A popular investment option is direct or indirect real estate investing.
With IRA real estate investing, you can invest in property for long-term appreciation, rental income, or a short-term ‘fix & flip’. The investment properties may include; single family and multi-unit homes, apartment buildings, condominiums, commercial property, and improved or unimproved land, just to name a few.
When seeking ways to diversify your retirement portfolio, real estate may be an option. It may provide recurring income and potential appreciation in value over time. However, real estate investing is not for the faint of heart, as you must consider allocation of your time, cost, and commitment before considering this type of investment.
Required Documents to Close a Real Estate Deal
- Preferred Trust Investment Authorization & Direction Form
- Contract or Purchase Agreement
- Appraisal or BPO
- Liability Insurance
- Property Management Agreement
- Title Insurance
- Draft of the Deed
- Settlement or Closing Statement
- Wiring Instructions
Real Estate Purchase Options
- You can co-buy real estate with your IRA funds and personal cash
- Use a blend of IRA funds and a non-recourse loan or other private lender
- Loan funds to another person and collateralize the loan with real estate
Unrelated Business Income Tax (UBIT)
If your IRA owns an asset that produces UBIT, your IRA may be subject to an UBIT pursuant to Section 511 of the Internal Revenue Code. Generally, IRA investments that can generate UBIT include any investment that incurs debt financing. Consult your tax advisor.