How to Invest in a REIT using a Self-Directed IRA

How to Invest in a REIT using a Self-Directed IRA

A Self-Directed IRA (SDIRA) is a distinct category of retirement account, in which you maintain total control over and responsibility for the investments in your account. This little-known type of IRA allows you both greater control over managing your investments and potentially more freedom in the types of investments you can make than most other IRAs offer.

With a self-directed IRA you can invest directly in real estate, precious metals, private businesses, and other types of what the IRS calls “alternative assets,” which you generally cannot invest through conventional IRAs. If you have an old or abandoned 401(k) sitting around gathering dust from a previous job, you may want to contact the plan administrator to rollover your funds so you can invest the money.

A popular investment for self-directed IRA holders is commercial real estate, and a common way to invest directly in commercial real estate is through a Real Estate Investment Trust (REIT). REITs can have the objective of appreciation and cash-flow similar to commercial real estate without any of the responsibilities for the day-to-day management of the properties.

Depending on whether or not you already have an SDIRA set up, there are two main paths you can take to invest in REITs using your retirement funds:

How to set up an SDIRA to invest in a REIT (Option 1: If you do not have an SDIRA)

If you do not have an SDIRA currently set up, our team of professionals can help you get started by directing you to several custodians where you will be able to:

1. Open a new account with a custodian
2. Fund the account by transferring funds from another existing retirement account, and/or contribute this year’s election to the new account
3. Use the funded account to make an investment into one, or both, of our REITs.

If you choose to open a new account with our preferred custodian, IRA Services Trust Company (ISTC), the process for opening an SDIRA and placing an investment is combined into one process which you may begin by selecting your investment of choice. We have created distinct REIT strategies with different investment objectives. The primary goal of INCOME REIT is diversification and income, whereas the objective of APARTMENT GROWTH REIT is growth and income through multifamily investments.

Investing with ISTC also means that RealtyMogul will pay up to two consecutive quarters of custodial account maintenance fees charged for the first year of investment if you make an investment of $5,000 or greater, or up to four consecutive quarters of custodial account maintenance fees for the first year of investment if you make an initial investment of $10,000 or greater.*

How to use an existing SDIRA to invest in a REIT (Option 2: If you already have an SDIRA)

If you already have an SDIRA established that you would like to use to place an investment, the first step is to find out who your custodian is, or where your funds are held. Once you know where your SDIRA is held, our team can help you determine whether or not they will be able to accept an investment with us.

If it is determined your custodian is compatible with our platform, you may begin your investment in either of our REITs with the objective of diversification and income (INCOME REIT ) and growth and income through multifamily investments (APARTMENT GROWTH REIT ).

If we are not able to work with your existing custodian, you are still able to open an additional account with a different custodian should you choose, and subsequently transfer funds from your existing custodian into the new account, or contribute this year’s election to the new account. We will facilitate the transfer or rollover process with your old custodian.

Ready to invest? Download our flyer, 5 Steps to Invest Your Retirement Funds in a REIT , for a simple guide on how to get started, or sign up here to become a member. There are risks to investing in REITs including the loss of capital, so it is important to understand any investment before allocating to it. As always, investors should understand the risks associated with real estate investing and that nothing is guaranteed.

For more information, please review the Offering Circular for INCOME REIT and APARTMENT GROWTH REIT prior to investing.

* IRA Services Trust is RealtyMogul’s preferred custodian, as well as the Administrator and Trustee for RealtyMogul’s Self-Directed IRA accounts. IRA Services Trust charges a quarterly account maintenance fee on the first day of each calendar quarter. RealtyMogul will pay up to two consecutive quarters toward custodial account maintenance fees charged for the first year of investment if you make an investment of $5,000 or greater, or up to four consecutive quarters of custodial account maintenance fees for the first year of investment, if you make an investment of $10,000 or greater and maintain this minimum, invested balance for 12 months. All account balances are determined as of the last business day of each calendar quarter. RealtyMogul reserves the right to modify or discontinue this offer at any time. See the IRA Services Trust’s Fee Schedule for more information.