How to invest in real estate using your IRA or Keogh plan

Did you know that you can invest in real estate using the funds from your IRA or Keogh plan? Although most people are surprised to hear this, many are interested in learning more about this rewarding opportunity. Before you start, it is important to know the right way to invest using your IRA. With a little planning in advance, you can greatly increase your chances of a good return.

Learn the rules for the acquisition

Your IRA or Keogh plan will have what is called a trustee or custodian. This is a very important point to remember. You must acquire the name of the trustee or custodian registered in your account. The only time this does not apply is if you are qualified as a non-bank trustee.

If you have already purchased real estate using your IRA and your name has been mistakenly listed on the title, this error should be corrected as soon as possible.

Payments must be taken from your IRA account

Loan payments for the purchase of real estate must be deducted from your IRA account. This looks like a mortgage where payments are automatically withdrawn from your checking account monthly. You have to make sure that there is enough funds in your IRA to cover these deductions.

In some cases, this may require additional contributions or cashing other assets to make a payment. Whatever it is, you want to be sure to have enough funds in your account each month. As with a mortgage, if you default, you risk losing the property.

Invest with IRAs

Investing with your IRA is a serious decision that requires thought. You do not want to use all your retirement funds in an investment opportunity unless you are familiar with the procedure. This is why it is wise to seek professional advice before making any kind of commitment. An advisor can also help you verify that your portfolio is in good working order. This is especially important if you have beneficiaries.

Understand the Keogh and other retirement plans

A Keogh is a type of retirement plan often used by self-employed and unincorporated businesses. Most Keogh plans are configured according to the defined contribution method. These contributions are generally tax deductible up to a specified percentage of your annual income. Keogh&39;s plans may also involve profit sharing, money purchase plans and defined benefits. It is important to have a thorough knowledge of your retirement plan before considering any type of real estate investment.