Thanks for a great article. Can you please clarify how the funds can be used for the business? We’ve owned an eCommerce business and retail shop for 8 years. Last year, we closed the shop to focus on the increasing online sales. We want to open a showroom/shop in a better location and own the real estate this time instead of renting. Can we use our IRA retirement funds to purchase a commercial real estate property to open a new showroom/shop? If so, who could best help me through the process? Is ROBS the only option and best option (for use of retirement funds for business use/real estate purchase)? There is another property we are considering that is mixed use which allows storefront, office and could be live/work. Would this property qualify and are all these uses allowed? Thanks for your time and help!
Using a ROBS isn’t always the best option for buying real estate for a number of reasons. First, you have to be a legitimate employee of the business for which you use ROBS funds, which is hard to do if you aren’t in the real estate business. Second, to use a ROBS you must set up a C-Corp and a 401(k) and all 401(k) eligible employees must be given the option of investing in the business (your real estate, in this case).
That said, it is possible to use a ROBS to purchase real estate if you structure things possible. Guidant is our recommended ROBS provider and can help you to set things up to accomplish this. They can also give you more information on whether the mixed-use property will qualify for a ROBS. You can contact them directly to set up a consultation and get things started.
Another option for using retirement funds to purchase real estate is to use a self-directed IRA for real estate investing. That may offer you greater flexibility and be more in line with what you’re outlining. For more information, be sure to check out our article on using a Self-Directed IRA for Real Estate Investing.
Hope this helps,