Starting May 28th, through September 3rd, the Next Generation office will close at 3:30pm ET on Fridays.

Investing in Self-Storage Through a Self-Directed IRA

Investing in Self-Storage Through a Self-Directed IRA

Did you know you can include self-storage in your retirement portfolio? Real estate is the most popular asset class in self-directed IRAs—including commercial real estate—and self-storage is a growing segment that offers great potential for self-directed investors. In fact, it is a $39.5 billion industry in the U.S., utilized by approximately 10% of all U.S. households (with tremendous growth potential as Generation Z gets older and Generation X starts to downsize). As of this year, the estimated number of self-storage facilities is over 49,200.

The most common avenues for self-directed investments in this asset class are through promissory notes (lending) or private placements—direct investments in a private entity such as a self-storage REIT (real estate investment trust), C-corporation, LLC or fund. The self-directed IRA invests into those entities, with all income and expenses related to the asset flowing in and out of the retirement plan.

Strong asset class with strong ROI

Investing in self-storage through a self-directed IRA

Before taking the steps to invest in self-storage through a self-directed IRA, there are a few things to note. This must be a passive investment to meet IRS investing guidelines. You, as the self-directed IRA owner, cannot be an active partner, director, or managing member of the investing entity (REIT, fund, LLC)—this makes you a disqualified person and creates a prohibited transaction which can cause your investment to lose its tax-advantaged status. Also, beware of investing in a private fund or company that is owned 50% or more by disqualified individuals, as this would constitute a prohibited transaction. Disqualified persons for this purpose are the account owner, his/her spouse, lineal descendants or ascendants; a beneficiary of the IRA; or plan service providers and fiduciaries.

At Next Generation, we take steps to make investing in all types of alternative assets as easy as possible. Our Starter Kits contain all the paperwork needed to open and fund a new self-directed retirement plan. After you do your research and identify the entity into which you wish to invest through your IRA, we’ll provide you with a list of the documentation required to process and execute the private placement (or promissory note, if lending). You will need to provide our Next Generation team with a buy direction letter, private placement instruction letter and advisory notice, transaction payment method, and outgoing ACH or wire instructions.

We will review the transaction for compliance with IRS investing guidelines and complete the transaction; our custodial firm, Next Generation Trust Company, holds the assets for our clients.

Want to know more including self-storage in your self-directed IRA? Watch this on-demand webinar on the topic, or schedule a complimentary educational session with Next Generation. You can always contact us by phone at 888.857.8058 or by email to with your questions.

Time to Include Real Estate in Your Self-Directed IRA

An article last month on Reuters explored how rising interest rates are helping real estate-related stocks perform very well amid the broader U.S. equity market; the article stated that investors are putting money into real estate investment trusts (REITs), betting that these publicly traded assets will provide a better return as the Federal Reserve continues to tighten monetary policy. Real estate sector stocks have declined at half the rate of the overall market since February. All this may signal a good time to include real estate in a self-directed IRA.

Interest Rates Expected to Rise

The Fed is expected to raise rates at least twice more this year (there was an increase in March), and rising rates generally indicate a strong economy. This in turn usually results in an increased demand for all types of commercial property—the type of property that self-directed investors can invest in through their retirement plans. The article went on to say that the Standard & Poor 500 real estate sector had been in decline since the start of the year, but was trending higher this quarter, which suggests more positive investor sentiment. And, according to research by the National Association of Real Estate Investment Trusts, if inflation remains moderate amid economic growth, REITs may outperform the broad stock market. Again, this may signal that for savvy investors who already know and understand real estate assets, the timing could be great for adding investment real estate in a self-directed IRA.

Rising Demand in Real Estate

The rising demand in real estate will also drive up rental rates, boost net operating income from investment property and increase real estate valuations along the way, providing relatively strong returns for the self-directed IRAs that have invested in those assets. Self-directed investors may include a broad array of non-publicly traded assets in their retirement plans, including essentially any kind of real estate: multi-family housing, warehouses and industrial properties, retail or office properties, and even vacation rental property. If you have your eye on a commercial or residential investment property to include in a self-directed IRA, our helpful Real Estate Investment Kit has all the forms you need to make it happen after opening a self-directed retirement plan at Next Generation Trust Company. Our Starter Kits will walk you through all the steps to open your self-directed retirement plan and get it funded, and our team is available to answer any questions you have. Contact us at or 1-888-857-8058 if you need assistance.

Stock Market’s Got You Down? Consider Alternative Assets as a Retirement Plan Pick-Me-Up

The stock market’s performance in early February likely has many savvy investors thinking about alternative (“alt”) funds as a hedge against market volatility. According to FINRA (Financial Industry Regulatory Authority) alt funds might invest in assets such as global real estate, loans, start-up companies and unlisted securities that offer exposure beyond traditional stocks, bonds and cash.

Luckily, you can replicate what alt funds are doing by establishing a self-directed IRA and investing in your choice of non-publicly traded alternatives.

There are many alternative assets that investors may include in their self-directed retirement plans as a way to diversify their retirement portfolios—and build retirement wealth with nontraditional investments they already know and understand.

These are just some of the myriad ways you can include nontraditional investments in a tax-advantaged retirement plan. And, when you open a self-directed IRA with Next Generation Trust Company, you get complimentary education, full account administration, transaction support and asset custodial services under one umbrella.

If you’re interested in perking up your portfolio with alternative assets you already know and understand, check out our Starter Kits to open an account and sign up for our monthly newsletter for timely tips. Have questions? Contact our team at or 1.888.857.8058

Did you miss our last Self-Directed Webinar?

Last Thursday, Next Generation Trust Services had the pleasure of working with Wen Hsu of Keller Williams, NYC and Tony D’Anzica of Dynamax Realty and Manhattan MLS, Inc to produce an informative webinar regarding real estate trends and using your retirement plan to make these purchases.

In case you missed this educational self-directed webinar session you can access the recording of this hour long seminar right here!  Covered within this webinar are the following topics:

Manhattan Real Estate Investment Trends
Real Estate Investment Strategies
Buying Real Estate in Your Retirement Plan

Real Estate Investments feat. Wen Hsu & Tony D’Anzica from Next Generation Trust Services on Vimeo.