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November 1, 2023

Investing in Commercial Real Estate with an IRA LLC

Key Points 

  • With an IRA LLC, you can diversify your retirement portfolio by investing in commercial real estate and manage your everyday investment transactions independently.
  • The tax advantages of a Self-Directed IRA can enhance the potential gains from your commercial real estate investments.
  • Choosing a trusted IRA LLC Facilitator like Broad Financial makes the IRA LLC setup process seamless.
Commercial real estate office building aerial view to show that you can invest in a property with your Self-Directed Checkbook IRA LLC.

Investing in commercial real estate can be an intriguing opportunity, offering the potential benefits of portfolio diversification, relatively consistent cash flow, and a hedge against inflation. If you're considering this investment avenue, you can enhance its potential benefits by leveraging the power of an IRA LLC, also commonly referred to as a Checkbook IRA or Self-Directed Real Estate IRA.

What Is an IRA LLC?

Blocks with LLC written on them with calculator and notebook on a table.

True to its name, an IRA LLC is a unique financial tool that combines the tax advantages of a retirement account with the liability protection of a Limited Liability Company. In essence, it allows you to diversify your retirement portfolio by investing in alternative assets, while also granting you the autonomy to manage everyday investment transactions independently. With an IRA LLC, you can manage your day-to-day transactions through a dedicated checking account tied to your IRA LLC. This is a step beyond a classic Self-Directed IRA, where each investment transaction goes through your Self-Directed IRA custodian.

How To Set Up an IRA LLC

An IRA LLC may seem like a relatively complex offering, but with Broad Financial, it’s easy to set up and manage. 

First, you will fill out Broad Financial's easy online application. Simultaneously, you will open and fund a Self-Directed IRA with our sister company, Madison Trust, who will serve as your Self-Directed IRA custodian. A Self-Directed IRA is the foundation for investing in alternative assets like commercial real estate through a tax-advantaged retirement account.

With your Self-Directed IRA in place, the next step is to create an LLC specifically designed to operate within the framework of your IRA. At this juncture, Broad Financial will guide you through the process and take care of the back-end paperwork to officially form your entity.

Once your IRA LLC is established, you'll open a dedicated checking account in the LLC's name. This account becomes your financial control center, providing you with what is commonly referred to as "checkbook control." Funding this account marks the moment when you gain the autonomy to invest and manage everyday transactions freely. Once again, the level of control is the key differentiator between an IRA LLC (or Checkbook IRA) versus a classic Self-Directed IRA.

Self-Directed Checkbook IRA investor writing a check from their IRA LLC checking account to make an investment in commercial real estate.

Why Consider an IRA LLC for Commercial Real Estate?

Investing in commercial real estate through an IRA LLC can be a savvy way to build wealth. For many, the most enticing benefit is the tax advantages. Whether your Self-Directed IRA is structured as a Roth (tax-free) or Traditional (tax-deferred) account, the tax advantages get applied to any potential gains from your commercial property.

Hand holding a key with a miniature house keychain with a laptop, pencils, papers, and other tools on the table underneath to indicate an investment in commercial real estate with an IRA LLC.

Commercial real estate investments typically come with a range of ongoing transactions, such as maintenance, repairs, and tenant requests. Here, the power of checkbook control truly shines, allowing you to address these issues promptly, without involving your custodian.

Beyond facilitating real-time investment transactions, an IRA LLC can also create cost savings. By eliminating the need for custodian involvement in every transaction, you can save on transaction fees that are typically associated with SDIRAs. All the while, your LLC provides enhanced liability protection relating to your investments, compared to standard IRAs and even classic Self-Directed IRAs.

How To Invest in Commercial Real Estate with an IRA LLC

Of course, commercial real estate investing hinges on identifying the property that aligns with your investment goals. From there, the process is notably streamlined thanks to your IRA LLC. Once your IRA LLC is established, you can write a check to the seller from your LLC’s checking account, and when the deal closes, the property becomes an asset held within your IRA LLC. It’s that easy!

Investing in commercial real estate through an IRA LLC empowers you to combine the income potential of real estate with the tax advantages of an IRA. Establishing an IRA LLC is now made easier and more accessible than ever, thanks to the expertise and support provided by our team at Broad Financial. To learn more and get the answers to any additional questions you may have, schedule a call to speak with one of our specialists today.

IRA LLC investor couple smiling on a couch looking at their tablet with their retirement savings on it.

Disclaimer: Broad Financial LLC does not provide legal, tax, or investment advice. Please consult with your tax or legal advisor before making investment decisions. 

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