Women are rapidly becoming the silent majority in the real estate marketplace. While everyone pays attention to the needs of the “typical family,” very few people are addressing the specific needs of single female real estate buyers and sellers.

Which of the following groups buys more condominiums: married couples, single men or single women?

The answer is single women. Not only are single women buying more condominiums, NAR reports that 22 percent of all home purchases are made by single women as opposed to only 9 percent for single males. In other words, single Gen X and Gen Y women are buying more than twice as much real estate as compared to Gen X and Gen Y men.

What accounts for these differences? Is it that women are nesters and men are hunter-gatherers? Are women more practical — they buy a house while their male counterparts opt for the big-screen television with surround sound?

The answer is much more complex.

Consider the following facts:

1. According to the U.S. Census, 51 percent of all women in the United States live without a spouse.

2. Women now account for 57 percent of all college graduates.

3. Women continue to outpace men in terms of longevity. Women between the ages of 50 and 70 are not only inheriting their parents’ wealth, many have had their own careers where they have accumulated substantial sums of their own money. If they were married, they may also inherit (or obtain in a divorce settlement) part of what their husbands have accumulated as well.

4. While women continue to be under-represented as CEOs in Fortune 500 companies, an increasing number of small businesses are now owned and operated by women. A substantial number of these women work from home.

If you’re looking for a good source of business in a slowing market, become a niche specialist who works with single women. To better serve this increasing segment of our market, hone in on what different aspects of the single female market wants.

Primary Residence or Investment?

While many older single females shy away from investment properties due to the property management issues, a substantial proportion of single Gen X and Gen Y females are putting their money into real estate investments. A primary challenge is that there are very few residential agents who specialize in two- to four-unit investment properties.

Becoming an expert on two- to four-unit investment properties has a number of advantages. First, assuming the owner will occupy one of the units, you can obtain a conventional loan. Second, many Gen X and Gen Y females prefer to rent and make their first real estate purchase an investment property. Once someone becomes an investor, the individual is more likely to buy additional properties as opposed to someone who only purchases a primary residence. Third, for your clients who have children heading off to college, it’s often more cost effective for them to buy a condominium or small rental property rather than putting their daughter in a dorm or an apartment. The benefit is that the daughter may become one of your future clients and/or that the parents will buy additional income properties in the future.

The Age Effect

When a woman purchases a primary residence, her age may have a strong influence on the type of property she will purchase. For example, first-time Gen X and Gen Y buyers are more likely to buy a centrally located loft condominium in a major metropolitan area. The urban lifestyle is highly attractive to many single Gen X and Gen Y women.

In contrast, a boomer female may elect to purchase a townhouse or condominium that is near her children. Many women also prefer full-service condominium buildings, not only for security reasons, but for the extra help a doorman or concierge can provide. A large proportion of them also love to travel. Having a place that they can lock up and not have to worry about maintenance is another draw for the full-service-building lifestyle. As these women age, they may elect to move into a retirement community where they can have the benefit of companionship and organized group activities.

Home-based Business

It’s also important to determine whether the woman works at home. If so, having a team of trustworthy professionals who can help her convert a bedroom into her office is another great way to serve this niche.

“Use common sense to make sense.”

It sounds like Ben Franklin, but the speaker in this case is David Johnston, a green-building consultant in Boulder, Colo. His Ben Franklin-sounding aphorism, he said in a recent interview, has proved to be a useful, shorthand way of explaining sustainable green-building principles and practices.

Although these have been embraced by more and more home builders, there is still much confusion among the general public as to what exactly makes a house green. One way to keep things straight, Johnston said, is simply to remember to “use common sense to make sense.”

For example, Johnston is regularly asked if a green house is one that is petroleum-product-free. His common sense answer: “If you eliminate everything that contains petroleum, you can’t enjoy the accoutrements of a 21st century lifestyle.” All the heating and cooling equipment and standard appliances contain plastic, he pointed out, adding that “even something as basic as a toilet has plastic parts.”

The make-sense part of green building, Johnston went on to say, has to make sense both environmentally and economically. For example, building materials that have recycled content are generally considered to be a plus because recycling can significantly reduce both the volume of the waste stream and pressure on overflowing landfills.

But, speaking like the hard-headed home builder that he once was, Johnston said you shouldn’t select a product solely on this basis. A product with recycled content may be much more costly than the conventional product it is intended to replace, and it may not perform any better.

Materials have to make sense from a health perspective as well, Johnston said. Many building materials are made with unstable, volatile organic compounds, called VOCs. They can off gas into the air for weeks and sometimes years after they are installed in your house. Of the hundreds of VOCs that have been identified, the one that concerns most people is formaldehyde, a potent eye and nose irritant that can cause respiratory problems. It has been classified by the World Health Organization as a confirmed human carcinogen. You can easily avoid it by using one of the many building products now available with low or no VOC content, Johnston said. Though the non-VOC products often cost more, this is one instance where a higher cost is worth it, he added.

Segueing from materials to other aspects of green-home builders Johnston talked about household energy use. His common sense rule: Use as little as possible. His common sense reason: to save money and the planet. If you use less energy, you’ll save money on your utility bills. You’ll save even more as the price of natural gas, fuel oil and electricity inevitably goes up.

If you use less energy you’ll help save the planet because you will be reducing the greenhouse gas emissions associated with your house. Unbeknownst to most homeowners, buildings are the largest source of the greenhouse gas emissions that are causing global warming. In the United States, half of building-related emissions are from houses.

Johnston feels that energy issues are so important, he urges homeowners to put them front and center in the design of any new house — “from the first sketch of a floor plan to the final dotting your I’s and crossing your T’s.”

