5 Ways to Invest in Real Estate with a Self-Directed IRA

When it comes to real estate investing with a self-directed IRA, your options are nearly limitless. You can choose between direct property, notes, tax liens, REITs, and more.
The most popular option is typically direct property. This category of real estate investment has the potential to bring in steady income through rental payments and offers the most diversity in terms of investment possibility.
Here are the five most popular ways to invest in real estate through a self-directed IRA and what you should consider before choosing one of these opportunities.

1.  Undeveloped Land

The “blank canvas” of the real estate world, undeveloped land represents a world of possibility to investors. Once you own a piece of undeveloped land, you have many long-term options to produce investment return.
You could subdivide the land for development, sell it to a developer, or even make a profit selling the land to a government agency.
Purchasing undeveloped land is for investors with long-term vision, as this strategy can take decades to unfold. Investors looking to meet short-term goals may want to explore the other options.

2.  Single-Family Dwellings

IRA investing

Real estate is the perfect investment for your IRA.


The category of single-family dwellings consists of rental properties. This strategy has both short-term and long-term benefits. The property can help bring consistent income into your self-directed IRA, which can then be filtered into additional investments.
Over the long-term, a home owned by your self-directed IRA could eventually be an exit strategy. Upon retirement, you could take the property as a distribution and turn it into your retirement home!

3.  Multi-Family Dwellings

Apartments, duplexes, and other multi-family properties create opportunities similar to those of single-family dwellings, but on a larger scale.
Large apartment complexes can bring in considerable rental income over the short- and long-term, and could be converted into condominiums in the right market.
Similarly, one of the units could eventually become your retirement residence.

4.  Rehab Properties

Rehabbing a property can be a very lucrative short-term strategy for self-directed IRA investors. Many have succeeded in turning a foreclosure purchase into a hefty profit in the right economic climate.
When flipping houses within an IRA, it is important to remember that any money put into the property after initial purchase must also come from the IRA, so this strategy typically requires a certain amount of cash available in the IRA to rehab the property.

5.  Commercial Real Estate

Commercial real estate covers a range of investments, from parking lots to office buildings. These are better long-term investments to bring in consistent rental income throughout the life of the IRA. Self-directed IRA owners tend to make these investments through an IRA-LLC, which offers the potential for enhanced asset protection.
Before choosing the real estate investment that is right for you and your self-directed IRA, take the time to perform your due diligence. Research the markets. Real estate often works in cycles. An investment that may have been beneficial in one cycle may not pay off in another.
With life expectancy increasing and the social security system in danger, the need for retirement income is more necessary now than ever. What is that dollar going to be worth 20 years from now? How long will your nest egg last?
These considerations are key to the decision-making process. Real estate has long been a profitable investment, as long as you know what you’re doing. If you are a skilled real estate investor, it may be time to put your knowledge to work for your retirement.
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