There are several ways to fund a real estate purchase using a self-directed IRA. You don't need to have the full purchase amount in your IRA to buy property. Here are some of the most popular strategies for funding the purchase.
1. Direct Purchase
Direct Purchase is when you purchase the asset using only money in your self-directed IRA. Your IRA pays all-cash for the investment. It is the simplest and quickest way to fund a purchase.
Partnering is when you bring in other sources of cash to fund the purchase. You can partner with other people’s IRAs or with their personal funds. You divide the investment profits and expenses among investors based on ownership percentage.
Relevant Article: 5 Self-Directed IRA Real Estate Investing Strategies
Leveraging is when your IRA takes out a loan, typically known as a non-recourse loan. This sort of credit is common in real estate purchases and cannot be obtained by going through traditional means. We work with many non-recourse lenders. Contact us to learn more.
4. LLC/Checkbook Control
LLC/Checkbook Control is the process of establishing a limited liability company (LLC) with IRA funds and using the LLC to buy the asset. The investment is then held in the name of the LLC. These are called Checkbook IRAs because you have direct access to your IRA funds via a checking account that is owned by your IRA. IRA Resources does not sell or create LLCs. To learn about how to form an LLC, visit the IRS website or your local SBA district office for more information.
To learn more about these strategies give us a call, 888-322-6534. We will be happy to answer any questions you may have about investing in real estate with your self-directed IRA.