I'm considering to start a self directed IRA to invest in Real Estate and I'm wondering if it's worth it? I'm curious if anyone out there has used them and has an opinion on whether or not it's worth the effort. Also any tips anyone would have would be nice to know. Thanks

@Joe Hermanson

If you can get better results for your IRA investing in real estate than you can in conventional investments, then yes, it is very much worth it.

The self-directed IRA itself is just a tool. The use of that tool determines its value.

We have helped many thousands of clients establish self-directed IRA plans for investing in real estate. Many are very happy with the results, and feel much more secure about their retirement future.

The key is to remember that it is the IRA, not you, that is investing in real estate. If the idea of diversifying part of your tax-sheltered retirement savings into a real asset that has potential for income through both cash flow and appreciation appeals, then it it worth checking out.

I certainly do better in mine than I could do without it.  I use it for investments that are various loans.  one is a hard money lender, and the second is a reperforming note fund.  I've looked into using it for private placements for property.  Some people do that.  However, I don't chose to, because the impact of UBIT and UDFI is a bit complicated enough I'd rather stay out of that.  Look those up and look into them.  However, most people that I know personally that have self-directed IRAs use them for loaning out to other investors.

Yes, investing with a self-directed IRA is definitely worth it! I self-direct my own Roth and am also IRA Specialist at Quest Trust Company, a self-directed IRA custodian based out of Texas. There are definitely huge advantages to self-directing your IRA, but it is also very important to be aware of the rules and restrictions when using these accounts. My parents are investors and have been self-directing their IRAs since 2004, and I have now been with Quest for about 3 years, so I can definitely help to answer any of your SDIRA questions if you want to connect! @Joe Hermanson

@Joe Hermanson

To add to the discussion, here are some considerations if you take the step to select a self-directed IRA provider:

I suggest that you interview a few providers and as you do so here are some issues to consider:

1. In order to have checkbook control, the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimim balance that applies to the IRA account.

2. Confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.

3. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).

4. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).

5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLCsuch as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a speciality trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.