re included in those pre-formulated investment models (Target 2025 Retirement Model, for example) and as á la carte options that people invariably click.

But what most people don’t know, however, is that you can have a house in your IRA. Or even an apartment building…land…a condo. It’s all possible – you just have to think outside the brokerage account.

Real estate is what’s referred to as a non-correlated asset. In other words, its performance isn’t dictated by the performance of the equity and fixed income markets. Thus, it’s a valuable diversifier for your investment portfolio and can act to offset losses should the stock and bond markets go haywire.

Using real estate in your IRA has been allowed by the IRS since the 70s, so why don’t more people know about it (and why isn’t your stock broker telling you about it?)? Well, it’s because pre-packaged solutions provided by wirehouses, online brokerages and financial advisors are easy to sell and cost little to maintain. Having a real estate or self-directed IRA that can invest in real estate actually takes some education and a knowledge of what you’re buying. And – here’s the kicker – your financial advisor doesn’t make a commission on that self-directed IRA you’re going to open because he can’t open one for you. That’s the most common reason you haven’t heard about it.

Another great library of resources for every level of investor can be found at IraPad.com. All of their resources are free, so just sign up and open the oyster to your financial future online. While real estate in your IRA isn’t for everyone, learning something new never hurt!

How long are you willing to wait for a tenant?

Your rental home is sitting vacant and you’re left paying the tab on the mortgage and everything else that comes along. Sure, you expected a month or two of vacancy every year, but it’s still empty! Whether houses surrounding yours are in the same boat or getting snapped-up off Craigslist like $20 bicycles, there are certain steps you can take to drastically increase your property views and lower the likelihood of longer than necessary vacancy periods.

Photos. Blurry doesn’t cut it. And if you don’t have photos on your listing, that’s even worse. Photos are the difference between lookers and renters. Take the time to get some great photos of your rental property. Big backyard for dogs? Take a picture. Hardwood floors? Take a picture. New appliances? Take a picture!

Incentives. If your rental property has been vacant more than 45 days, it’s likely you’re at the threshold of your estimated vacancy rate. It’s time to get creative, and that’s where incentives come in. What are you willing to do in order to get a tenant in place? One month free rent, utilities paid for first month, pick up the water bill, free lawn maintenance, new ceiling fans, a brand-new garage door opener, or option to renew at 2^nd year for same rate all make enticing offers for prospective tenants.

Be a Craigslist Snoop. If you’re a self-managing landlord or find that your property management company is missing the boat with securing tenants for your rental property, start snooping on your own. Visit Craigslist and enter your zip code in the rentals section and see what your neighboring homes/apartments/condos/duplexes have that you don’t. You can also see how you compare to your neighboring rentals and whether you’ve got some work to do to be competitive or if yours really is the nicest property on the block. There’s nothing wrong with being nosey!

Increasingly, Self-Directed IRA (SDIRA) owners are looking at alternatives to traditional stocks and bonds for their retirement accounts. Growing investor sophistication is driving many in the direction of Real Estate, Private Stock, non-public Hedge Funds and other investments traditionally excluded from their current retirement portfolios. Alternative investment transactions through a SDIRA, may provide greater transparency and control over retirement assets. Additionally, a Traditional SDIRA allows taxes on assets held inside the IRA account to be deferred or postponed until the money is withdrawn from the account, presumably after the age of 59 ½. Alternative investments may allow account owners to take a proactive approach to improving investment returns because they choose asset classes that are not correlated to their current portfolios.

When working with SDIRA’s, it is important to be familiar with the prohibited transaction and disqualified person sections of the Internal Revenue Code (IRC). Failing to understand Prohibited Transactions, or to find an advisor or professional that does, may lead to the disqualification of your SDIRA, resulting in possible taxes and penalties. This article will outline the importance of disqualified person(s), prohibited transaction(s), and common scenarios SDIRA owners should avoid with their SDIRA.

The prohibited transactions rules are intended to ensure that the assets of a plan are invested in a manner that benefits the SDIRA itself and not the SDIRA owner. This is intended to prevent a person, such as the IRA holder, from using the assets of their SDIRA for personal benefit. It is incredibly important that the IRA holder not engage in any ‘transaction’ with his or her IRA. Consequently, transactions involving the SDIRA must be “arms-length” and free from any direct exploitation by the SDIRA owner.

