Understanding Self-Directed IRA Cost
Set Up Fee
Most custodians have a one-time setup fee for establishing your account. This fee can range from $50 to $300 depending on the custodian or provider. It can also vary depending on your investment types. Providers that create LLCs are usually higher in cost. You should also take into account any annual LLC expenses. By the way, it's not required to create an LLC to invest in real estate.
Annual Fee
Custodians charge an annual fee based on the asset type or its value, others may provide an "all-inclusive" fee but still charge additional transaction fees. Make sure you read the fine print, there is no such thing as a no-fee retirement account.
Transaction Fees
Transaction fees include buying, selling, transferring funds, check requests, etc. Depending on how many transactions you make a year, this can add up.
When it comes to real estate, there is a fee to purchase the property, wire of funds, and some custodians also charge a fee for making the earnest money deposit (EMD). Find out what's included in the purchase fee.
Other Self-Directed IRA Services Fees
If you have an online "self-directed IRA" through a big bank (Fidelity, Charles Schwab, Merrill Edge, etc.) more than likely this is not a truly self-directed IRA— one where you can invest in all types of alternative assets including real estate. Usually, these platforms allow the buy and sell of stocks. It may be a commission-free, automated investing platform, but you may still be paying for the use of an online brokerage system, Robo advisor, or trading fees.
