If you are looking for investment alternatives to bonds and stocks, then you might be considering options to pair an IRA account with commercial real estate investing. But even the savviest investors can be confused by common self-directed IRA myths. Here are five of the most common things that are misunderstood about self-directed IRAs:

5 Self-Directed IRA Myths

  1. Difficulty with Account Setup: Many people are confused by self-directed IRAs, leading them to believe that these accounts are hard to set up. The truth is that self-directed IRAs don’t have to be difficult. The key is to choose the right financial professionals to streamline the system and optimize your results.
  2. Self-Directed IRAs are Unnecessary: Is a regular IRA sufficient for what you need? It depends on your goals and involvement in the investments. If you want to have control over the way the funds are invested, then it is important that you choose a self-directed account instead of another IRA type.
  3. Expect High Taxes if an IRA is Used for Real Estate: If you are thinking about buying real estate with your IRA funds, then you might be worried about the tax implications of moving the money. The truth is that removing the money from the IRA can be done with tax deferment strategies with the right rollover plan. Don’t overlook the benefits that are available. Instead, talk to a financial professional and tax strategy expert for advice about your situation.
  4. Non-Traditional Asset Investments are Illegal: The truth is that the IRA doesn’t control what you choose to invest in; instead, guidelines are put in place to manage what you can’t invest in. Certain things are off-limits, such as artwork and gemstones. Other non-traditional assets, such as commercial real estate, are not off-limits and offer great investment opportunities for self-directed IRAs.
  5. My IRA Can’t be Used to Buy Real Estate: One of the common self-directed IRA myths is that the entity can’t be used to buy properties or land. The IRA allows investment in properties, which can be a great way to diversify your funds and increase the opportunity for long-term gains.
  6. Self-Directed IRAs are Too Risky: Risk can’t be avoided completely with any investment. But keep in mind that the success of your investment will depend on the integrity and experience of the financial professionals that you choose. Your money is safe in the account because un-invested cash (up to $250,000) is insured by the FDIC. Rest assured knowing that your money is insured while you are looking for new investment opportunities.

It is a good idea to learn about these self-directed IRA myths so that you can separate truth from fiction in the industry. The more you learn about the investment opportunities that are available, the higher the possibilities are available for you in the future. As you are considering long-term gains, you are welcome to talk to us at First National Realty Partners for more information. We’re here to answer your questions and help you determine the right investment strategy for your needs.

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