Disqualified Person(s)
An IRA owner may not invest in property that he/she, a relative, or his/her business, already owns. Prohibited transactions are transactions that occur between the SDIRA and disqualified person(s). The following are, generally, considered disqualified persons.

• The IRA holder
• The IRA holder’s spouse
• The IRA holder’s ancestors and lineal descendants
• Spouses of the IRA holder’s lineal descendants
• Investment managers and advisors
• Anyone providing services to the plan (IRA), e.g., the IRA trustee or custodian
• Any corporation, partnership, trust, or estate in which the IRA holder has a 50% or greater interest

Prohibited Transactions
Understanding what constitutes a prohibited transaction is very important when it comes to making investments within a SDIRA. A prohibited transaction can bring into question the tax-deferred status of the account, resulting in the disqualification of the SDIRA and severe tax and penalties. Prohibited transactions fall into two general categories: Prohibited Investments and Prohibited Transactions. The Internal Revenue Code (IRC) defines a prohibited transaction to include any direct or indirect:

• Sale or exchange, or leasing, of any property between a plan and a disqualified person;
• Lending of money or other extension of credit between a plan and a disqualified person;
• Furnishing of goods, services, or facilities between a plan and a disqualified person;
• Transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan in his own interest or for his own account, or
• Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interest or for his own account; or
• Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving income or assets of the plan.

Often, SDIRA custodians communicate to the SDIRA holders that they should consider their SDIRA separately from themselves as individuals. It is important to understand that for purposes of the IRS code you and your SDIRA are separate entities whose interests are not related. Understanding this nuance will reduce the number of potential issues that may arise when you make investments using your SDIRA.

Common Prohibited Transactions

• Borrowing money from an SDIRA
• Using the SDIRA as security for a loan
• Selling personal assets to the SDIRA
• Buying property in the SDIRA for personal use
• Purchasing property from a disqualified relative i.e. Spouse, Children, Parents of the SDIRA holder.
• Issuing a mortgage on a disqualified relative’s residence

Penalties
When an IRA is involved in a transaction that is considered ‘prohibited’, the IRA loses its tax-exempt status and the IRA holder is deemed to have received a distribution on the first day of the tax year in which the prohibited transaction occurred. The value of the IRA is treated as if was distributed to the IRA holder and must be included in the IRA holder’s income for that year. Unless the IRA holder has reached age 59½ or is disabled, this distribution is subject to the 10 percent penalty tax on early distributions. These are hefty penalties that can rapidly diminish the benefits of the self-directed IRA.

Conclusion
Individuals who consider making, or have made, alternative asset investments in their SDIRA must be vigilant and responsible for each action they take. Becoming aware of the prohibited transaction and disqualified person rules will help them avoid tax consequences by not tripping over these fundamental rules. Individuals should contact a knowledgeable self-directed IRA custodian, attorney, CPA, or financial advisor, with a track record of working with SDIRA’s, for more details.

TommyJoe A. Valenzuela (“TJ”) is VP of sales and marketing for TAS (Trust Administration Services) online at www.trustlynk.com and a division of First Regional Bank. He has 15+ years experience in the financial services industry, implementing marketing strategies to benefit real estate professionals, attorneys and others and speaking at industry conferences on taxable investment strategies, retirement plan investing, etc. Trust administers more than $1.3 billion in assets, including those invested in real estate, tax liens, and private equities.

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

Real Estate IRAs - Save Smarter!

The self-directed or real estate IRA is a powerful tool and growing in its popularity. However, as with any other way of investing your retirement funds, it’s not to be taken lightly.

Rental and other income property can be excellent vehicles that provide long-term appreciation potential and a steady flow of income as you work towards retirement. We spoke with Jenn Dizmang, a national speaker and former securities professional who teaches investors and real estate professionals how to properly use a real estate IRA for some advice on common mistakes that people make in the process.

