Yieldi | How to Use a Self-Directed IRA to Invest in Real Estate
Investor Starter Toolkits
Investment Basics, Investors

How to Use a Self-Directed IRA to Invest in Real Estate

Eric Rhodes

March 7, 2025 · 6 min read

Building a strong retirement portfolio requires diversification, and real estate investments offer an attractive alternative to traditional stocks and bonds. A Self-Directed IRA (SDIRA) allows investors to use their retirement funds to invest in real estate while maintaining tax advantages. At Yieldi, we provide investors with the opportunity to earn passive income through real estate-backed investments using their IRAs.

In this guide, we’ll explore how self-directed IRAs work, the benefits of using an SDIRA for real estate, and the best IRA custodians to help you get started investing with Yieldi.

The Importance of Diversifying Your Portfolio with Yield Products

A well-balanced investment portfolio should contain a mix of growth, income, and capital preservation assets. While stocks and bonds are traditional options, adding yield products like real estate-backed loans provides a layer of stability and consistent income generation. Real estate-backed investments through a Self-Directed IRA offer predictable returns and mitigate volatility compared to stock market fluctuations. By including yield products in your retirement strategy, you can achieve long-term financial security and passive income growth.

What is a Self-Directed IRA (SDIRA)?

A Self-Directed IRA (SDIRA) is a specialized retirement account that gives investors the freedom to invest in alternative assets beyond traditional stocks and bonds. Unlike standard IRAs, SDIRAs allow investments in real estate, private loans, private equity, and other non-traditional assets. These accounts are managed by specialized IRA custodians who handle compliance and administration while you make the investment decisions.

The Role of Private Lenders in Real Estate Investing

Private lenders play a significant role in real estate financing - 51% of all mortgages in the U.S. are held by private lenders. Unlike traditional banks, private lenders like Yieldi offer investors a lower-risk approach to real estate investing by focusing on more conservative loan-to-value (LTV) ratios. While banks often lend at upwards of 80% LTV, Yieldi maintains an average LTV of 65%, ensuring that investments remain well-secured and resilient to market fluctuations. This conservative lending approach significantly reduces risk while allowing investors to earn competitive, predictable returns.

Why Real Estate-Backed Investments Are Safer Than Traditional Investments

One of the key advantages of investing in real estate-backed loans is the security provided by the underlying asset—a physical property. Unlike traditional investments such as stocks, which can be highly volatile and subject to external economic factors, real estate loans are secured by real collateral. This means that in the rare case of borrower default, the lender (and by extension, the investor) has the ability to recoup the investment through the asset itself. Yieldi’s rigorous underwriting process and conservative LTV ratios further enhance the safety of these investments, making them a strong alternative for risk-conscious investors.

The Tax Benefits of Investing in Real Estate Through an SDIRA

Investing in real estate with a Self-Directed IRA provides significant tax benefits:

  • Tax-Deferred Growth (Traditional IRA) – Earnings from rental income, interest payments, and capital gains grow without immediate taxation, allowing funds to compound over time.
  • Tax-Free Growth (Roth IRA) – Qualified withdrawals from a Roth IRA are completely tax-free, making it an ideal vehicle for long-term wealth accumulation.
  • Shielding Gains from Immediate Taxes – Unlike taxable investment accounts, SDIRAs allow real estate gains to be reinvested without incurring annual tax liabilities.

How Real Estate Investments Perform During Economic Downturns

Real estate investments have historically outperformed other asset classes during economic downturns due to their tangible nature and income-generating potential. Key advantages include:

  • Lower Volatility – Unlike stocks, real estate-backed loans are secured by physical property, reducing exposure to market fluctuations.
  • Steady Cash Flow – Rental income and fixed loan payments provide consistent returns, even during recessions.
  • Hedge Against Inflation – Real estate values and rents tend to increase with inflation, preserving purchasing power.

How Yieldi’s Due Diligence Process Protects Investors

At Yieldi, we prioritize investor security by implementing a rigorous due diligence process:

  • Careful Asset Selection – We evaluate the borrower’s financial stability, project feasibility, and collateral value before funding any loan.
  • Conservative Loan-to-Value Ratios – By maintaining a 65% LTV, we ensure that investors have a strong equity cushion.
  • Ongoing Portfolio Monitoring – We continuously assess loan performance, mitigating risk and taking swift action if necessary.

