Self-directed IRA Real Estate Pros and Cons

Hi, I’m going to talk about the pros and cons of having a self-directed IRA. Most of you probably know what a self-directed IRA is it’s just an IRA in which you’re allowed to invest in things other than the stock market.

Self-directed IRA Real Estate Pros and Cons

We allow you to invest in non-traditional assets such as real estate, private notes, private stock in companies, precious metals pretty much anything you can think of that’s not prohibited by the IRA.

Self-directed IRA Real Estate Pros and Cons

Pros and Cons of self-directed ira Real Estate

So today I’m going to talk about the pros and cons of doing this it’s really not for everyone but for some people it’s you know a great investment tool for your retirement account.


1. The first Pro is it’s really easy to set up an account. Whether or not you use Sunwest trust. No matter what custodian you go with it’s it’s going to be a fairly simple process.

They’ll probably just have a couple of forms for you to fill out and probably need a copy of your driver’s license but other than that it’s pretty painless.

2. The next is any qualified retirement account can be rolled over into a self-directed IRA.

So if you’ve got an IRA with another just a custodian that allows you to invest in stocks bonds, mutual funds things like that.

That can be rolled over if you’ve got a 401K from an old company a 403 B 457 plan or thrift savings plan anything like that. All those qualified retirement accounts can be rolled over into a self-directed IRA.

3. Next with a self-directed IRA, most IRA custodians will allow you to invest in anything that’s not specifically prohibited by the IRS.

The only two things that the IRS says you cannot invest in our life insurance and collectibles.

So other than those two things you’re allowed to invest in anything you want.

The only other thing you have to watch out for is you’re not allowed to do any business with disqualified parties.

4. Next Pro is there’s the opportunity to make high returns on things like investment in lending money. That’s not always the case but we do have quite a few clients who have done really well investing in real estate.

Lending out money investing in private stock and companies and things like that so the opportunity is definitely out there.

5. Next, there’s no Commission’s that are paid on self-directed IRA accounts.

6. So the last one is low administrative costs. A lot of times with brokerage houses and things like that. You’re charged fees based on the percentage of your assets.


Some of the cons to having a self-directed IRA is there’s a lot more pressure put on the client. The client has to find their own investments.

1. The client has to do a lot of their own research and due diligence. I know that most IRA custodians do not do any due diligence on any of their client’s investments.

So you know you’re going to want to research the company that you’re investing with or research you know any investment that you’re making speak with a CPA.

Talk with the tax attorney you know just to make sure you know what you’re getting into before you do it. So there’s really a lot of legwork to be done by the client.

2. Next, there’s always the chance of investing in a fraudulent investment. If you haven’t done your research if you know if you haven’t done all the legwork that’s required.

There is a chance that you could lose your money by investing in a fraudulent investment. There’s no FDIC insurance or anything.

3. Last you one of the other cons is just you know you always have to be aware of the prohibited transaction and disqualified party rules.

There are rules to having a self-directed IRA you can invest with yourself your spouse any lineal family members. Then there’s as we talked about earlier there are certain things that the IRS will not allow you to invest in like life insurance and collectibles.

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