Jenn shared with us that the following are the most common AND the most easily avoidable mistakes she sees people making with their real estate IRAs:

1. They either live in or vacation to the property that their IRA owns
2. They try to let family members use or live in property that the IRA owns
3. They don’t realize that when an IRA takes a loan, an additional tax may be due called UDFI (Unrelated Debt Finance Income Tax)
4. They try to lease the property back to themselves from the IRA
5. They try to do rehab work themselves on a property that is owned by the IRA. (You have to hire a contractor that is an unaffiliated party to perform the work!)

Good decisions outweigh bad markets with SDIRAs

All our lives we, as investors, have been told to put money away for those rainy days. Today, investors are on the seemingly neverending search for solid investment ideas that produce sound returns with balanced risk. Consequently, advisors are looking for council on a lesser-known and often misunderstood category:alternative assets.

Alternative assets include a wide-ranging group, such as partnerships and private equity. But the largest segment of alternative investments has been and continues to be real estate. In fact, almost 60 percent of alternative asset investments are in this category. Investors can invest in condos, rental properties, raw land, commercial buildings and other types of real estate from within a Self-Directed IRA (SDIRA).

Most Americans already have real estate investments, i.e., their home, and most (given the opportunity) may prefer to invest in asset-backed investments over paper-backed investments. Many investors are wondering if today’s retreating real estate market means that the good times are over for real estate, or whether new opportunities will emerge from the wreckage. I believe that it’s the latter. Real estate advisors, with whom my company works, suggest that falling real estate prices, combined with increasing inventory, may create new investment opportunities. As prices begin to fall back to earth, the pendulum may swing past center to create oversold conditions, providing opportunities to buy real estate at low prices. Some areas in the United States may already be starting to enter this situation. Consequently, many typical real estate investors are being squeezed out of the market due to the current credit crisis.

This has created a unique opportunity for cash-rich retirement plan investors who are in a position to purchase real estate outright. Who are these cash-rich investors? Baby boomers. 2007 marked the beginning of the wave of more than 78 million baby boomers that will begin to retire over the next two decades. This group controls more than $14 trillion in retirement plan assets, which will transition from employer-based plans to individual retirement accounts. Many baby boomers have already begun to shift away from traditional equity investments to those that generate income. When you add the factors noted above with the possibility of real estate appreciation, it is easy to see why retirement accounts that invest in real estate are growing in popularity.

Just because you can invest in real estate in your IRA does not automatically make it the best decision for all account holders. Opponents of using a self-directed IRA to invest in real estate suggest that there are specific tax implications foregone by choosing real estate as an investment. First, profits personally made in real estate, if long-term, are taxed at the capital gains rate of 15 percent. When a SDIRA sells a piece of real estate, there are no taxes due at the time of sale. However, depending on the type of SDIRA, when the owner takes a distribution from a retirement account, the proceeds will either be taxed at the person’s ordinary income rate (for a traditional SDIRA) or will, potentially, be tax-free under a Roth SDIRA.

This is an important issue because ordinary income tax rates are typically higher than long-term capital gains rates. SDIRA investors cannot depreciate property or write-off interest from their mortgage on their personal tax return.

In general, real estate investors experience increased return potential because of their use of leverage and its favorable tax treatment. Most real estate investment experts advocate the use of leverage to build wealth. Most SDIRAs do not use leverage to buy real estate, although it is permissible. Without the use of leverage, real estate begins to look more like income-producing bonds with equity upside. The lack of leverage may also reduce one component of risk for investors as well since the rental income is not being immediately used for debt service. If a property goes unrented the account holder owns the property outright and may not be subject to foreclosure proceedings, as with most current leveraged properties. Consequently, the methodology for buying real estate inside a tax-deferred retirement account may differ over time from real estate purchased outside the account.

Prohibited Transactions

Investing in real estate with an IRA requires that advisors and their clients be knowledgeable about prohibited transactions and what constitutes them. A prohibited transaction can jeopardize the tax-deferred status (and tax-free status if a ROTH) of the account, and can result in serious tax consequences. Another important issue for real estate concerns the access and use of property held inside the SDIRA. In such situations, neither the account holder nor their family members (ancestral & lineal) may have personal use of said property. To do so would result in an immediate prohibited transaction.

