Phase 2 - Real Estate 101 (How to or one big idea)

What Is The Investment Process When Using A Self-Directed IRA?

Tyler Stewert
August 24, 2021
What Is The Investment Process When Using A Self-Directed IRA?

Adam Hooper: Is there anything different when it comes time to actually make the investment out of one of these accounts versus the typical process for taxable money savings account?

Mat Sorensen: Yes. So you're going to have to work with the custodian. So let's say it was us directed IRA. So you would have us processed the paperwork.

So let's say you're buying real estate. Or investing in a fund. The first thing is who's the buyer on the contract or who's the subscriber investor on the subscription agreement. It's not Adam Hooper, it's directed trust company, FBO Adam Hooper, IRA. That's the buyer on the property or the purse or the account subscribing on the investment.

And so the first thing to keep in mind is like a, you're not buying this. Your IRA is. And then the second thing is your IRA. Custodian's going to actually process the money and fund it and is going to get the investment income. So as returns are being paid out, that's going to go to your IRA account and, there's spots in the subscription where typically you'll indicate here's where to send my payout, or if you're buying a property directly, you'll generally have a property manager that knows.

All right, I got to send payments to the IRA. And many clients actually that buy IRA property. The buy real estate with an IRA, have their IRA on an LLC. A hundred percent of the LLC owns real estate. That's called a checkbook IRA. We'll see probably another conversation but in practice, the biggest distinction is the IRA owns it.

Things are going to go through the IRA. It's not you're signing and approving things, but your IRA custodian actually signs off on the documents for the investment.

Want to see if raising capital online is right for you?