How to Use Your IRA to Invest in Real Estate

25 Jan

Posted By: Sean Terry | January 26, 2009

Make a Fortune in this Real Estate Market Downturn Using Your IRA

How To Use Your IRA To Invest In Real Estate

As 2008 passes of as one of the worst years in stock market history inventors are asking, “Where do I invest in a recession?” Well, we all know the real estate market will come back and with the government pushing extremely hard to heal the market place, there is a good chance we will have an over correction.  So How Can You Use Your IRA to Invest in Real Estate and make a fortune in this market downturn?

Here are 2 excellent ways to use your IRA to invest in real estate but before you start, there are several items that need to be accomplished.

1. Open a Self Directed IRA Account with a trusted custodian, I recommend The Entrust Group or do a search on Google for “Self Directed IRA”. 

2. Transfer all or a portion of your retirement account balance to your newly established Self Directed IRA with no tax penalty. 

Now that these are complete, you’re ready to start IRA real estate investing.  Let’s use as an example a renovated $200,000 residential rental property with a tenant in place paying $1,200 a month in rent that you purchase for $157,500 (you will learn where you can purchase these types of deals…Read on).

1. Use IRA to Purchase All Cash

Purchasing the property this way would mean no mortgage or no debt service.  All profits made from the sale or rental income collected would go directly into the IRA account tax free or tax deferred depending on your plan.  All expenses pertaining to the property will be funded buy the IRA, make sure there’s extra funds available in the IRA to cover these expenses.

IRA Pays Cash

2. Partner With Your IRA to use Leverage

If you are looking for a way to use leverage with your IRA than partnering with yourself is the answer.  You are able to use mortgage money and IRA money to make a purchase.  In the example, the $200,000 property that is purchased for $157,500 can be purchased using your IRA and a mortgage loan.  You can use your IRA to put down $78,750 (50%) and you, the individual, acquire a mortgage loan from a bank for the remaining $78,750,000 (50%).  The loan must be non-recourse note meaning it’s not personally guaranteed by the individual.   This allows you to use leverage with your IRA and also not any of your personal money.


Partner With Your IRA

Partner With Your IRA



When partnering with your IRA, the spilt of ownership must directly reflect how each contributes to the purchase price.  Of course this example is just one way in which the splits can occur.  Any percentage split is allowed as long as it reflects the contribution amount from each party to equal 100%.  Keep in mind the IRA is not responsible for any loan payments, but the rental income should be able to pay the mortgage payment.


IRA Percentage Split

IRA Percentage Split



You can increase the percentage of ownership in the IRA by putting more as a down payment which will increase the IRAs percentage of ownership. As you can see from this example,  the individual has no money out of pocket and can reap huge profits.  If the motive is to have the majority of the profits go to the IRA, than increase the down payment accordingly.


Now your probably wondering where you can  find renovated properties with 25%  built in equity?  Well,  as a founder of  Fortress Investments we deliver Renovated Cash Flow Properties With Tenants In Place with 25% guaranteed Equity.  If you would like to Learn More  Click Here.

*These examples are for illustration purposes only, and are not to be considered legal or tax advice.  Please contact The Entrust Group for more information on Self Directed IRAs.

Happy Investing!


Tags: real+estate+ira+investing, , self+directed+ira+real+estate
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7 Responses to “How to Use Your IRA to Invest in Real Estate”

  1. David Walters 14. Oct, 2009 at 2:20 pm #

    Does anyone know if it’s possible to use a self directed IRA to inject cash into an investment property to pay down the mortgage to where it can be refinanced in a case where housing values have fallen? My email is Thanks!

  2. george 15. Oct, 2009 at 10:51 pm #

    can i roll my ira over for a downpayment on a home purchase

  3. lorence 01. Jul, 2010 at 3:15 am #

    The real estate IRA is very famous and investors like to invest in the real estate IRA because when compared with the traditional IRA, real estate IRA has got many benefits.

  4. Tanya Crane 02. Jul, 2010 at 4:26 am #

    Self directed IRAs have a diversity of alternative investments that can be used towards retirement plans. A few instances of alternative or non-traditional investments are personal loans, private businesses, real estate, and tax liens.

  5. Real Estate Deals 31. Mar, 2011 at 6:18 am #

    Can I use my IRA to buy houses?

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  7. 10 x 12 gazebo 08. Aug, 2011 at 2:57 pm #

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