While a historically lucrative investment, real estate has traditionally been difficult to access, especially through a retirement account.

However, with the advent of real estate crowdfunding and other alternative investment strategies, many specialized IRAs like self-directed IRAs have begun allowing the use of IRA funds to invest in real estate (either directly or through a crowdfunding platform).

To make an investment through an IRA, you will first need to establish an account with a self-directed IRA (SDIRA) custodian.

After establishing an account, a custodian would offer traditional asset investments (ex. stocks, bonds, mutual funds) as well as permit an alternative range of investment opportunities the IRA could legally own (like real estate).

There are many different providers, so if you already have a relationship with a financial services firm, chances are high that they can point you in the right direction. Some investors choose to set up an LLC for their SDIRA, but you can also invest as an individual.

It’s important that you find a plan administrator who is comfortable with investing in commercial real estate, and you identify the investment in which you are ready to invest.

Mark Luscombe, a CPA and attorney, who is the principal tax analyst for CCH, suggests $100,000 or more to roll into one of these accounts.

Crowdfunding platforms like Fundrise allow you to invest through an IRA in commercial real estate. However, before you invest, make sure you consult your IRA provider. They may require certain forms to be signed and filled out by the crowdfunding platform’s administrators.

Additional Resources: This MarketWatch article provides additional detail on using an IRA to invest in real estate. breaks down some of the potentialities someone could face.


Image Source: Stuart Butterfield, Flickr