A self-directed IRA allows flexibility to acquire any type of residential or commercial property, from an office building, single family investment, or raw land. Self-directed IRA’s combined with real estate investing create many options for investors. One such option is to purchase a parcel of land very inexpensively. There are typically two primary options: you can resell the parcel of land for a higher price than you bought it for or you can build a new structure on the property with additional IRA dollars or obtain a non-recourse construction loan. If you decide to resell the land, all profits flow back into your self-directed IRA. Some advantages of acquiring land in a self-directed IRA are:

• The ability to diversify your investment portfolio;
• It generally is a stable investment;
• When completed properly, there is a higher likelihood of profit over the long term.

If you choose to invest in real estate with your self-directed IRA, there are quite a few prohibited transactions to be aware of. You cannot participate in the following:

• Sell land that is owned personally to your IRA
• Purchase land from your IRA
• Use the land for any personal advantageous reasons
• Allow a family member or descendent to utilize the land
• Grant a loan from your IRA for the land
• Use your IRA as security pledge to obtain a loan
• Provide or receive services or goods to or from your self-directed IRA

Tags: non recourse, non-recourse construction loan, non-recourse loan, self directed IRA, self-directed IRA