Top 10 Alternative Assets Allowed Inside a Self-Directed IRA (With Examples)
by Peter Rizzo
One of the biggest advantages of a Self-Directed IRA is the ability to invest in real assets instead of being limited to traditional stocks and mutual funds. The IRS only restricts a small list of items, so the range of allowed investments is much broader than most people expect. The key is keeping everything arms-length, properly titled, and compliant with IRA rules.
Here are the top alternative assets people use inside a Self-Directed IRA, along with simple examples.
- Real Estate
Real estate is the most common asset inside a Self-Directed IRA. The property must be purely investment based. No personal use, no family use, and no sweat equity.
Examples include:
- Single family rentals
- Multi family properties
- Commercial buildings
- Airbnbs managed by third parties
- Land for long term appreciation
Every expense and income must flow through the IRA-owned LLC or custodian account.
- Private Lending and Notes
Many investors use their IRA to become the lender instead of the borrower. This creates steady, predictable returns.
Examples include:
- Secured notes backed by real estate
- Private loans to businesses
- Interest-only loans with balloon payments
- Mortgage notes purchased at a discount
You cannot lend to yourself or family members, but third-party lending is fully allowed.
- Tax Liens and Tax Deeds
These are popular for investors who understand local auction rules. Returns can be strong, and ownership stays strictly within the IRA.
Examples include:
- Tax lien certificates
- Tax deed auctions
- Redeemable deeds
Each jurisdiction works differently, so due diligence is essential.
- Private Equity
Your IRA can invest in companies that are not publicly traded. This includes early stage startups, established private firms, and everything in between.
Examples include:
- Minority ownership in a private company
- Venture capital style investments
- Franchises (as a passive investor)
- Operating companies that do not involve you personally
You cannot invest in a company you personally own or control, but unrelated businesses are fair game.
- Cryptocurrency
Digital assets are allowed when held properly through a custodian or an IRA LLC with a compliant wallet setup.
Examples include:
- Bitcoin and Ethereum
- Diversified crypto baskets
- Cold storage inside an IRA-owned wallet
- Investments in blockchain funds
All trading must be done through the IRA. You cannot personally hold the keys on behalf of the IRA unless structured correctly.
- Precious Metals
Physical metals are permitted as long as they meet IRS standards and are stored in an approved depository.
Examples include:
- Gold bullion
- Silver bars
- Platinum and palladium
- Certain coins that meet purity requirements
Storing metals at home is not allowed. Storage must be handled professionally.
- Land and Raw Land Projects
Raw land is simple to manage and can appreciate without active involvement.
Examples include:
- Agricultural land
- Development parcels
- Utility easements
- Timberland
Since there is no personal use, compliance is straightforward.
- Oil, Gas, and Energy Interests
Energy investments are allowed as long as you are a passive investor and not working in the project.
Examples include:
- Mineral rights
- Royalty interests
- Energy partnerships
- Passive share positions in drilling programs
These can produce steady income inside the IRA.
- Structured Settlements
Some investors use IRAs to purchase cash flows from structured settlements at a discount.
Examples include:
- Fixed monthly payouts
- Lump sum future payouts
- Insurance based settlement contracts
The IRA receives the payments until maturity.
- Private Funds and Syndications
Self-Directed IRAs can invest in pooled funds that are not publicly traded.
Examples include:
- Real estate syndications
- Private REITs
- Debt funds
- Energy or infrastructure funds
These are popular because the IRA simply holds a membership interest and receives distributions.
Summary
A Self-Directed IRA opens the door to a wide range of alternative investments. Real estate, private lending, private equity, cryptocurrency, metals, land, and other assets are all allowed as long as everything remains arms-length and properly titled. The IRS prohibits only a few items, so most structured, passive investments are available. With the right setup and compliance, your IRA can build wealth through assets you understand and trust.
