YES, You Can Buy Real Estate With Your IRA!

Most of us have a retirement account — either an IRA or a qualified employer plan like a 401(k) or 403(b). These plans provide easy access to traditional investment choices like stocks, bonds and money market accounts.

But, what if you don’t want to bank your retirement on the ups and downs of the stock market? Can’t you choose to invest your retirement money in real estate?

The answer is YES. The IRS allows you to invest in a multitude of “alternative investments” including real estate. IRS Publication 590-A explicitly states only a few things you can’t invest in with qualified retirement funds, such as life insurance and some collectibles.

If you’re unable to invest in real estate with your current plan, it’s simply because your plan administrator or financial institution restricts the choices they make available to you.

Most financial institutions choose to limit their offerings to traditional investments, largely because allowing alternative assets necessitates unique administrative and custodial requirements. It’s just easier for institutions to transact and administer traditional choices like electronically traded stocks, bonds and mutual funds.

But here’s what they don’t tell you: It’s just as easy for you to roll over your funds to a trustee or custodian that allows you to own assets in any investment allowed by law, including real estate. The easiest way to investing in real estate with qualified retirement funds is to open—or transfer your existing account into—a Self-Directed Individual Retirement Account (SDIRA).

In 2015, I moved my retirement funds from a full-service brokerage account to a Self-Directed IRA. Since then, I’ve purchased, rehabbed and rented three properties using my qualified retirement account. I’d love to talk with you if you’re interested in exploring buying real estate with your retirements savings. I also wrote an article about how I did it which you can read here.