We get asked questions all of the time from savvy investors who we work with here at Central Coast Home Buyers.
Most of the questions surround buying investment properties in Santa Barbara California… 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 Santa Barbara Rental Properties?
First off, IRA refers to an individual retirement account.
In today’s financial landscape, individual retirement accounts (IRAs) have become synonymous with traditional investments like stocks and mutual funds. However, astute investors are now exploring an alternative route to build wealth – real estate. If you’re intrigued by the potential of real estate to bolster your retirement funds while capitalizing on tax benefits, this article is your gateway to understanding the possibilities.
Diversifying your IRA into real estate assets is a viable strategy, but it requires adherence to specific regulations to ensure compliance. With the rise in popularity of self-directed IRA real estate investments, it’s crucial to navigate the process with precision.
By leveraging a self-directed IRA, you gain the freedom to invest in Santa Barbara‘s lucrative real estate market. The advantages are two-fold: first, you can diversify your retirement portfolio, reducing risks associated with traditional investments. Secondly, you capitalize on the wealth-building potential of Santa Barbara‘s real estate market, potentially yielding higher returns.
To successfully incorporate real estate into your retirement plans, you must carefully follow all legal guidelines pertaining to self-directed IRAs. By partnering with reputable financial advisors and real estate experts, you can navigate the intricacies of IRA investments confidently.
Take charge of your financial future by exploring the vast potential of self-directed IRAs for Santa Barbara real estate. Secure your retirement while seizing the lucrative opportunities the local real estate market has to offer. Start building your wealth intelligently with self-directed IRAs and unlock the true power of your retirement savings.
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 Santa Barbara 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 Santa Barbara.
The Process of Buying Santa Barbara 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 Santa Barbara properties.
Once an you provides the correct documentation for purchasing the local Santa Barbara 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 Santa Barbara 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 (805)505-7373 or email us through our Contact page and we can give you information on the best SD IRA companies for Santa Barbara California 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 Santa Barbara investment properties go fast).
Your Active Involvement in the Investment Post SD IRA Acquisition
As the proud owner of a self-directed IRA account, you hold the reins to actively manage your investment in a hands-on manner. Your role encompasses a range of responsibilities, including receiving rent payments from tenants, overseeing property management, and all tasks typical of an investment property owner.
With your self-directed IRA, you have the freedom to be directly engaged in the day-to-day operations of your investment property. This level of involvement empowers you to make informed decisions, ensuring the property’s success and maximizing returns. By actively participating in the management process, you can fine-tune your investment strategy and align it with your financial goals.
Furthermore, having a say in the management of your investment property provides a sense of security and control over your retirement funds. You can tailor your approach to suit market conditions, identify growth opportunities, and build a diversified real estate portfolio that aligns with your unique preferences and risk appetite.
Of course, there are more guidelines that you have to follow if you plan on using your self directed IRA for real estate in Santa Barbara… 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 (805)505-7373 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 Santa Barbara investment property experts, like us at Central Coast Home Buyers. One of the best ways to get great properties here in Santa Barbara is by working with a professional investment property company like ours. We find high discount properties (both single family and multi-family) all around Santa Barbara 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.
Feel free to get in touch with us through the contact details provided below – either by calling our phone number or sending us an email. We are more than eager to guide you through the entire process, offering valuable insights and connecting you with the finest SD IRA resources available in Santa Barbara. Furthermore, by reaching out to us, you gain the advantage of being added to our exclusive Preferred Investment Property buyers list, where you’ll have access to exceptional investment opportunities. Don’t hesitate to contact us; we look forward to assisting you in achieving your investment goals with utmost professionalism and dedication.