Benefits of Using Self-Directed IRAs for Multifamily Real Estate Investing

By Chris Urso

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Is your IRA working for you, or are you working for your IRA? Chances are that if you don’t have a self-directed IRA, you’re working for it. Just like you can invest in stocks, bonds, and mutual funds, you can also use your self-directed IRA to invest in multifamily real estate—tax-deferred or tax-free.

From my experience, most people do not realize it is possible to generate long-term cash flow and capital appreciation by investing in multifamily real estate within their retirement plan.

I’m not talking about purchasing stock in a public REIT, either. I’m talking about investing in tangible, income-producing buildings with little to no debt. Once people are educated about the benefits of purchasing real estate through an IRA, they realize the opportunities that are in front of them and the benefit of including cash-flowing real estate in their retirement plan.

I have found that most people miss the opportunity to take advantage of multifamily real estate because of two main factors: 1) They are simply not aware they can use IRA funds to invest, and 2) They don’t know how to get involved.

The first factor I’ve already solved for you. Now that I’ve told you it can be done, I’m sure you’ll want to know what to do to make it happen. Making an IRA investment in multifamily real estate is fairly simple. After deciding to invest, the first step is to open a self-directed IRA. This can be done in as little as two to three business days.
Next, you will need to fund the IRA. You can do this with a simple rollover, usually with no tax consequences. (Of course, you should consult your CPA or tax professional for proper tax advice.)

The rollover can be accomplished in as little as one day or could take up to three weeks depending on the company currently holding your funds. Once your account is funded, it’s now just a matter of filling out a few forms to transfer into the IRA investment tax-deferred. It’s that simple.

Now that you’ve made the decision to take action, the real fun begins. It’s time to buy some property.

This step, however, can be frightening and challenging for anyone who is not an experienced an investor but still wants to make a good return on his or her retirement fund. Anyone can purchase property, but understanding whether or not that investment makes sense is another matter altogether.

Personally, I have spent much of the last decade educating investors on how multifamily real estate opportunities are located, analyzed, negotiated, financed, operated, and eventually sold. Much of this was financed using investors’ self-directed IRAs.

Now that you understand the possibilities, the first step is to take action. In order to use your self-directed IRA to invest in real estate, start setting up your account today. Next find knowledgeable professionals with whom to invest. Your IRA will thank you later.

To learn more about IRA investment opportunities in multifamily real estate contact our office and see how easy it is to become a partner in our next project. In the last three years National REIS has raised more than $7 million for various projects with over half of those dollars coming from investors utilizing their IRAs to invest. Contact us today at National REIS for more information.