Common Mistakes to Avoid When Using an SDIRA for Real Estate

When investing in real estate through an SDIRA, it's crucial to avoid common pitfalls:

  • Ignoring Prohibited Transactions – Investors cannot use IRA-owned properties for personal benefit, such as living in or renting to family members.
  • Choosing the Wrong Custodian – Not all custodians allow real estate investments; selecting a specialized SDIRA provider like the ones listed below is essential.
  • Neglecting Liquidity Planning – Required minimum distributions (RMDs) at age 72 must be considered when structuring IRA investments.

Top IRA Custodians for Real Estate Investments

IRA custodians like the typical brokerage houses may not support real estate investments. Yieldi works with trusted SDIRA providers to help investors seamlessly invest in real estate-backed opportunities:

1. Preferred Trust Company

Preferred Trust Company offers self-directed IRA services, allowing investors to diversify into real estate with a seamless, compliant, and tax-advantaged process. Schedule a consultation with Preferred Trust Company today!

2. Directed IRA

Directed IRA specializes in alternative asset investing, offering seamless SDIRA management for real estate investments. They provide expert guidance and flexible account structures.

3. IRA Financial

IRA Financial helps investors take full control of their SDIRA, providing customized solutions for real estate and private lending investments.

4. Alto IRA

Alto IRA is a tech-driven SDIRA platform designed for modern investors looking to diversify into real estate and alternative assets with ease.

5. Advanta IRA

Advanta IRA is a leader in self-directed account administration, with decades of experience helping investors navigate real estate transactions through SDIRAs. They offer personalized service and comprehensive support to ensure compliance and maximize investment potential.

Why Invest in Real Estate with Yieldi?

At Yieldi, we offer exclusive, asset-backed real estate investment opportunities that allow investors to grow their retirement funds securely. Our experienced team ensures that all investment offerings are thoroughly vetted and structured for strong returns.

  • Earn Passive Income – Invest in secured, high-yield real estate-backed loans.
  • Competitive Interest Rates – Take advantage of above-market returns.
  • Diverse Investment Options – Choose from a variety of carefully selected real estate-backed assets.
  • Expert Management – Leverage decades of experience in real estate lending and investment.

Start Investing Today

If you’re ready to use your self-directed IRA to invest in real estate-backed opportunities, Yieldi can help. Partner with one of our trusted SDIRA custodians and start building a diversified retirement portfolio today.

Explore our current offerings and start earning passive income with Yieldi!

Investment Basics, Investors
Why Georgia is One of the Best States for Real Estate Investors in 2025

Looking to expand your real estate portfolio in 2025? Smart investors across the country have their eyes on Georgia —...

Read More
Borrowers, Investors
What Is a Bridge Lender?

Introduction In the fast-paced world of real estate, having quick access to funds can make all the difference between seizing...

Read More

Ready to start investing?

Schedule a Call
Borrowers, Investors
What Is a Bridge Lender?

Introduction In the fast-paced world of real estate, having quick access to funds can make all the difference between seizing...

Read More
Borrowers, Investors, Lenders
The Future of Lending: AI-Driven Loan Origination and Approval

The lending industry is undergoing a digital transformation, and at the forefront of this change is artificial intelligence (AI). Traditional...

Read More
Investors
How Private Lending Can Strengthen Your Real Estate Investment Portfolio

Private lending is an increasingly popular strategy for real estate investors seeking flexible, high-yield financing options. At Yieldi, we specialize...

