How to Invest Tax-Free in Self-Directed IRAs


Our goal at the Self-Storage Podcast has always been to educate and spread knowledge about all types of real estate investments, although we mainly focus on the self-storage industry. However, to invest in real estate and reap the most profits, you could use additional financial advice when it comes to taxes. Hence, our guest today is Glen Mathers, founder of NuView Trust.

Glen created NewView so that people could use self-directed IRAs to invest in real estate, notes, mortgages, precious metals, private placements, and other lucrative assets. Thus, your investments can grow without taxation, and your profits will be higher. We’ll go through the basics of using a self-directed IRA to invest together and also talk about what more you can do to get through the COVID-19 crisis.

Taking Control of Your Assets

People need to have the choice of where their money goes when investing. Traditional retirement accounts limit the number of assets you can hold, so your savings and retirement planning are essentially based on the stock market fluctuations. Why should your tax benefits be limited to stocks, bonds, and mutual funds if you want to explore other, more lucrative investments?

A self-directed IRA allows you to take control of your investment decisions. Sure, there are lots of IRS rules you’d need to follow, but that’s the case with most investments, right? For example, tax codes state that these accounts must be overseen by a trust or custodian. This is where an organization such as NewView comes to play. You’ll be overseen by a financial institution, but you’ll still be in complete control of your decisions since people like Glen don’t offer investment advice. They are just there to guide you through the financial side of things and help you take all the tax advantages you can.

What Is a Real Estate IRA?

A self-directed IRA is a retirement account you need for investing in real estate as a part of your retirement plan. Contribution limits are the same as with traditional IRA or Roth IRA: $6,000 (plus an additional $1,000 if you’re over fifty years old).

A self-directed IRA is, as we said, overseen by a financial institution, but it allows you to use the money in it for alternative investment purposes. You can acquire assets such as real estate, precious metals, mortgages, or private equity as long as you comply with the usual IRS regulations.

Custodians can determine which type of investments one can own in this account. Hence, it’s critical to first consult with these institutions and conduct thorough research prior to making huge decisions. Make sure that they offer the options you need to take advantage of tax-free investment opportunities.

Can I Use IRA Money to Buy Rental Property?

Purchase a house

As with all tax-advantaged accounts, there are some prohibited transactions – the improper use of IRA assets – such as borrowing money from your plan, directly selling properties to your plan, or buying properties for personal use. Luckily, buying an investment property and growing rental income isn’t prohibited. With a self-directed IRA, you can invest in as many rental properties as you wish, including multifamily homes, short-term rentals, self-storage facilities, etc.

Stock market holdings entirely depend on fluctuations on Wall Street. Even when stocks are performing well, investors aren’t in a favorable position. When stocks are on the rise, you might be keen on holding onto them for longer to not lose potential profits. However, when you’re retired, you need a regular steady income. You don’t want to sell your assets to make ends meet – you want your assets to provide you with more than enough cash to live comfortably. Hence, rental income can be very valuable in your retirement account.

Real estate investors with rentals in their retirement portfolios reap immediate benefits every month. On top of this, property can appreciate over time, so you can earn even higher profits. With a private storage IRA, you’ll be earning a consistent steady income and easily get through this COVID-19 crisis. Self-storage properties, for example, aren’t likely to lose value since this industry is recession-resistant. Whatever the future holds, you’re more likely to turn a higher profit with a good real estate investment than with funds on Wall Street. 

Overall, keep investing through the COVID-19 crisis, rather than pausing and hoping for better days. If you invest now when the market is low, you’ll be in a much more favorable position when the market bounces back. 

Balancing between optimism and pessimism is the answer to making good investment decisions. The sooner you adapt to the current state of the new Covid economy, the better it will be for your investment portfolio.

Private Storage IRAs in Real Estate Investing

Currently, many people are keen on receiving regular income, whether through self-directed IRAs or more traditional investment accounts. More passive investors aren’t looking for “hot” properties to flip. Instead, they want to gather rental income but without the hassle of dealing with tenants. With a self-directed IRA, you can make hassle-free profitable investments such as self-storage.

Self-storage facilities are almost entirely automated – you won’t have to lift a finger. Units are almost, as Glen puts it, vending machines. Tenants just put their stuff in, pay on a kiosk, and move on. Investors are just there to find lucrative projects and reap the profits. Passive investors don’t have to even do that – they can rely on an experienced syndicator to do the groundwork.

With a private storage IRA, your investments will grow tax-free, so you’ll have one thing less to worry about and be able to focus entirely on earning money from lucrative deals. Do your due diligence and conduct quality research – self-storage investments are waiting.

For more advice on how to ensure your self-storage business is a success, check out our FREE Blueprint that will provide you with all the information you need!

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August 5th to 7th 2021