Partnerships

For an advisor who is seeking a niche, SDIRAs might be the answer. It takes time to develop expertise in this area and an advisor who invests time in understanding real estate investments with SDIRAs can create a competitive advantage.

Today, many advisors are partnering with those who have alternative products in which to invest, whether they are real estate-related or other private offerings. These partnerships provide the advisor with the ability to meet the changing demands of their clients. Advisors are learning to work more closely with clients who may have a property or real estate professional already in mind. As investors’ needs change, alternative assets and self-directed retirement accounts will become important tools for advisors to help clients diversify and grow their retirement wealth. Those advisors that are prepared for this change will be at the forefront of the financial services industry for years to come.

TJ Valenzuela is with TAS (Trust Administration Services), a leading personal management provider of self-directed IRA retirement accounts, retirement planning services, and custody accounts at www.trustlynk.com

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

Your Virtual Key to Real Estate Investment

We find so much powerful information across the web on a weekly basis that we wanted to take a moment and fill our readers in on the “coolest of the cool” in this week’s real estate and investment markets.

Back on April 3rd, we posted Real Estate: the Self-Directed Perspective and have found that this subject is really heating-up across the web. Here are two complimentary posts on the subject of “retiring with real estate” that our readers might also find useful:

Real Estate: Market Slowdown Offers Deals for Real Estate Investors – DailyPress.com. Real Estate is on sale and the market’s current slowdown is offering great deals for real estate investors in the Norfolk, VA region. InvestorLoft members can search Virginia for investment property!

Using IRAs to Buy Real Estate: Six Reasons to Tap Retirement Funds Now to Buy Rental Property - (Chris Pummer) MarketWatch.com. There’s a lively discussion going on over at MarketWatch on Chris Pummer’s series of articles on investing in real estate with your retirement funds. This let us know that we’re doing the right thing at InvestorLoft by helping educate our members and site visitors on the details of using their IRAs to purchase real estate. Have you seen our 7-part series on the Basics of Real Estate and Self-Directed IRAs?

Bellevue, Wash. and DENVER – (April 13, 2009) - Guidant Financial Group and InvestorLoft.com announced today that they will be joining efforts to create more awareness around real estate IRA investing through both companies’ websites. Combining Guidant’s award-winning expertise in alternative investment facilitation with InvestorLoft’s reach within the real estate investment community, both companies are excited at the expanded offerings.

“Many would-be investors contact us looking for investment opportunities,” says David Nilssen, co-founder of Guidant, a leading provider of self-directed IRA services and business-financing solutions. “By combining InvestorLoft’s resources with our self-directed IRA services, our companies create an opportunity for investors to identify, evaluate and purchase real estate investments.”

Guidant’s website includes audio and video about self-directed investing, a glossary of investment-related terms and a plethora of informative articles,” says Nilssen. “The inclusion of InvestorLoft content will help fill a gap in our curriculum.”

InvestorLoft is the first technology-driven real estate investment marketplace to effectively solve the challenges of identifying, analyzing and funding investment opportunities. Having experienced a similar gap in educational content and trusted resources for referral, InvestorLoft is enthusiastic about the resources that the relationship with Guidant offers their site members as well.

“With an estimated 70-90 percent of IRA holders unaware of their ability to purchase real estate through their IRA, there is a strong need to educate our members by providing solid educational tools, particularly information about innovative investing solutions as offered by Guidant,” says Walter Charnoff, co-founder and CEO of InvestorLoft. “We’re excited about the relationship with Guidant and look forward to leveraging their expertise on the utilization of retirement funds for purchasing real estate and other alternative investments.”

By teaming up, Guidant and InvestorLoft plan to help investors take a more active role in their future investments and get one step closer to achieving their investment goals.   

About Guidant Financial Group

Guidant Financial Group provides self-directed IRAs and business-funding solutions through IRAs and 401(k)s. Guidant’s services allow investors the freedom to make investments in real estate, franchises, businesses, tax liens and more by accessing their retirement accounts without penalty before retirement age. For more information on Self-Directed IRAs or Business Financing please visit www.guidantfinancial.com.