Read More
Read Full Disclosure
THIS PRESENTATION FOR YIELDI, LLC (THE “FUND”) AND ANY APPENDICES OR EXHIBITS IS PROVIDED TO YOU ON A CONFIDENTIAL BASIS AT YOUR REQUEST FOR INFORMATIONAL PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY AN INTEREST IN THE FUND. THIS PRESENTATION IS CONFIDENTIAL AND IS ONLY BEING PROVIDED TO “ACCREDITED INVESTORS” WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, IN WRITING OR ORALLY OR IN ANY OTHER WAY OR FORM, THIS PRESENTATION OR ANY OF THE INFORMATION SET OUT HEREIN. A
private offering of Borrower Payment Dependent Notes (“Notes” or “Note”) will only be made pursuant to a confidential private placement memorandum (the “Offering Memorandum”), each specific Note, and the Fund’s subscription documents, which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. This document does not purport to contain all the information that may be required to evaluate an investment in a Note and is subject to completion and amendment. Any prospective investor is advised to carefully review all of the Offering Memorandum, the Note, and the Fund’s subscription documents. Certain factual information has been obtained from third-party sources believed to be reliable but has not been independently verified. The Fund may change some terms of the Offering prior to finalization of the Memorandum. The information contained herein will be superseded by, and is qualified in its entirety by reference to, the Offering Memorandum, which contains additional information about the investment objective, terms and conditions of an investment in a Note or Notes and also contains tax information, information regarding conflicts of interest and risk disclosures that are important to any investment decision regarding a Note or Notes. No person has been authorized to make any statement concerning the Fund other than as set forth in the Offering Memorandum and a Note, and any such statements, if made, may not be relied upon. The information contained herein must be kept strictly confidential and may not be reproduced, redistributed or otherwise used without Yieldi, LLC’s express written approval. Each recipient, by accepting these materials, is deemed to agree to the foregoing, and to agree to return these materials promptly upon request. An investment in a Note or Notes of the Fund is highly speculative and involves significant risks, including potential loss of the entire investment. Before deciding to invest in a Note or Notes, prospective investors should pay particular attention to the risk factors contained in the Offering Memorandum. Investors should also have the financial ability and willingness to accept the risk characteristics of a Fund Note or Notes according to their terms.  An investment in a Note or Notes is not suitable or desirable for all investors and only qualified eligible investors may invest in the Fund. Past performance is not indicative of future returns or Fund results. The views expressed herein represent the opinions of the Fund and are not intended as a forecast or guarantee of future results. Individual investment performance, examples provided and/or case studies are not indicative of overall returns of a Fund Note. In addition, there can be no guarantee of deal flow in the future. Some of the statements in this Presentation, including those using words such as “targets,” “believes,” “expects,” “intends,” “estimates,” “projects,” “predicts,” “anticipates,” “plans,” “pro forma,” and “seeks” and other comparable or similar terms are forward-looking statements. Forward looking statements are not statements of historical fact and reflect Fund’s views and assumptions as of the date of the Presentation regarding future events and performance. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are important factors that could cause a Note or Notes actual results to differ materially from those indicated in these statements. The Fund believes that these factors include, but are not limited to, those described in the “Risk Factors” section of Fund’s Memorandum. The performance figures set forth in this document are provided to you with the understanding that, as a sophisticated investor, you understand the inherent limitation of such illustrations, will not rely on them in making any investment decision, and will use them only for the purpose of evaluating your preliminary interest in investing in a Note or Notes of the Fund. Any performance data represents past performance. Any performance information included in this document is for information purposes only. The Fund makes no guarantee that it will be able to achieve similar results. Targets are objectives and should not be construed as providing any assurance as to the results that may be realized in the future from investments in a Note or Notes of the Fund. HISTORICAL PERFORMANCE IS NOT AN INDICATOR OR GUARANTEE OF FUTURE RESULTS. No representation or guarantee is made that the Fund will or is likely to achieve its investment objectives or be able to avoid losses This document contains selected information regarding transactions entered into by the Fund on behalf of other accounts and clients. The purpose of any historical information is to provide prospective investors with examples of investments the Fund has made in the market in which the Fund expects to invest and illustrate the types of investments that may be targeted by the Fund. Prospective investors should not rely on this information in making an investment decision, as the investments of the Fund in the past and the investments made in the future may be materially different from any historical investments. In view of the foregoing,  there can be no assurance the Fund will make investments similar to those that may be described herein or be able to achieve comparable results or avoid losses. The Fund has not filed, nor does it currently intend to file, a prospectus or similar document with any securities regulatory authority. No securities regulatory authority has passed upon the value of an investment in a Note or Notes of the Fund, made any recommendations as to a purchase of any securities of the Fund, approved or disapproved of the offering of any securities of the Fund, or passed upon the adequacy or accuracy of this document. Any representation to the contrary is unlawful. This document does not constitute an offer or a solicitation in any jurisdiction to any person or entity to which it is unlawful to make such offer or solicitation in such jurisdiction. Prospective investors should make their own investigations and evaluations of the information contained herein. Prior to the closing of a private offering of a Note or Notes of the Fund, the Manager of the Fund will give investors the opportunity to ask questions and receive additional information concerning the terms and conditions of such offering and other relevant matters. Each prospective investor should consult its own attorney, business adviser, and tax adviser as to legal, business, tax and related matters concerning the information contained herein and such offering. Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. AN INVESTMENT IN THE FUND INVOLVES RISK, AND NUMEROUS FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF FUND TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION.