Self-Directed Individual Retirement Accounts (or SDIRAs), though one of the best kept secrets in the finance world – even amongst the most savvy investors, provide one of the most effective means for which to invest in real estate. Not only will a SDIRA enhance and diversify any portfolio, the array of tax benefits typical with any standard IRA account makes this investment vehicle particularly attractive.

What is a SDIRA?

Simply, a SDIRA is an IRA account (Roth, Traditional, SEP, SIMPLE) where the managing custodian allows the IRA to invest beyond stocks, bonds, mutual funds, and ETFs. In other words, it allows the investments in the account to be “self-directed” (go figure!). While traditional retirement accounts are tethered to stocks, bonds, and mutual funds, SDIRAs can also be applied to assets such as:

  • Real Estate

  • Private Equity

  • Hedge Funds

  • Promissory Notes

  • Precious Metals

What are the Benefits of a SDIRA?

Tax Advantages: The first clear benefit of a SDIRA is its tax advantages. Like a typical IRA, a SDIRA utilizes either tax deferred funds (Traditional IRA) OR funds for which the distributions are tax-free (Roth IRA).

Diversification: The ability to use tax-advantaged funds to invest in private equity, real estate, etc. allows investors to truly diversify their portfolio. While a typical IRA may be able to invest in a REIT (Real Estate Investment Trust) or an index tracking the price of a commodity, it would not be allowed to invest in a privately held business, have equity in a real estate project, or purchase a commodity. These opportunities give investors the opportunity to choose higher yield investments while also spreading their investments across a diverse spectrum. SDIRAs provide investors with unparalleled upside and freedom compared to typical retirement accounts.

Invest in What You KNOW: With this newfound freedom offered by SDIRAs, investors are able to allocate tax-advantaged capital in businesses, industries, partners, and assets that they know. Whether it’s investing at the ground-level for a start-up business, of which you are already familiar of the industry or investing in a real estate deal with trusted partners, the SDIRA allows you to invest in assets of which you are closer and more knowledgeable.

How Do You Set Up a SDIRA?

For those who already own an IRA, creating a SDIRA is easy and accessible. The process would begin by simply opening an account with a SDIRA custodian, subsequently rolling over funds from current IRA account, and then following the custodian’s steps for investing in the asset for which you wish to invest.

Watermark is proud to say that each of our private equity real estate projects are qualified recipients for SDIRA funds. We have worked extensively with several SDIRA custodians and have helped a myriad of equity partners enjoy the benefits of using their hard earned and carefully saved retirement funds to invest in real estate assets. It is one more way Watermark seeks to protect and grow our equity partners’ capital like it is our very own.


To learn more, reach out to Watermark Equity Group today!


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Mike Berttucci

Mike is the Finance Director of Watermark Equity Group. Since graduating Wheaton College (IL) with degrees in Business and Economics, Mike was active in community development and was a professor of business studies before joining Watermark in 2017.