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Investor Insights Blog

Wall Street Journal Shines Light on Self-Directed Real Estate Investors and a Fix-and-Flip Hot Spot

June 16, 2020
Individuals often buy rentals with self-directed individual retirement accounts, which allow savers to diversify beyond stocks and bonds.
Ryan Dezember, The Wall Street Journal

Not only do investors have the option to purchase property with a self-directed account, it’s possible to lend money for these types of investments to real estate companies, startups, LLCs and more.

“The Retirement Industry Trust Association says $5.6 billion of IRA money is invested in property and an additional $27.7 billion with limited liability companies, which usually own income-generating real estate. The spending power is even greater considering lenders will finance most of the purchase price,” he says.

Ultimate Real Estate Investor Resource

Rental payments are sent to Equity Trust for the benefit of (FBO) your IRA. The checks or money order should be made payable to: “Equity Trust Company Custodian FBO [Your Name] IRA.” Once received, the checks or money orders are deposited into your IRA. All checks must be sent to Equity Trust with a payment coupon.

Yes. A self-directed IRA gives you the ability to diversify your portfolio with additional investments that are permitted by the IRS, in a tax-free or tax-deferred environment.

According to the IRS, a prohibited transaction is improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person. Examples of prohibited transactions with an IRA are borrowing money from it, selling property to it, using it as security for a loan and buying property for personal use (present or future) with IRA funds.

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