What Is a Self-Directed IRA?
Self-directed IRAs give owners complete control over their retirement funds and investing decisions. These plans can use alternative investments like real estate and private equity to create diversity and build retirement wealth.
The power of self-directed IRAs compared to conventional IRAs:
- Self-directed IRA investments are not limited to stocks, bonds, and mutual funds.
- Self-directed IRAs can invest in a large pool of alternative assets not available in brokerage IRA accounts.
- Account owners—not advisors, brokers, or plan custodians—choose their own investments they personally know and understand.
Why Should You Self-Direct Your IRA?
- Additional investment capital: You won’t miss that next deal because you don’t have the personal funds to invest. Put your retirement plan funds to work to buy that asset and earn tax-sheltered income for your golden years.
- Control of your retirement funds and decisions: When you invest in things you personally know and understand, you increase your odds of success. Self-direction allows you to call the shots instead of relying on someone else to make decisions for you.
- Alternative investments create critical diversity: Self-direction presents the opportunity to step off Wall Street. You can invest in multifamily homes, rehabs, private mortgages, startups, crypto, forex, and much more.
- Tax-free or tax-deferred growth: All income generated by assets in your plan, including capital gains, flows into your IRA on a tax-sheltered basis. This allows you to use that income—often built faster with alternative assets—to reinvest.
A bridge loan’s major draw comes in its lack of structure. While agency lenders will typically only approve stabilized assets, bridge lenders make their money on value-added projects that sit in the pre-stabilization phase. If an investor has a strong strategy to increase revenues on an asset, they have an opportunity to produce outsized returns. The bridge loan was created for these types of investors.
Bridge loans also have a quick closing process because they are based on the value of property rather than the income a property generates. Thus, no need for heavy analysis and the grueling time that goes with it. Additionally, bridge loans offer higher leverage points, decreasing the amount of equity needed to close, and increasing equity multiples created from appreciation. Finally, like agency loans, bridge loans are non-recourse, so investors do not have to risk personal assets.