We get asked questions all of the time from savvy investors who we work with here at J. Avila & Company.
Most of the questions surround buying investment properties in Fresno CA… which we of course know a lot about.
But one part of buying an investment property / rental property is how are you going to pay for it?
And, can I use my IRA to buy local investment properties?
Self Directed IRAs for Real Estate – Can You Use Them To Buy Fresno 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 the tax benefits of the IRA, and the benefits of Fresno real estate too?
Though the self-directed ira real estate is increasingly being taken up by investors, you should do certain things ensure that the law is being followed to the letter when you use your IRA for local CA 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 Fresno you are forbidden from self-dealing.
Self-dealing is outlawed with your SD IRA 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 the process of business dealings in Fresno.
The Process of Buying Fresno with Your Self Directed IRA
There are very specific rules that you have to follow if you’re using your SD IRA to pick up Fresno CA properties.
Once an you provides the correct documentation for purchasing the local Fresno investment property to the self-directed ira custodian, the custodian will start the purchasing process on behalf of the self-directed ira real estate.
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 and the penalties to be paid by the IRA.
Choose The Type Of Self Directed IRA Wisely To Use It For Your Real Estate Investments
There are lots of options when it comes to self-directed IRA’s.
Not all SD IRA’s allow you to buy real estate in them… so you’ll have to do your research to find the best SD IRA custodians so you can start buying Fresno properties in it.
NOTE: We’ve worked with many SD IRA companies and we’ve found the best providers who are very experienced in working with real estate within an IRA. Call us today at (559) 549-7247 or email us through our Contact page and we can give you information on the best SD IRA companies for Fresno CA real estate investments.
Some Self Directed IRAs 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 whats called “check book control”.
An investor in self-directed ira for real estate with control of the checkbook is able to make purchases by just writing checks rather than having to go through the lengthy process of having to pass it through the custodian first. This lets you take advantage of deals that you have to act quickly on (which many of our local Fresno investment properties go fast).
Your Role In The Investment After The SD IRA Purchases It
You as the owner of the self directed IRA account has the ability to really manage the investment in a hands on manner. 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 Fresno… so make sure you do your homework and do these two things immediately:
- 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 in it… call us at (559) 549-7247 and we’ll refer you to the best local custodians… and they’ll be able to help you transfer your current IRA to your new self directed IRA.
- Find a couple great Fresno investment property experts, like us at J. Avila & Company. One of the best ways to get great properties here in Fresno CA is by working with a professional investment property company like ours. We find high discount properties (both single family and multi-family) all around Fresno 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 SD IRA 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 SD IRA resources locally in Fresno, and get you on our Preferred Investment Property buyers list.