David Moore and Tom Moore, the Exchange Brothers of Equity Advantage, have spent decades helping investors use self-directed retirement accounts for real estate. Over that time, they have seen one issue surface more often than any other. Problems usually do not start with the investment itself. They start with the wrong structure.
Many investors begin with the assumption that they just need an account. Something basic. Something simple. On paper, that approach feels efficient. In practice, the structure determines how smoothly everything works once real transactions begin.
Personality matters. Transaction frequency matters. How much control an investor wants matters. Ignoring those factors early almost always leads to higher costs and unnecessary fixes later.
Why “Basic” Often Stops Working
David has seen many investors begin with a basic self-directed custodial account. Sometimes that approach works. Other times, it creates friction almost immediately.
He recalls one investor who was told she could probably get by with a basic setup. Technically, that was true. But the structure did not align with how she wanted to operate. She wanted more control and flexibility than the account allowed.
Rather than revisiting the structure early, she hired an attorney to build something custom. Ten thousand dollars later, she ended up with an operating agreement that could not be used. At that point, she raised the white flag and came back looking for help.
That situation is not uncommon. When structures are created without specialized experience in self-directed retirement accounts, investors often pay significant legal fees for documents that do not function in practice.
Structure Must Match How You Actually Invest
David consistently emphasizes that no single structure works for everyone. Some investors genuinely do fine with a simple custodial account. If transactions are limited and mostly paperwork-driven, simplicity can be an advantage.
But many real estate investors are active. They acquire properties, manage expenses, and make frequent decisions. For those investors, the structure needs to support that level of involvement.
When the structure does not match the investor’s behavior, frustration shows up quickly.
The Custodian Experience Shapes Investor Satisfaction
Tom has observed that investor satisfaction often comes down to how much interaction is required with the custodian.
In general, the less an investor has to deal with the custodian, the happier they tend to be. If an investment only requires occasional documentation or approvals, a standard self-directed custodial account may be sufficient.
That dynamic changes when activity increases.
Frequent transactions mean frequent custodian involvement. Over time, that can slow down the process and create delays that interfere with real estate timing.
Why Active Investors Often Choose an IRA LLC
When investors are transacting regularly, many naturally lean toward an IRA LLC structure. Tom notes that this is especially common with real estate acquisitions.
An IRA LLC can allow for more direct control over transactions and day-to-day decisions. It reduces the need to route every action through a custodian, which can make a meaningful difference for investors who operate frequently.
This is not about adding complexity. It is about choosing a structure that supports how the investor already plans to invest.
The Hidden Cost of Fixing Structure Later
David has seen firsthand what happens when structure decisions are postponed or handled by professionals without specific experience in self-directed retirement accounts.
Legal documents may look polished, but if they are not designed for the self-directed environment, they can fail once put into use. When that happens, investors lose more than money. They lose time, momentum, and opportunities.
Fixing a structure after the fact is almost always more expensive than setting it up correctly from the start.
Start With How You Plan to Operate
The right question is not which structure costs the least today. The right question is how the account will actually be used.
If an investor expects minimal activity and limited transactions, a basic custodial account may be enough. If regular transactions and hands-on involvement are expected, the structure should reflect that reality from day one.
Most frustration in self-directed investing comes from forcing investors into setups that do not match their behavior.
Make the Decision Before You Commit
Structure decisions shape everything that follows.
Taking the time to evaluate transaction frequency, desired control, and comfort level with custodian involvement upfront can prevent years of unnecessary complications. A structure that fits from the beginning allows investors to focus on their strategy instead of correcting avoidable mistakes.
If you are setting up a self-directed retirement account or questioning whether your current structure still fits how you invest, contact Equity Advantage today to speak with an expert who can help you choose the right structure from the start.
The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
