The 3 IRA Investing Experts You Need on Speed Dial When You Buy Real Estate


Self-directed investors tend to be a very independent group. Because self-directed investors must do so much research and due diligence on their own before making investments, they often feel like they can handle everything on their own. Unfortunately for so many, this is not necessarily the case – and the costs associated with making a mistake can be huge since some prohibited transactions can actually result in the account being considered “fully distributed” from the point at which the error was made. This means that the investor will owe fines, fees, and penalties that could date back years and, on top of that, will owe all the taxes that the formerly tax-advantaged account now owes thanks to the post-event distribution. The fallout, as you can imagine, can be devastating.

Although self-directed investors do a lot of work to learn about different investment options and figure out how to manage their self-directed accounts, they still need expert advice. Here are 3 IRA investing experts you need to have on speed dial when you buy real estate.

1. Your IRA Advisor

In most cases, this person should be a legal expert in self-directed IRA investing. Ideally, they will also have a basic familiarity (or better) with real estate investing, but it is imperative that you have an expert on your specific type of self-directed retirement account to help you review transactions before you do them and look out for potential pitfalls that could result in prohibited transactions or investing with disqualified persons.

2. Your Real Estate Attorney

If you want to invest in real estate, you need an attorney available to you who can review your documents to look for potential issues with the transactions themselves. Many investors mistakenly believe that any lawyer can do this; the reality is that you need a lawyer that is an expert in real estate so they can advise you on the specifics of your deals.

3. Your IRA Custodian

You might not think you need your self-directed IRA Custodian on speed dial, but keeping your custodian in the loop about the deals you are considering doing in your self-directed IRA is imperative. After all, many real estate deals are time-sensitive and you will need your custodian’s support in order to get these transactions done in a timely fashion. Your custodian can help you with the logistics of your transactions and, to a degree, help you estimate how much time it could take to complete them.

Always take the time to consult with trusted, professional advisors to ensure you understand tax, legal, and investment issues related to the use of IRA funds in LLCs.