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Investing in real estate with self-directed IRA

Investing in real estate with self-directed IRA

Has there ever been a better time to invest in real estate? Neighborhoods where homes used to sell for $80,000 are now selling for $25,000-$40,000 and it just is a bizarre time to be alive. Consider this chart:

You can see that the bulk of sales used to be in the $100-$150,000 range but now is in the under $50,000 range. This isn’t going to last forever. This is being caused by the foreclosure crisis and when that settles down you’ll see things slowly return to “normal”.

So if you’ve gotten the bug to invest, you may be asking “Where am I going to get the money to do this?” and one answer that people are turning to is a self-directed IRA or Roth IRA. A self-directed IRA is basically using your retirement money to invest in real estate rather than purchasing mutual funds or stocks. To accomplish this you can’t just open a savings account and transfer in all of your retirement money, you need to use an administrator that handles the funds. One such company that I have had personal experience with is the Entrust Group in Okemos, Michigan. The plus: all the tax advantages that you already enjoy with your retirement account but you control the investment. The minus: when adding in an administrator that is one more person to be signing off on purchase documents and can sometimes slow the process, making it more difficult when time is of the essence.