Why Many Traditional IRA Custodians Have Problems with Real Estate
Most IRA custodians tend to be myopic when it comes to allowing you to place real estate inside your IRA account. Meaning, they try to limit what you can do with them.
As with most things that involves money, the WIIFM principle is at work. Most IRA account custodians are tied to a financial institution. Financial institutions promote financial products, on which custodians make commissions in most cases. Furthermore, in many cases there are transaction fees as well.
Hence, there’s an automatic built in conflict of interest.
One of the good things about Self Directed Real Estate IRA accounts is that custodians are not allowed to influence the investment decisions you make. They, in essence, take their instructions from you.
The job of the IRA custodian is to make sure you are in compliance with all the rules as it relates to IRA accounts, and to file the appropriate paperwork at the appropriate time. That’s it. Nothing more, nothing less.
So, if you want more control over your IRA funds, a Self Directed Real Estate IRA account may be just the thing.
