top of page
  • Writer's picturemmeblin

Did You Know You Can Invest in Multifamily Real Estate Using Funds From Your IRA?

If you are one of the over 60 million Americans who own an Individual Retirement Account (IRA), you know that there are many options for investing IRA funds. Most investors allocate funds to traditional investments in the stock market through mutual funds or ETFs. What many don’t know is that IRA funds can be placed in alternative investment vehicles such as multifamily real estate, which may offer stronger returns and less volatility than the market. This article will address the benefits of making this type of IRA investment, as well as special rules and processes that must be followed.

What is syndicated multifamily real estate investing, and why should you invest in it through an IRA?

A syndicated multifamily real estate investment allows individuals to join a group of investors who pool their resources to acquire a multifamily dwelling or complex. Each investor owns a percentage of a limited liability corporation that owns the specific property. When this transaction is performed utilizing your IRA, the share of ownership for an individual investor would be held within your IRA.

Multifamily real estate investments often provide a steady stream of passive income, which grows tax-free within the IRA, and can then provide valuable income during retirement. Although real estate investments are often not as liquid as other types of investments, this strategy can match nicely with an extended timeline desired for retirement investing. Real estate tends to appreciate over the long term, so the longer this type of investment is held, the greater potential for return. It is also a way to diversify your portfolio into vehicles that may not experience the same fluctuations in the market as other types of investments. The rate of returns in private placement multifamily real estate can often top investments in real estate investment trusts (REITs) as well as other market-driven investments.

What rules must you follow if you invest in multifamily real estate through your IRA?

Now that you are aware of how beneficial multifamily real estate investments can be, you should become familiar with the rules and requirements for making this type of investment within an IRA. First, a real estate investment must be made within a specific type of IRA known as a self-directed IRA. This kind of IRA gives an investor the opportunity to make alternative investments normally not allowed by regular IRAs, including real estate. A self-directed IRA is administered by a custodian with experience and specialization in certain investment types, and will charge nominal fees to provide this service. Since custodians do not provide investment or financial advice, investors must directly manage their own accounts and be prepared to do their own due diligence and research in order to make informed decisions. This gives investors more control and flexibility than typical IRAs.

Another important rule to remember is the real estate purchase must be solely for investment purposes. This property must not be a second or vacation home, a location for your business, or a place for family members to use for any of those purposes. The Internal Revenue Service disqualifies the following family members from using this investment property: a spouse, parent, grandparent, great-grandparent, child (and child’s spouse), grandchild, or great-grandchild. Also disqualified from using the investment property would be those who are service providers of your IRA, or any entity that owns over 50% of the investment property (1). Another related rule is that you cannot make a purchase of an investment property from one of these disqualified people.

Investors should be aware that the ownership of the investment property will be in the name of your IRA, not in your own name. You are a separate entity from your IRA. If this transaction is handled improperly through your IRA, the IRA could become disqualified. In order to avoid costly errors, investors should spend the time to research and find the specialists who can help structure and conduct the purchase the correct way.

How can Sequoia help with multifamily real estate investments?

With over 35 years of experience, Sequoia Equities has extensive knowledge of the multifamily real estate market and its benefits for investors. At Sequoia, we know the importance of focusing on the individual needs of our investors. We are always ready to assist our clients with any questions they may have regarding opportunities and advantages of investing in multifamily real estate. For individuals wishing to make their investments utilizing IRA funds, Sequoia can aid investors in finding the appropriate self-directed IRA custodians, establishing an account, and making an investment according to regulations.

Learn more about investing with Sequoia by visiting, or contact us at


(1) Title 26 – Internal Revenue Code Section 4975

27 views0 comments
Post: Blog2 Post
bottom of page