Self-Directed IRAs (SDIRA) for Real Estate Investing:
Mohamed YoussefBusiness Member
Accountant · Brea, CA · Member since 2018 · 111 posts · 61 votesSelf-Directed IRAs (SDIRA) for Real Estate Investing:
Most Popular Reply
Member since 2025 · 194 posts · 140 votes
1yI agree that investing with a QRP is a powerful wealth-building strategy. However, anyone considering it must understand the critical rules and restrictions, particularly those related to prohibited transactions and self-dealing. Unfortunately, I’ve seen many clients who failed to educate themselves properly, ultimately causing their QRP to be disqualified.
The information provided is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication
6 Replies
- Member since 2025 · 21 posts · 7 votes1y
Using a SDIRA is a great way to invest in real estate. I just worked with an investor this week that used his SDIRA to acquire 3 properties, in 3 different markets, utilizing fractional real estate.
- Accountant · Brea, CA · Member since 2018 · 111 posts · 61 votes1y
Quote from @Vincent Trujillo:
Using a SDIRA is a great way to invest in real estate. I just worked with an investor this week that used his SDIRA to acquire 3 properties, in 3 different markets, utilizing fractional real estate.
Glad to hear more investors are using this strategy to finance more transactions.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesEverything you said is spot on.
Quote from @Mohamed Youssef:
Beyond simply purchasing rental properties in a self-directed IRA, several lesser-known strategies have proven remarkably effective. I've helped clients implement these approaches with impressive results.
One particularly powerful technique involves using SDIRA funds for private lending rather than direct ownership. A client recently structured a deal providing 65% LTV financing for a fix-and-flip operator at 12% interest with 2 points, all returns flowing back into the tax-advantaged environment.
Another approach gaining traction: partnering SDIRA funds with personal funds to acquire properties too large for the retirement account alone. This requires careful structuring (typically using tenancy-in-common arrangements) to maintain compliance while leveraging limited retirement funds.
For those concerned about UBIT (Unrelated Business Income Tax) from leverage within IRAs, some investors have successfully used options strategies, securing rights to purchase properties using minimal SDIRA funds, then selling those options for profit or exercising them when additional funds become available.
The compliance requirements remain stringent (prohibited transactions can invalidate the entire IRA), but the growth potential justifies the administrative complexity for many investors.
Who's actively using a self-directed IRA for real estate? Any unique strategies you've implemented successfully?I actually utilize the self directed IRA's sister, the Solo 401k. I started my self directed 401k in 2024, with a rollover from a defined benefit plan. Over the last 4years I "paid the piper" and turned my 401k into a Roth.
Interestingly, while 80% of my investments are notes and some passive real property ownership, (many in the form of syndicated investments), I do have an ownership interest in my 401k which would, if the entity owned was a LLC or S corp, trigger the unrelated business income tax. To avoid this, the investment held by the 401k is in the form of shares of stock in a C corporation, which means the 401k collects dividends, a passive income which does not trigger the unrelated business income tax. However, the C corporation must pay tax on its earnings, before the dividend distribution. Fortunately, with C corporation net income taxed at 21% flat, the "pain" is bearable.
- Accountant · Brea, CA · Member since 2018 · 111 posts · 61 votes1y
Quote from @Don Konipol:
Everything you said is spot on.Quote from @Mohamed Youssef:
Beyond simply purchasing rental properties in a self-directed IRA, several lesser-known strategies have proven remarkably effective. I've helped clients implement these approaches with impressive results.
One particularly powerful technique involves using SDIRA funds for private lending rather than direct ownership. A client recently structured a deal providing 65% LTV financing for a fix-and-flip operator at 12% interest with 2 points, all returns flowing back into the tax-advantaged environment.
Another approach gaining traction: partnering SDIRA funds with personal funds to acquire properties too large for the retirement account alone. This requires careful structuring (typically using tenancy-in-common arrangements) to maintain compliance while leveraging limited retirement funds.
For those concerned about UBIT (Unrelated Business Income Tax) from leverage within IRAs, some investors have successfully used options strategies, securing rights to purchase properties using minimal SDIRA funds, then selling those options for profit or exercising them when additional funds become available.
The compliance requirements remain stringent (prohibited transactions can invalidate the entire IRA), but the growth potential justifies the administrative complexity for many investors.
Who's actively using a self-directed IRA for real estate? Any unique strategies you've implemented successfully?I actually utilize the self directed IRA's sister, the Solo 401k. I started my self directed 401k in 2024, with a rollover from a defined benefit plan. Over the last 4years I "paid the piper" and turned my 401k into a Roth.
Interestingly, while 80% of my investments are notes and some passive real property ownership, (many in the form of syndicated investments), I do have an ownership interest in my 401k which would, if the entity owned was a LLC or S corp, trigger the unrelated business income tax. To avoid this, the investment held by the 401k is in the form of shares of stock in a C corporation, which means the 401k collects dividends, a passive income which does not trigger the unrelated business income tax. However, the C corporation must pay tax on its earnings, before the dividend distribution. Fortunately, with C corporation net income taxed at 21% flat, the "pain" is bearable.
Great points here, Don. I also like the solo 401 (k), as you can potentially contribute up to $70K per year pre-taxes.
- Member since 2025 · 194 posts · 140 votes1y
I agree that investing with a QRP is a powerful wealth-building strategy. However, anyone considering it must understand the critical rules and restrictions, particularly those related to prohibited transactions and self-dealing. Unfortunately, I’ve seen many clients who failed to educate themselves properly, ultimately causing their QRP to be disqualified.
The information provided is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Mohamed Youssef:
Beyond simply purchasing rental properties in a self-directed IRA, several lesser-known strategies have proven remarkably effective. I've helped clients implement these approaches with impressive results.
One particularly powerful technique involves using SDIRA funds for private lending rather than direct ownership. A client recently structured a deal providing 65% LTV financing for a fix-and-flip operator at 12% interest with 2 points, all returns flowing back into the tax-advantaged environment.
Another approach gaining traction: partnering SDIRA funds with personal funds to acquire properties too large for the retirement account alone. This requires careful structuring (typically using tenancy-in-common arrangements) to maintain compliance while leveraging limited retirement funds.
For those concerned about UBIT (Unrelated Business Income Tax) from leverage within IRAs, some investors have successfully used options strategies, securing rights to purchase properties using minimal SDIRA funds, then selling those options for profit or exercising them when additional funds become available.
The compliance requirements remain stringent (prohibited transactions can invalidate the entire IRA), but the growth potential justifies the administrative complexity for many investors.
Who's actively using a self-directed IRA for real estate? Any unique strategies you've implemented successfully?Being on the debt side with a SDIRA I view as far superior - as typically debt side is not kind to taxes (pay ordinary income) and when you own real estate you typically lever it (impacts SDIRA with UDFI) as well as you cannot take advantage of the depreciation.
So if I had a pile of cash and SDIRA, I would put the SDIRA $ investing in debt/private lending/debt fund 100/100 times.
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