💰 Self-Directed IRA Real Estate Investments: What Lenders Really Allow 🏡

📈 How to Use a Self-Directed IRA for Real Estate (And What Lenders Approve) 💼

💰 Self-Directed IRA for Real Estate: What Lenders Allow

Investors looking for more control over their retirement funds are increasingly turning to self-directed IRAs (SDIRAs) to purchase real estate. While these accounts open the door to powerful wealth-building opportunities, financing rules can be tricky. Understanding what lenders allow (and don’t allow) can save you from costly mistakes.

✅ What Is a Self-Directed IRA?

A self-directed IRA lets you invest retirement funds in alternative assets beyond traditional stocks and bonds. This includes rental properties, multifamily investments, raw land, and even commercial buildings.

🏦 Can You Get a Mortgage with a Self-Directed IRA?

Yes—but not every lender will allow it. Traditional mortgage lenders usually shy away, while specialty lenders familiar with SDIRA rules can offer non-recourse loans. These loans are required by the IRS, meaning the lender can only claim the property—not your personal assets—if the loan defaults.

🚫 Restrictions to Know Before Investing

1.      No Personal Benefit – You can’t live in or personally use the property.

2.      No Prohibited Transactions – Family members and disqualified parties can’t directly benefit.

3.      Loan Must Be Non-Recourse – Your IRA owns the asset, and you can’t personally guarantee the loan.

💡 What Lenders Typically Allow

·         Investment Properties Only – Single-family rentals, small multifamily, or commercial real estate.

·         Higher Down Payments – Expect 30–40% down with non-recourse financing.

·         Stronger Cash Flow Requirements – Lenders prioritize DSCR (Debt Service Coverage Ratio) since your IRA, not you, is the borrower.

·         IRA Custodian Approval – The custodian managing your SDIRA must approve and execute documents.

📊 Why This Strategy Matters for Investors

Using a self-directed IRA to buy real estate can:

·         Diversify your retirement portfolio beyond Wall Street.

·         Generate tax-deferred or tax-free rental income (depending on Roth vs Traditional IRA).

·         Create long-term equity growth while protecting personal assets.

But success depends on working with a mortgage broker who understands non-recourse financing and SDIRA rules. The right lender can make or break your investment strategy.

👉 If you’re exploring real estate investing with your self-directed IRA, reach out today. We’ll help connect you with lenders who know how to structure these loans the right way.

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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory