I sat down with Kaaren Hall to dig into a topic that blows many experienced investors’ minds—self-directed IRAs. Kaaren is a real estate investor, the author of the BiggerPockets book on self-directed real estate investing, and founder of Udirect IRA Services, which manages around $1 billion in assets. We walked through how she got started in real estate, why most people don’t realize they’ve been able to self-direct retirement accounts for 50 years, and exactly how to roll over funds from a 401k or IRA into a self-directed account. Kaaren shared surprising investment strategies, including syndications, private lending, and even some unexpected past deals, along with critical rules to avoid prohibited transactions. If you’ve ever wondered how to unlock the retirement capital you already have and put it into assets you know and trust, you’ll want to hear every detail of this conversation.
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Kaaren is amazing. I’ve known her for years. I remember the first time I heard her speak about some of the stuff she’s going to share with us here today. She is a real estate investor herself. She is the author of the Bigger Pockets book on self-directed real estate investing. And she is going to talk to us today about her experience and also these self-directed IRAs or STIRAs.
It’s gonna be a lot. It’s gonna be amazing. So make sure you listen to the whole thing. And let’s start at the beginning. So Kaaren, how did you get involved with real estate investing in the first place?
Yeah, real estate investing. Don’t we all kind of eventually make our way there in some way? The way I started off was, well, first I was a radio announcer for 17 years. And then I made the logical transition to real estate like everybody, right? So that’s what I did. I got a real estate license while I was working at a radio station and also simultaneously managing an apartment building. So I was doing all these things at the same time.
So I was doing that and then life went on. I went from that to mortgage loan servicing, which I did for a number of years while I was the trailing spouse while we were moving and growing. And then when we moved to California 26 years ago to Irvine, I got into loan origination. And that was, you know, that’s boiler room—coffee is for closers.
I learned a lot about that in the industry, not just sales, but about how other people are getting wealthy. Because you’re looking at their 1040s, you’re looking at their 1120s, all their tax forms, and how they’re doing it. While we’re underwriting loans, it’s like, huh, that’s interesting—it’s almost always real estate.
Having three real estate licenses in Washington, Texas, and California, I understood real estate, understood loans, and it was the perfect segue into self-directed IRAs because this is what our account holders invest in—essentially real estate, other things too, but mostly real estate-based assets. It gave me a great base of knowledge to do this. I worked for another company and two years later, went off on my own, started Udirect and now we have like one billion dollars under management.
That’s amazing.
I love this. It definitely speaks to your depth of experience in various fields and how you ended up where you are. We all take kind of a winding road to get there, right? And now, somebody’s listening and they’re like, okay, this woman’s really into self-directed IRAs and she’s talked about how it builds wealth. For somebody who doesn’t know about SDIRAs yet, what is that?
Right, and it can confuse people. I did a podcast recently and in the comments, people’s minds were blown that you can do this. But you’ve been able to self-direct an IRA for 50 years. This is the 50th birthday of the IRA—it was 1975 when Gerald Ford, who was president then, signed the ERISA Act, the Employment Retirement Income Security Act, into effect.
That created the IRA. And since day one, the only rules about investing with an IRA are that you can’t invest in life insurance contracts and you can’t invest in collectibles. So no fine wine collection, no car collection. Pretty simple rules—those are the two things you can’t do. The IRS didn’t say you can self-direct; they didn’t say what you can do, right?
Wall Street got a hold of this, financial advisors got a hold of this, and they were stock brokers then. They used that vehicle as a basket for retirement dollars and said, “Hey, put this in mutual funds.” Over time, the industry evolved—we started having 401ks at work that, when we leave, are going into IRAs.
It’s been that way for 50 years. You’ve always been able to self-direct. So what does that mean? It means you can invest outside the stock market. Your IRA doesn’t have to be in mutual funds, doesn’t have to be stock-market-based, doesn’t even have to be a CD. It can be an actual house. Your IRA could buy a house. Now, there are rules—you can’t live in the house, no personal use. Those prohibited transactions are important to know.
