Investing with a small SD-IRA?

Question

This might be a stupid question so bear with me. I have a SD-IRA for my child's college fund. It only has $6,000 in it. Any suggestions for investing an amount this small somewhere in the world of real estate? Or maybe I should just stick with something like a mutual fund or bonds until it grows larger. Thanks!

Ian Ippolito · Answer

Are you an accredited investor? If so there are a few crowdfunding sites that have $5000 minimums, that you could invest through a self-directed IRA. Patch of land, Fundrise, Realtyshares And Peerstreet all have $5000 minimums (or less).

If you are not accredited, then another option is to invest in peer to peer loans, such as The Lendingclub. Currently that's returning me about 7% very safely. The key is to diversify into at least 100 loans (and 250 is even better). No one that has done that has lost money to date. Since the minimum is $25 per loan, you could easily have more than 250.

Wayne Snell · Answer

I was going to suggest that you partner with someone else who also has a small SD-IRA on  either a note, or possibly to loan the rehab money to an investor. I have invested a small amount (e.g., $1000) on note deals where my SDIRA partnered with other money. When the investment ended the SDIRA received a proportional amount of the profits. I'm doing this in a ROTH IRA so it's tax free.

Adam Anderson · Answer

Another option no one mention would be to buy a REIT or a REIT mutual fund.  That would probably be the easiest and most liquid way to invest in real estate with a smaller amount of money.

Chris Johnson · Answer

Thanks again everyone.  Good suggestions.

John Cohen · Answer

@Chris Johnson Partnering or investing in a deal might be the best option. Look info crowdfunding type investments could offer you a solid deal. Tax liens/deeds might also work really well.

Doreen Chaisson · Answer

You may also want to consider a crowdfunding type investment like Prosper does, which allows you to invest your funds across multiple notes for varying amounts, at varying risk levels and interest rates.   Depends on your personal risk tolerance.

Chris Johnson · Answer

Thanks folks!

Mark Nolan · Answer

@Chris Johnson

You could always look into tax liens.

Bryan C. · Answer

Maybe you can find a Note or partner on a Note.  Possible to partner on another deal or use it for private lending.  Options can be limited at first glance but the more educated and outside the box thinking you are the easier it will be to find a solution

Investing with a small SD-IRA?

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