Contact: 

Marty Weishaar 
Guidant Financial Group^TM 
Phone: 888.472.4455 ext. 3248 
Facsimile: 888.418.0374 
marty.weishaar@guidantfinancial.com

Self-directed IRAs can build your nest egg

Many investors have become disenchanted with recent stock market volatility, stories of corporate scandal and corruption. In addition to impacting retirement account values, these events have also strained investor confidence. It is no wonder then that more and more investors are pushing their advisors to offer Self-Directed IRAs (SDIRAs) that allow them to invest in alternative assets which they believe will provide greater diversification and control over their retirement nest eggs.

Factors
While the list of alternative investments includes a wide-ranging group of assets–including private equities, hedge funds and mortgages–one area that has captured the greatest level of interest is real estate.

Typically, real estate comprises 60% of clients alternative asset investments. Some real estate advisors suggest that falling prices combined with increasing inventory is creating new investment opportunities. As prices begin to fall, the pendulum may swing past center to create oversold conditions, providing opportunities to buy real estate at low prices. Some areas in the U.S. may already be starting to experience this phenomenon.

Another factor to consider is that many real estate investors are being squeezed out of the market due to the current credit crisis. This has created a unique opportunity for cash-rich retirement plan investors. These investors are either purchasing the real estate outright, through a partnership, or LLC. It is estimated that the first of more than 78 million baby boomers will begin to retire this year. This group controls more than $14 trillion dollars in retirement plan assets. These assets are being rolled-over from employer-based plans to individual retirement accounts. Many baby boomers have already begun to shift away from traditional equity investments to those that generate income, such as, income-producing property. Add these factors with the possibility of equity appreciation, and it is clear why real estate is growing in popularity.

Opponents of using the SDIRA to invest in real estate focus on key concepts which they believe have a profound effect on individual financial strategies. Before engaging in any transaction prudent investors are wise to consider them. First, profits personally made in real estate, if long-term, are taxed at the capital gains rate of 15%. When a SDIRA sells a piece of real estate there are no taxes due at the time of sale. However, when the owner takes a distribution from their retirement account, the proceeds will either be taxed at their ordinary income rate (for a traditional SDIRA) or are tax-free under the Roth SDIRA.

Additionally, SDIRA investors cannot depreciate property or write off interest from their mortgage on their personal tax return. Another important issue concerns the access and use of property held inside the SDIRA. Neither the account holder nor his or her family members may have personal use of said property; doing so would result in a prohibited transaction. SDIRA firms, such as Trust Administration Services can help educate investors about how to use a self-directed retirement account to invest in alternative investments and other investments.

Taking the First Steps
Any investor that has been intimately involved in a real estate transaction is already familiar with the basic requirements of buying real estate in a SDIRA. There are other issues which must also be considered, such as ensuring the proposed investment is not a prohibited transaction. This is why choosing the right self-directed retirement plan custodian is important. Important factors to consider when selecting a self-directed IRA custodian include experience, a consistent service record, organizational structure and wealth o expertise.

After the proper SDIRA custodian has been selected, the investor should request and complete the appropriate forms for their Traditional, Roth, SEP, Simple, Individual 401(k) or other qualified plan(s). The SDIRA advisor will guide the individual through this process.  Once the account is established, the SDIRA custodian will forward the transfer form to the resigning custodian, whether that is a brokerage firm, mutual fund, insurance company, bank or trust company. Upon receipt the prior custodian will transfer the assets to the new SDIRA. A high-quality SDIRA advisor will make the process seamless for investors.

Cost
The fees associated with maintaining a SDIRA vary among firms and is one of the most important distinguishing factors. Most SDIRA firms choose to charge based on a percentage of assets, while a minority employ a transaction-based fee schedule, which is typically kinder to larger retirement accounts. When considering alternative investments, which have longer time horizons with potentially higher returns, the percentage of assets fee approach may not be as beneficial to the SDIRA account owner. Consequently, each account holder should consider his or her specific situation before determining which is best.

Summary
Ongoing market volatility, combined with the need of baby boomers to generate income, and retire securely, is causing investors of all shapes and sizes to take a hard look at their investment allocations to ensure there is a proper mix of opportunity and risk. As investors needs change, alternative assets and self-directed retirement accounts will become important tools to diversify and grow retirement wealth.

