An SDIRA (self-directed individual retirement account) is a type of traditional or Roth IRA account that allows you to invest in different types of assets—like real estate, gold, or LLC membership interests, for example. If you are looking for a retirement fund that lets you add investments outside of stocks, bonds, and mutual funds, then a self-directed IRA might be the best option for you. You don’t even need to have the full purchase amount in your IRA in order to buy an investment property—you can actually use your IRA to receive a non-recourse loan, making it even more accessible to invest in real estate.

It is very advantageous to use your SDIRA to invest in commercial real estate and grow your retirement fund. You should consider using your SDIRA to invest in commercial real estate for the following three reasons: tax-deferred growth, greater diversification, and long-term appreciation.

1. Tax-deferred growth

If you purchase an investment property outside of an IRA and attempt to sell it later for a profit, those gains will be subject to tax at the time of sale; however, if you purchase the property through your SDIRA, the appreciation is typically tax-deferred until distributions are withdrawn from the account in the future. Unlike 1031 exchanges, when buying real estate with IRAs there are no specific investment time or like-kind requirements to prevent being taxed on gains. Combining the high returns and appreciation of commercial real estate and tax advantages of IRA accounts is a recipe for success! 

2. Greater diversification

Since commercial real estate is a hard asset, it provides greater diversification to your portfolio and can add a stream of income to your IRA. There are many real estate options available to add diversification: commercial real estate, undeveloped land, REIT’s, and more. Not only does a commercial real estate investment add great diversification and security to your portfolio, but it also gives additional protection from the volatile stock market. There is an increased measure of control and protection when using a SDIRA; situations may vary, but in almost all cases, a commercial real estate investment using a self-directed IRA is safer, easier, and less expensive compared to other investment opportunities.

3. Long-term appreciation

Certain types of assets, like commercial real estate, that are not included in traditional IRAs, can give you the tax benefits and long-term financial returns that every investor is looking for. The long-term growth and appreciation of commercial real estate is probably the biggest benefit of investing in it. The ability to create massive wealth through capital appreciation is one of the many reasons why real estate investments are so attractive to investors of all kinds. The value of commercial real estate exponentially increases over time, yielding high returns and happy investors. Andrew Carnegie said it best: “Ninety percent of all millionaires become so through owning real estate.” 

At Millcreek Commercial, we have acquired properties that are ready for your proportional ownership. We break down the barriers of investing in commercial real estate, making it easier than ever before for investors to contribute a specified dollar amount to a property that fits their investment needs. Our properties are acquired debt-free with corporate tenants and have safe, stable, and secure returns. A Millcreek investment is guaranteed to be hands-off, so your money can start working for you, rather than the other way around.

If you are considering using your SDIRA to invest in commercial real estate (which we highly suggest), please contact a self-directed custodian so they can assist you in this process. Investing using an SDIRA can be complex, and a custodian is required so your investments are handled correctly.