Investing in Commercial Real Estate with a Real Estate IRA

 |  Investing in Real Estate
Commercial Real Estate

By J.P. Dahdah, Founder & CEO of Vantage

If you are like most real estate investors, you are looking for ways to diversify. If most of your money is in a brokerage account, you are frustrated with the limited options currently available to you. Consider investing in commercial real estate with a Real Estate IRA.

As Clifford Jack, Executive VP for Jackson National Life Insurance Company, said in a recent alternative investment survey, “The needs of investors are changing in today’s marketplace.”

The need for more diverse investment opportunities is being met for IRA participants through the Self-Directed IRA market. Among the many options available through a Self-Directed IRA, real estate is one of the most attractive.

Commercial real estate in a Real Estate IRA is poised to offer a tremendous investment opportunity.

Why?  Commercial real estate loans totaling over $1 trillion are coming due over the next five years. With bank lending so restrictive today, refinancing probabilities for these properties look doubtful. These commercial properties are likely to become distressed properties during this time frame.

The Opportunity.  Many individual investors don’t consider commercial property as an investment option because they tend to carry a high price tag. But, opportunities do exist.

  • Termed “Smaller Balance Commercial,” commercial properties with a much lesser value lower entry costs into the commercial real estate market. These properties are plentiful throughout the country. Ninety-eight percent of these properties are at risk of default over the next five years.
  •  A Self-Directed IRA offers the possibility of partnering on such investments, which also reduces the costs of entry.

How You Can Capitalize. The steps to open a Real Estate IRA are not difficult, but you should take some time to understand the process.

Here are some good starting points:

  • Find a qualified Self-Directed IRA company that includes commercial real estate in their custodial services. Not all do, so possible for research firms to find one that does.
  • Once you have selected a self-directed retirement plan administrator to custody your Self-Directed IRA, complete the application process, transfer or rollover funds to your IRA, and direct your agent to invest as you desire.

Commercial real estate is one of the many alternative investments available to you through a Self-Directed IRA. Doing a little homework to understand the rules and finding the right administrative firm will get you started.

Is commercial real estate in a Self-Directed IRA part of your retirement strategy?

For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or