Using Your IRA for Real Estate Investments

September 11, 2023


Earlier this summer we gave a talk to a local chapter of the Boglehead investor community that we wanted to share this month. Bogleheads are known for their conservative approach and diligence in investing, and we had a great discussion about how real estate or alternative investments can intersect with traditional market strategies.

One topic that came up was tax strategies for retirement (IRAs in particular), and how an individual or family saving for retirement could add real estate to their portfolio using an IRA. The group was interested in learning more about Self-Directed IRA’s as a strategy, and it led to a good conversation that I wanted to share in part here – a review of Self-Directed IRA’s, and how they can be a good counterbalance to a traditional stock index fund accounts.

To start, what is a Self-Directed IRA?

Putting it simply, a self-directed IRA is a type of traditional or Roth IRA. The difference is the type of assets you can own in the account. It allows you to save for retirement with assets that are traditionally off-limits for standard IRAs, including alternative investments such as precious metals, real estate assets and cryptocurrencies. With regular IRAs, your investment options are limited to approved securities like stocks, bonds, exchange-traded funds (ETFs) and mutual funds.

How Does a Self-Directed IRA Work?

To use a self-directed IRA to buy an alternative investment or real estate, you need to move money from your self-directed IRA to a Custodian. Custodian companies like Entrust or Millennium Trust (there are many) will review documents related to the investment to ensure that it meets the terms outlined in the IRS regulations governing Self-Directed IRAs, however they do not provide investment or fiduciary advice.

Varying on the type of self-directed IRA you have, you’d either ask the Custodian to disburse the funds or you’d wire the funds yourself from a linked checking account.

What Assets Can You Own in a Self-Directed IRA?

Some of the non-traditional assets you can own in a self-directed IRA:
• Cryptocurrency, like Bitcoin or Ethereum.
• Precious metals, including gold and silver
• Real estate
• Startups
• Foreign currency

When it Comes to Real Estate

With a self-directed IRA, you aren’t limited to stocks, bonds, or mutual funds. You can invest in real estate syndications or funds, or even residential and commercial properties like raw land, mobile homes, and more as alternative investments for your IRA. For an IRA owner, this allows greater account diversification that gives additional protection from the unpredictable stock market or inflationary worries. Your real estate investment then grows tax-free (Roth IRA) or tax-deferred (Traditional IRA), depending on the account type. Another great advantage besides diversifying your retirement portfolio is that you are not limited to a specific geographical area. You can purchase real estate in almost any area.

Self-Directed IRA Benefits

  • Potential for Higher Returns
  • Increased Diversification
  • Larger pool of potential investments
  • Generational Estate Planning


Self-Directed IRA Disadvantages and Risks

  • Takes more time to review the options
  • More Limited Protections
  • Finding a Trustworthy third-party
  • Strict IRS guidelines to follow


For those hoping to finance their retirement with assets you can’t find at a traditional brokerage, self-directed IRAs can be an attractive option. With investors that we speak to about retirement, some use this strategy for a portion of their portfolio, while keeping much of their investments in core or traditional investment vehicles like an index or mutual fund. With a blended portfolio like this, you can create an opportunity to maximize tax deferral or tax-free growth with opportunities that may provide a higher return than traditional markets.

If you’re considering real estate or alternative investments like this, always speak to a financial advisor or tax professional to help you navigate the decision.


As a reminder, if you’re interested in learning more about Preferred Equity and other types of investments, feel free to schedule a call to learn more visit here: Schedule a Call

Also feel free to view a few of our most recent resources.