In this 19th episode of the Learn | Invest | Grow show, Adam Levine and Tei Kim reiterate how taking full advantage of compounding will change the financial future for everyone and speed up the journey to financial freedom. However, significant taxes can dampen the positive effect that compound interest can have on our financial future.

They delve into a relatively underexplored tax-advantaged vehicle, a self-directed IRA. With a self-directed IRA, you may invest in assets you personally know and understand well outside the conventional investment options such as stocks, bonds, mutual funds, ETFs, etc.
Why is this important? Because when you understand your investments, you stand a better chance of building the wealth to reach financial independence in retirement. Adam shares a story of his father (retired dentist) and how he cashes in on the self-directed IRA for his investment.

If you liked this video, give us a little thumbs-up below the video and leave us a comment or a question.

We are curious to see what you think about and your experience with self-directed IRAs. We would greatly appreciate your inputs and feedback.

Thank you for watching!

Until next time…Happy Investing!

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DISCLAIMER: Everything in this video is of our own opinion based on what we saw and experienced. The comments and opinions in this video should not be construed as advice. It is imperative that you conduct your own research.

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Real Estate Investing with a Self-Directed IRA | Episode #19

Are you looking for a way to grow your retirement savings by investing in real estate? Look no further than a Self-Directed Individual retirement account (IRA). In today’s episode, we will discuss how real estate investing can be done within a Self-Directed IRA and the benefits it offers.

A Self-Directed IRA is a unique type of retirement account that allows you to diversify your investment portfolio beyond traditional assets such as stocks, bonds, and mutual funds. With a Self-Directed IRA, you have the freedom to invest in alternative assets, including real estate.

So, how does real estate investing with a Self-Directed IRA work? First, you need to set up a Self-Directed IRA account with a qualified custodian that allows for alternative investments. Once your account is established, you can fund it by rolling over funds from an existing retirement account or making new contributions within the IRA’s annual contribution limits.

With a Self-Directed IRA, you can invest in various types of real estate properties, such as residential homes, commercial buildings, rental properties, and even raw land. The key is that all income and expenses related to the investment must flow through the Self-Directed IRA.

One major advantage of real estate investing with a Self-Directed IRA is the potential for tax-deferred or tax-free growth. Any income generated from your real estate investments, such as rental income or capital gains, is tax-deferred or tax-free, depending on whether your Self-Directed IRA is a traditional or Roth IRA.

Additionally, you have the ability to leverage your real estate investments within a Self-Directed IRA. Traditional institutional lenders may hesitate to provide loans to a Self-Directed IRA, but you can still leverage your investments using non-recourse loans. These loans use the property itself as collateral, and the IRA is the sole borrower, protecting you from personal liability.

Another benefit of real estate investing with a Self-Directed IRA is the ability to participate in the potential appreciation of the property. Over time, real estate values may increase, and you stand to benefit from any appreciation when you eventually sell the property. This can be a great way to grow your retirement savings significantly.

However, investing in real estate within a Self-Directed IRA does come with some rules and regulations to follow. For example, you cannot personally benefit from any expenses or income related to the investment property. You also need to ensure that any transactions adhere to the prohibited transaction rules set by the IRS.

To ensure compliance with these rules, it’s highly recommended to work with a knowledgeable custodian or a specialized Self-Directed IRA provider. They can guide you through the process, help you navigate the regulations, and ensure that your investment strategy aligns with the IRS guidelines.

In conclusion, real estate investing with a Self-Directed IRA provides a unique opportunity to grow your retirement savings while diversifying your investment portfolio. The potential for tax advantages, the ability to leverage your investments, and the potential for property appreciation make it an attractive option for many investors. However, it’s crucial to work with a reputable custodian or provider who can help you navigate the rules and ensure compliance. Happy investing!