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Investing with a Self-Directed IRA


We often speak to individuals who either lack the funds or liquidity to invest in a syndication when an opportunity arises. Typically, the sponsor of a syndication will require a minimum cash investment of $25-50k, depending on the deal, and many people don't have that kind of money liquid and ready to invest!


But did you know you can invest in multifamily real estate using a self-directed individual retirement account also known as a SDIRA? This type of account can hold investments, such as real estate, where a typical IRA has restrictions. SDIRA accounts require a custodian to set up and administer the account, but the owner (YOU) directly manages the funds, which is why the account is known as "self-directed".


SDIRA can be set up to obtain tax deductible contributions or tax free distributions, just as a traditional IRA or ROTH IRA. There are several things to consider. With a SDIRA, the custodian will likely charge fees to set up and handle any of the additional tasks involving the account. Tax implications on a debt-financed investment (the majority of syndications) can be complicated. Working with a trained custodian is essential when setting up the account and to understand the legal dos and don'ts associated with IRS laws.


Interested in creating a more diverse retirement account? Here's a quick READ that explains the process in depth.


As with any type of investment, it is your job to perform proper due diligence on the Sponsor team and property itself. Self-directing retirement funds into syndications can offer benefits of investing in large apartment buildings without spending time finding and managing deals and can create a more diverse investment portfolio for your retirement!



~ Jennifer Fawcett

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