It’s getting closer and closer to year end and time to look back and see how our portfolios have been doing. For many, that means being thankful for a 5.50 percent annual return in an IRA or even not losing as much as we could have. Yes, theira invest in real estate Dow has been on a roll as of late but if you look at your typical mutual fund, getting anything beyond 5.00 percent is a gold mine. But you could do better. You could put your IRA funds to use buying investment real estate.

 First, note that doing anything with your retirement funds should be done hand in hand with financial counsel, but many simply aren’t aware that those tepid IRA funds can be used to acquire, rehabilitate and flip real estate for a profit. IRA funds can also be used to buy and hold real estate for the long haul. What are the basic requirements?

The subject property can’t be a primary residence and must be considered a rental property, not a beach house or second home. Next, your IRA must be considered “self-directed” which means nothing more than an IRA account where you make the investment decisions for the funds in the IRA.

When using IRA funds, you can provide enough cash to buy a property outright, sell the property for a profit then return those profits tax-free right back into the IRA fund. If you’d rather finance the property in an IRA, lenders won’t accept a loan application from an IRA. What you can do however is pull funds from the IRA to be used as a down payment and closing costs and obtain financing under your own name.

Most with an IRA view the account as a sleepy little tax-free fund that gets an annual contribution each year along with the tax deduction that goes along with it. But if you’d rather see returns that outperform any stock, bond or mutual fund, consider real estate instead.