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How to Flip Properties with your Self-Directed IRA

How to Flip Properties with your Self-Directed IRA

How to Flip Properties and Homes with your Self-Directed IRA

Flip Properties with your Self-Directed IRA

Saving for retirement requires a bit of finesse and a lot of strategy. If you own a self-directed IRA, there are many alternative assets to consider when building up your fund.

One of the most popular assets is real estate: purchasing property to rent, expand on, or sell. Real estate investing can reap big rewards if done properly, and one of the quickest ways to cash in is by flipping houses. If you are interested in buying and selling homes for profit using your SDIRA, here are some things you should know before jumping in.

Real Estate Investing

Real estate investment can be beneficial in many ways. You can purchase property with the intent to refurbish and rent, improve on land for profit, or you can choose to flip properties. Flipping houses is an investment strategy where a buyer will purchase a property with the intention of fixing and selling it for a profit. The intention is to buy low and sell high to get the most out of your purchase.

Investors buy houses of low appreciation and make improvements to make more money than they put into the real estate. Buyers look for houses either in a growing neighborhood or that can be fixed up quickly and resold. Usually, the improvements made to the home will include a flashy appearance to sell the flipped property as soon as possible. After making improvements, the value of the house rises, and real estate investors can get a big return on their investment. So, how can you go about finding the best property to flip?

How to Flip Properties with your Self-Directed IRA

Buying a Home to Flip

Flipping homes can build your SDIRA in a flash, so long as you know how to fix up and unload your property. The strategy to flipping a home is to buy and sell rather than buy and hold. While you can purchase a home in a rising market, hold on to it, and sell it at peak value, this may leave you with a property purchase eating away at your retirement fund if the market doesn’t improve.

Real estate investors don’t plan on keeping properties for an extended period. The goal is to buy, fix, and sell the property as soon as possible. Each day an investor holds on to a house or other building, it costs money. Time is the main factor. When searching for the right home, you must have patience. Select your investment property based on how much time you have to put into the improvements, how much money you have for the project, and how long you think it will take to sell.

Steps to Flipping Homes

Have the Cash

The first step to flipping a home is to have the right funds to do it. You should have good credit, a decent amount of cash, investigate money lenders, and the have the option of loan money open to you. Of course, if you should decide to purchase the home using your self-directed IRA, all money made from the sale will go directly into your IRA fund. Keep in mind, using your IRA means that all money for improvements, upkeep, and taxes must come from your retirement account. If you have the money in hand, you can move to the next step.

Watch the Market

Be careful when and where you purchase your property. Before putting your money down, determine if buying is the right course of action based on the value. Is the housing market up or down? If you aren’t sure, consider hiring a real estate agent for help. The key to successful house flipping is to see if the investment will make you money in the end.

Inspect and Evaluate the Property

The last thing you want to put your hard-earned cash into is a money pit. Look at what improvements need to be made on your potential property buy. The purpose of flipping a home is to gain profit. If you end up spending more than the house is worth, you will end up losing money. Find out what needs to be done, make a budget, and decide if the price is right.

Make Smart Improvements

The house, of course, must be livable. Don’t sink your cash into something that will take more to fix than it will cost to sell. When you do make improvements on your property, it’s a good idea to make changes that will add value. Fixing up kitchens and bathrooms are an easy value boost, especially if you know how to do it yourself. Improving floors, cabinets, and other house needs can bring up the price. Try to make smaller, less costly improvements that will not only make the house look better, but it will entice customers to purchase your property. Be mindful of how much you plan to put into any improvements. You want the house to look good, but don’t overspend.

Check out the Area

The final step to selecting a potential home to flip is checking out the area. What is the real estate market like? Are houses being bought left, and right? What is the cost of a home in that area? Location is very important when selling a house. If it’s in a good neighborhood, has a decent value, and won’t cost much to fix up, you may have found the perfect home.

Self Directed IRA Free Guide

Downside to Real Estate Investing

Worth the Cost?

While flipping homes can potentially bring in a decent amount of money, there are many downsides to the process, the biggest being the cost involved. Flipping homes and real estate investing in general are a high-cost risks that may or may not pay off. The expenses are up-front, and you are buying the property at face value.

If you don’t know what you may be buying or don’t have experience it could end up costing you money, especially if you don’t sell. Utilities, mortgages, and building costs can rack up the dollar signs fast, not to mention capital gains tax levies on the sale of specific assets. If you can’t sell immediately, you may end up paying on your investment for a while.

Do You Have the Skills?

Having a house flipping business requires more than just a deep pocketbook. If you don’t know how to inspect, build, or remodel a house, this investment could end up costing you more than you intend. If you have personal experience or interest in demo and building, the cost of flipping a home will be much lower. If not, be prepared to pay someone to do it for you.

Additionally, it is a good idea to have a fair amount of knowledge concerning property laws, taxes and zoning. Knowing what needs to be done to sell can save you time and money in the long run.


Real estate investing requires patience. You must be willing to wait for the right opportunity to make money. Jumping on the first house you look at, buying when the market is high, and trying to sell when your home isn’t finished are sure ways to eat up your funds. You can’t just buy property and expect it to sell for more money. Flipping a home takes patience, dedication, and a lot of time.

Risk Vs Reward

Before diving head first into real estate investing, weigh out the risk against the reward. Determine how much you will be willing to devote this project: time, money, and patience. The goal is to put in the effort to sell the property quick. Consider all possible ups and downs; how long will this property sit? Will anyone buy? Will you end up selling for less? Will you be forced to rent the property? These are all valid questions to contemplate before investing. If the risk is worth the reward, and you have the skills and knowledge, you can make bank on flipping homes.

House Flipping Business

Flipping houses can be an excellent way to build up your self-directed IRA fast but be aware of the risks involved. Perform your due diligence and have patience. The mark of a good real investor is knowing the market and knowing when to walk away. Consider the time, money, and research that must go into a house flipping business before deciding whether this is the best investment for you.

Start making money today and try your hand at flipping homes. Contact a trusted Horizon Trust custodian today.

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