Trying to learn the facts about a real estate IRA? Holding real estate in IRA accounts has been allowed since the laws were written in 1974, but only about 5% of all account owners choose this option. Why?

Primarily, it is because the more “traditional” custodial companies are brokerages or other financial institutions that will allow you to invest in certain stocks or mutual funds, as well as government bonds, CDs and treasury notes. They do not encourage a truly self-directed investment approach.

While it is true that many people don’t know much about investing, it is always possible to learn and a real estate IRA can be highly profitable. So, it is something worth learning about. Account owners often exceed their own expectations, in just a few short years.

You can hold real estate in IRA for short or long-term returns. You can use the property to earn rental income for your account or look for deals that you believe you can “flip” quickly to make a small profit.

Even small profits in the housing market typically exceed 10%. If you make 10% on three deals in a year’s time, that would be equivalent to a 30% annual rate of return. How could you beat that?

There are some laws that apply specifically to real estate in IRA funds. The property can only be used as an investment. It cannot be intended for personal use, now or later.

In other words, if you want to retire at the beach, you cannot use your retirement fund to purchase that property.

It could cause you lots of problems in the future. So, don’t even try to think of ways to get around the law. Just abide by them. Other transactions that are prohibited in a real estate IRA include those that include yourself, your children, your parents, grandparents, grandchildren and other “lineal descendants”.

So, you could not use your account to purchase a home for your son. You could not buy property from your grandparents. Those are just a couple of examples of prohibited transactions for holding real estate in IRA funds.

If you were thinking of buying an office building, you could not lease space in it. If the account owned an apartment building, your daughter could not live there. The better custodians can help you learn all about the different rules that pertain to a real estate IRA, which brings up another point.

Even among self-directed accounts, there are some custodial companies that place limits on your investment options. Others have high fees that are associated with holding real estate in IRA accounts.

So, as you are shopping around for good investments, also shop for the best custodian. You want an experienced company that charges a reasonable annual fee and no per-transaction fees, regardless of the types of investments that you wish to make.

A real estate IRA can be highly profitable, as long as you plan ahead. Be wise and learn from the mistakes of others, before you begin.

This is the easiest way to turn a modest investment into a handsome profit.

Real estate and your self-directed IRA will work and reward you profitably. Take action, be the trail blazer.

Selecting IRA real estate turnkey solutions can be the best investment strategy considering today’s economic environment for building your retirement wealth.