4 Ways Your IRA Can Invest in Real Estate

Posted By: Chris Tanner ICOR Blog & News ,

Throughout my career, I have met numerous people who said they were real estate investors. Initially I assumed they were buying rental estate or doing fix and flips. However, with time I began to appreciate that real estate investing is so much more and can encompass a much wider variety of investments.

I once had a similar understanding of what an IRA was: stocks, bonds, mutual funds and, more recently ETFs, largely mirroring what my employer’s 401K plan could offer. However, as I have matured in the investment industry, I’ve similarly learned an IRA can do so much more, though unlike real estate investing, far fewer know it’s true potential.

Much like the fabulous combination of peanut butter and jelly, an IRA can similarly be paired with real estate investing. The basic investment principles are virtually identical to the way you would invest personally, with a few caveats which we will discuss.

Let’s look at 4 ways your IRA can invest in Real Estate using a self-directed IRA (“SD IRA”)

1. Direct Ownership

a. A SD IRA can purchase real estate with or without leverage. A SD IRA can purchase real estate as an all cash buyer, or the IRA can borrow money to purchase real estate.

b. A SD IRA can own real estate 100%, or in partnership with another person or entity. The options for partnering with an IRA to buy real estate are virtually limitless, such as: partnering your IRA with yourself, with another individual, or another entity. The IRS has no guidelines regarding the percent ownership an IRA can have, so the IRA can own anywhere from 1% to 99% of a property, and anywhere in between. This is also one of the only times you can personally invest alongside your IRA, so this can be a useful option for investors. There are some basic guidelines to be aware of, but New Direction Trust can help educate you.

2. Private Lending

A SD IRA can lend funds to enable others to invest in real estate. IRA Loans can be secured by real estate, other collateral, or non-secured. The IRA owner can negotiate the terms of the loan, but the IRS has certain rules that, again, New Direction can help guide clients through.

3. Private Equity

An IRA can invest in a company that is investing in real estate. A more passive approach to real estate investing, this opens the door to investing with private real estate investment firms and fractional ownership platforms. Similar to private lending, the IRS maintains a few rules the IRA owner must follow.

4. Other

An IRA can invest in tax liens, tax deeds, options, wholesale deals, or purchase existing real estate notes. If the structure is used for investment purposes and adheres to tax guidelines, it is allowed.


Real estate investing encompasses a wide variety of strategies. Each strategy has its own set of considerations, but it’s important for investors to keep in mind that self-directed IRAs, HSAs, or solo 401Ks are very flexible plans that allow you to participate in virtually any real estate transaction. If you have any questions or would like to learn more, please feel free to contact New Direction Trust Company at (877) 742-1270.