We walk our account holders through these rules—tell us what you want to invest in, and we’ll talk about whether it sounds prohibited. The responsibility to do it correctly is on the account holder, but we’re here to guide people. A self-directed IRA is just an IRA; the way money comes in and goes out is the same as any other IRA. The only difference is the asset class it holds.
And they can hold real estate, which is what we’re most concerned with here. So let’s walk through the process. I’ve found that a lot of people leave their jobs and leave their 401ks there. They don’t roll it over into an IRA to start with. If you have a W-2 you left before and your 401k is just sitting there in whatever mutual funds you chose then, here’s how you could invest that in real estate, which you know and love more.
For a rollover from a previous employer plan, you open an account first. That takes 10–15 minutes. We have a digital application on our website—it’s super easy. Once the account’s open, you contact your previous employer’s plan administrator and say, “I would like to roll over that money. Here’s the information for my new IRA account where I want you to send this money. Here’s the address, the account number, or how to make the check payable.” Employer plans typically send a check, not wire money, so it can take a little longer to clear. Usually, it’s about two weeks before we have those dollars in your account.
If you’re rolling over from an IRA that’s in mutual funds or stocks, the process is a little different. An IRA-to-IRA transfer is faster. When you complete your digital application, you tell us who your current custodian is, your account number, and give us permission to initiate the transfer. You don’t have to call them—we handle it. You do need to liquidate positions ahead of time because only cash can transfer. That process can take a week or less.
Once the money is in a self-directed IRA, we can start making some magic. The number one asset class in our whole industry is syndications—raising capital for real estate projects like multifamily, self-storage, mobile home parks, strip malls, or development. Number two right now is cryptocurrency. Another popular choice is real estate-related notes. Your IRA can be the bank, lending to others secured or unsecured, often on real estate. You can buy performing or non-performing debt—sometimes at a discount—and profit on the difference.
I also like precious metals. Gold, silver, platinum, palladium can be held in your IRA as a hedge against inflation. You can’t have personal possession of IRA-owned metals; they’re stored with a custodian, like Delaware Depository, under high security.
Some investors use self-directed IRAs as diversification from the stock market; others avoid Wall Street entirely and stick to tangible assets. The only barrier to entry for having a retirement account is earned income—you don’t need a finance degree.
Let me share a wild example. A young man used his Roth IRA to buy Super Bowl tickets—not for personal use, which would be prohibited—but to resell at a profit. The profit stayed in the Roth IRA, growing tax-free. It was allowed because it was a one-time deal, not an ongoing business. Each custodian decides what assets they’ll hold, so you need to find one that fits your deal.
On UBIT—Unrelated Business Income Tax—it’s allowed, just taxed at trust rates (17–37%), unlike prohibited transactions, which burst the IRA’s tax-protected status. For example, you can’t live in an IRA-owned property or have close family use it, nor can you invest your IRA in a deal you manage as a GP.
If your IRA buys property, all rents go back into the IRA, all expenses are paid from it, and you can’t do the labor yourself. You can choose the property, screen tenants, and hire vendors. Always leave cash reserves in the IRA for expenses.
I think of retirement planning as layers: social security, personal savings, old 401ks, self-directed IRAs, maybe annuities or whole-life cash value, plus income from properties. The more income streams you have, the more resilient you are.
Syndications can diversify you into new asset classes or locations without being the expert yourself, but they’re not fully passive—you still need to monitor performance and communication from the sponsor.
When it comes to running my own operations, my go-to is my staff. I delegate. We have strong internal platforms for communication and for working with our trust company. I wish I’d hired a personal assistant sooner.
If I could give my younger self advice, it would be: don’t worry so much—it’ll work out.
One book that’s been transformational for me is Think and Grow Rich by Napoleon Hill. It’s about mindset and possibility, and it pushed me to get educated about different financial tools. I also recommend The Richest Man in Babylon.
If you want to learn more, our website is full of information—especially our blog. We’re also on LinkedIn, Instagram, and Facebook with tips and reels about self-directed IRAs.