How to Invest in Private Real Estate Funds with Your Self-Directed IRA

Welcome back to another episode of the IRA Cafe podcast! Join Kyle Moody, Business Development Manager at American IRA, as he hosts an insightful discussion with Steve Kelly, Vice President at MLG Capital.

In this episode, Kyle Moody and Steve Kelly explore how self-directed IRAs can be used to invest in private placement real estate funds, diving deep into MLG Capital’s nearly four decades of history, unique fund structures, and tax-efficient investing strategies. Steve Kelly shares his journey from wealth management exposure through family ties to dedicating his entire professional career to MLG, explaining how he educates and supports investors, and detailing MLG’s transformation from a local, diversified real estate firm to a nationwide leader in multifamily, industrial, and diversified real estate funds.

The conversation covers the evolution of MLG's investment approach from syndicating individual deals to launching diversified private funds and explains how MLG helps investors gain access to passive, diversified portfolios without the headaches of direct property ownership. Listeners will also gain valuable insights into the realities of today’s real estate market, the intricacies of tax planning (including UBTI and REIT blockers for retirement account investors), and the minimum requirements to participate in MLG’s offerings. Whether you’re a seasoned pro or just curious about stepping back from hands-on real estate investing, this episode is packed with practical guidance and actionable education.

Key takeaways:

1. MLG Capital's Evolution: Steve Kelly outlines MLG Capital’s growth since its founding in 1987, from managing various real estate services and syndicating one-off deals to shifting focus on diversified private funds that offer nationwide exposure especially in the Midwest and Sunbelt regions (06:00 to 10:20).
2. Passive, Diversified Real Estate Investing: Through their private fund structure, MLG allows investors to participate in a portfolio of 20–30 properties, providing diversification by geography and asset type, which helps mitigate risk compared to direct ownership or single-property syndications (08:04 to 14:18).
3. Self-Directed IRA Compatibility: Investors can use self-directed IRAs to access MLG’s funds, with special attention to mitigating UBTI through REIT “blocker” structures that convert rental income to dividend income for better retirement account tax treatment (18:10 to 22:01).
4. Real Estate Market Insights: Steve Kelly provides an informed look at multifamily market trends, including the impact of recent record-setting new construction, ongoing strong rental demand, and why localized, granular market analysis remains crucial to successful investment management (28:19 to 32:23).
5. Accessibility and Investor Requirements: Participation in MLG’s private funds requires accredited investor status with a $50,000 minimum investment, and while the investments are illiquid, distributions and liquidity events are staggered as individual assets are sold over a 10–12 year fund lifecycle (32:39 to 35:13).

Whether you’re looking to diversify away from the stock market, want to free yourself from hands-on property management, or just want to understand what’s next in the real estate investment landscape, this episode is an essential listen for anyone interested in maximizing their self-directed IRA’s potential.