Most of the questions surround buying investment properties in Houston Texas… which we of course know a lot about.
But one part of buying an investment or rental property is the question on “how are you going to pay for it?”
Or another one that my pop out of your head is, can I use my IRA to buy local investment properties?
Self-Directed IRA For Real Estate In Houston – Can You Use Them To Buy Rental Properties?
First off, IRA refers to an individual retirement account.
IRA’s traditionally hold investments like stocks, mutual funds, etc…. mainly because that’s the mainstream way most people save for retirement.
But, since you’re reading this article you know that real estate can be a GREAT option for increasing your wealth.
But… how can you use your IRA to grow your retirement fund, earn its tax benefits, and the benefits of Houston real estate too?
Self-directed IRA real estate is increasingly being taken up by investors, however you should do certain things to ensure that the law is being followed to the letter when you use your IRA for local Houston real estate investments.
Some Simple SDIRA (Self-Directed IRA) for Real Estate Rules To Follow
No “Self Dealing”
If you’re using your self-directed IRA for real estate in Houston you are forbidden from self-dealing.
Self-dealing is outlawed with your SDIRA in the sense that it can’t purchase land or property (both commercial and residential) FOR the owner or any family member to reside in. It is also prohibited from selling property or land TO the owner of the IRA or family members in Houston.
The Process Of Buying In Houston With Your Self-Directed IRA
There are very specific rules that you have to follow if you’re using your SDIRA to pick up Houston Texas properties.
Once you provide the correct documentation for purchasing in the local Houston investment market to the self-directed IRA custodian, he or she will then start the purchasing process on your behalf.
All the costs related to the purchase of the property are channeled through the self-directed IRA for real estate; hence it’s vital that it must have enough cash to pay for these costs. Failure of this will lead to the forfeiture of tax benefits where penalties are to be paid by the IRA.
Choose The Type Of Self-Directed IRA Wisely For Your Real Estate Investments
There are lots of options when it comes to self-directed IRA’s.
Not all SDIRA’s allow you to buy real estate in them… so you’ll have to do your research on where your can find SDIRA custodians that deals specifically on buying Houston properties so you can start doing so.
NOTE: We’ve worked with many SDIRA companies and know who are very experienced in working with real estate within an IRA. Call us today at (713) 635-9000 or email us through our Contact page if you’re wondering which are the best SDIRA companies to help you on your Houston Texas real estate investments.
Checkbook Control
Some Self-Directed IRA’s have more restrictions than others.
As an example… some of them require that you submit the investment details to them… they analyze it… then they send the cash from the account.
But there are accounts that give you what’s called “checkbook control”.
An investor in a self-directed IRA for real estate that’s in control of the checkbook is able to make purchases by just writing checks rather than having to go through the lengthy process of passing it with the custodian first. This lets you take advantage of deals that you need to act quickly (which many of our local Houston investment properties sometimes do).
Your Role In The Investment After The SDIRA Purchases It
You as the owner of the self-directed IRA account has the ability to really manage the investment. The roles include: receiving checks for rent payments from tenants, managing the properties, etc… everything you’d normally do as the owner of an investment property.
Of course, there are more guidelines that you have to follow if you plan on using your self-directed IRA for real estate in Houston… so make sure you do your homework. To start with do these two things:
- Find a great self-directed IRA company / custodian. This is the first step. You have to get this in place before you even think about purchasing anything through your IRA. If your current IRA holder won’t allow you to buy and hold real estate… call us at (713) 635-9000 and we’ll refer you to a company who does. They’ll help you transfer your current IRA to your new self-directed IRA.
- Find a couple great Houston investment property experts, like us at Fast Cash Offers. One of the best ways to get great properties here in Houston TX is by working with a professional investment property company like ours. We find high discount properties (both single family and multi-family) all around Houston and sell them to investors like you at discounts so you can turn them into solid profitable rental properties. Join our Preferred Buyers List Here >>
We Can Help You Get Rolling With Your SDIRA For Real Estate
Just reach out to us at the phone number below or send us an email… and we’ll walk you through the process, point you to the best SDIRA resources locally in Houston, and get you on our Preferred Investment Property buyers list.