TommyJoe A. Valenzuela is Vice President of Sales and Marketing for TAS (Trust Administration Services), a division of First Regional Bank and online at www.trustlynk.com. He has over fifteen years experience in the financial services industry. He is a guest speaker at industry conferences, addressing topics such as taxable investment strategies and retirement plan investing.

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

Creative Real Estate Financing Strategies

Funding your investment property purchases — how do you get it done these days? No one want to tie-up the bulk of their liquidity to pay cash outright and everytime for a portfolio purchase, so where do you turn when traditional financing and mortgage options are more challenging to obtain?

This week’s blog entry focuses on 3 financing thoughts for the “creative real estate investor” out there. We’d love to hear more thoughts from the lending and Agent/Broker communities on how your clients are getting the deal done as well. Feel free to leave a comment below (and gain a valuable linkback to your site!)

1. Self-Directed and Real Estate IRA Funding – With the recent downturn in the equity markets and bonds being…well…bonds, investors are looking for other places to stash their nest eggs for the long-term. Retirement plans rolled-over to a self-directed or real estate IRA custodian will allow investors to use their retirement assets to invest in real estate. The balance of some retirement plans can allow some lucky investors to pay cash lock, stock and barrell for a rental property and enjoy the benefits of long-term cash flow into their IRA. Others can use a portion of their retirement assets to acquire a qualifying property (and yes, there are restrictions on real estate purchases in an IRA) and utilize leverage to finance the remainder of the purchase with a non-recourse loan.
    
2. Non-Recourse Loans – When using your retirement accounts to fund a real estate investment purchase, most investors don’t want to tie-up all of their account’s liquidity in one transaction. That’s where non-recourse loans come in. There are several institutions out there like North American Savings Bank that will finance the balance of qualifying real estate purchases made through your self-directed IRA. Lenders generally require around a 30% downpayment contribution from your IRA and they’ll be looking for specific types of properties (i.e. cash-flow potential residential or commericial real estate, no raw land, farms ot condo-tels), but these lenders specialize in helping you “get the deal done” when you want to diversify your portfolio and place a certain amount of cash in each deal. More information can be found in our educational article on non recourse loans in our Self-Directed IRA Learning Center.
    
3. Ask the Bank – We know it sounds strange, but it’s the most obvious place to start asking questions. Many investors have long-standing relationships with their financial institutions, so why not talk to the folks who watch your money? Most institutions have lending specialist who are familiar with the bank’s entire array of lending products and can look at your particular situation and recommend what the bank would perceive as the best-fit product. What’s the worst that can happen? You leave learning about a new product that can help you meet your goals or you move on to other financing options. A win-win either way.

In these days of tightened lending criteria and the stated income mortgage having gone by the wayside, what’s a real estate investor to do? Creative financing requires putting on your thinking cap and looking for new, untapped sources of liquidity. Forget thinking outside the box – you need a whole new frame of mind when it comes to your real estate financing needs.

The process of purchasing real estate in your IRA is relatively simple, yet widely unknown and the subject of this week’s blog. For those in search of a financing source for their real estate investment goals, we’ll plant some seeds worth cultivating today.

The lending environment today is a far cry from where we were 12-24 months ago. While many of the tools that real estate investors used to achieve their goals have now been dispensed with (i.e.: stated income loans, 80/20 loans and the Option-ARM), there’s a pile of money just waiting to be used and it’s likely you’ve been sitting on it this whole time: your IRA. Most investors aren’t aware that they’re able to expand beyond the norm of mutual funds, stocks and bonds with their retirement kitty, but it’s an easy process.

Here are 3 tips to get you started on the path of utilizing your IRA to invest in real estate:

1. Find a custodian for your IRA. There are specialized custodians for self-directed and real estate IRAs. Consult our handy list of custodians to begin your due diligence process.
2. Learn about non-recourse loans and how they can help you finance your real estate purchase by using leverage in your IRA.
3. Review permitted and prohibited transactions. Purchasing real estate in your IRA doesn’t come without Uncle Sam’s restrictions. Once you know what they are, finding a qualifying property is simple!