Decide What Fits Your Needs

Before you can decide how to proceed, you need to identify your needs. Everyone has their own unique situation. Some want to buy one piece of property and hold on to it until they retire. Others want to buy and develop properties, run businesses, invest in partnerships or even in speculative startups. The solution that is right for you may not work for others. The more complicated your investment objectives, the more complex and expensive your solution will be.

You don’t need a sledge hammer to kill a fly.

If you simply want to buy and hold one or two pieces of property then your needs are simple. So keep your solution simple. For clients like this, we offer the “Simple” option. Select a custodian that allows that type of purchase. There are limitations and if you choose this option, according to the IRS regulations, you cannot have anything to do with the property, not even changing a burned out light bulb. Additionally, the custodian will charge you for every check they write. This solution is best for things like raw land where the most likely expenses you will incur are property taxes.

Save the sledge hammer for the big things!

If you want to buy a business, rental units, hotels, or any other type of entity that has income and expenses then you need a more complex solution. Why? Three major reasons:

You have to get your custodian’s permission before you can make an investment. This can take a lot of time and your investment opportunity may be lost while waiting for approval.
Once you buy a business, you cannot manage the business so you will have to hire a management company. Remember, you can’t even change a light bulb on the property, much less pay for an urgent repair like a plumber to fix a broken water pipe.
Your custodian will charge your IRA for every single transaction. Every check and deposit will have a cost associated with it. You need to analyze your investment situation and determine if this is a cost effective solution for you.

The Solution? - The Checkbook IRA gets around all of these drawbacks imposed by the custodians.