But, Johnston hastened to say, energy savings should not come at the cost of having a great-looking house with lots of windows and great views. The trick is to get all this and save energy.

Johnston’s common sense strategy for supplying household energy needs: Use what’s free before using what you have to pay for. That is, tap as much free solar energy as you can for your heating and lighting needs before turning to conventional solutions.

To do this, you really do have to think about energy from the start because the feasibility of passive solar solutions depends on how you place your house on your building site, the first step in any building project. To capture the sun’s rays for heating your house during the winter, your living areas must be oriented to the south. You can keep the same spaces cool in the summer by adding overhangs. With some additional refinements to the overhangs, the sun can also supply your lighting needs during the day.

To maximize the benefit of passive solar heating and cooling, you need to carefully tailor your building envelope to reduce heat loss or heat gain through the walls and roof. This generally requires adding insulation to the walls, attic and basement in amounts far above code requirements and upgrading windows to get ones with a low-emission coating that helps to keep the heat inside during winter and outside in summer.

Unless you live in Hawaii or Santa Barbara, Calif., where passive solar strategies can supply all your heating and cooling needs, you’ll still need a furnace for those cold days when the sun’s heat is not enough to keep you comfortable. But with your upgraded building envelope, you can use a smaller furnace and air conditioning condenser, and that is a cost savings, Johnston said.

You’ll also need electric lights for nighttime use and cloudy days. Surprisingly, lighting accounts for about 12 percent of household energy use in the average household. Solar daylighting shaves part of this, but you can shave it further with compact fluorescent bulbs, commonly called CFLs, Johnston said. They use about 75 percent less energy to produce the same amount of light as an incandescent bulb, and they last six to eight times as long. CFLs can be screwed into almost any conventional light socket and their color correction has vastly improved in recent years.

The other part of the home energy puzzle that green building can affect is the sizeable energy draw for hot water. The luxury of having 40 to 50 gallons available 24/7 consumes another 12 percent of household energy use. But, Johnston said, it’s another instance where you can tap free solar energy by installing a solar collector on your roof. For those cloudy days, though, you’ll need a backup hot-water heater.

The other 35 percent of the energy that the average household consumes is out of a builder’s hands, because it is the “plug loads” that homeowners bring into the house when they move in — appliances, computers, home-entertainment equipment, and all the other doodads that most households accumulate. The most effective way to reduce this load is to purchase Energy Star products, now available in more than 40 categories.

How does Johnston’s “common sense to make sense” work in real time on a real house?

To find out I contacted McStain Neighborhoods, a small production-home-building firm in Boulder that has built sustainable, green houses for more than 40 years. The firm builds about 350 houses a year in the Denver and Boulder markets.

Like all home builders, McStain evaluates everything from a cost-benefit perspective. But, unlike almost all the others in the United States, McStain has a research and development department that carries out in-depth reviews of about 50 new products and building techniques a year. Periodically, the firm builds a test house that incorporates the most promising of these innovations. The test houses are eventually sold, but the firm continues to monitor them for several years afterwards, said McStain marketing head Barr Hall.

Jeff Medanich, who heads up McStain’s research efforts, said that much of his work is a balancing act, spending more here but saving more there so that in sum, the cost of an innovation is relatively small.

Medanich offered as an example McStain’s current exterior wall construction. Instead of the dimensional wood studs that are used by most home builders (a single piece of wood sawn from a tree log), McStain uses finger jointed studs, which are made up of several smaller pieces of recycled scrap lumber that are glued together. These cost more but their superior quality means that fewer are tossed as unusable — only about 4 percent compared with 20 percent of the dimensional studs. The cost difference is a wash, but the finger-jointed studs have the added benefit of lowering costs down the line. Because they are straighter, the walls are plumb, and this makes the work of subsequent trades go more smoothly and faster.

It is not unusual, real estate lawyers and brokers say, for people to consider pooling resources with friends or family members when buying property.

Dickinson Baker, an associate broker in East Hampton, N.Y. said that he had seen a number of cases in which groups of people who have been renting a vacation house decide to get together and buy instead of rent. But what seems like a good idea at first, Mr. Baker said, can get complicated as time passes.

Here are some things to consider when buying property with partners.

James Grossman, a Rochester lawyer who is a former chairman of the real estate section of the State Bar Association, said that the first consideration is how title will be held. When a husband and wife buy property, he said, the title typically is held as “tenants by the entirety.” With this form of joint ownership, if one spouse dies, the survivor automatically becomes the sole owner.

And while it is possible for unmarried partners to take title as joint tenants, it is more likely that friends or family members purchasing a house together will take title as tenants in common.

With that form of ownership, Mr. Grossman said, each owner has an equal right to possession of the property, and any owner can transfer his or her interest independent of the other owners.

Because of this, Mr. Grossman said, it is critical to determine upfront how future transfers of ownership interest will be handled.

“You really should have a written agreement as to what is going to happen if one owner decides to sell,” he said. It might make sense, for example, to provide remaining owners with a right of first refusal.

Another thing to consider, Mr. Grossman said, is that with a tenancy in common, when an owner dies, his interest will pass to heirs or beneficiaries. “So you might want to put something in the agreement or even the deed itself that if an owner dies, the remaining owners have the right to buy out whoever inherits the property.”

Christopher LaMonica, a real estate lawyer in Brick Township, N.J., said the partnership agreement should clearly spell out all financial obligations.

“Normally, everyone on a mortgage will be jointly and severally liable,” he said. “That means that if one owner stops making his share of payments, the other owners are going to be liable for the full amount of the debt.” So, he said, it might be worthwhile having something in the agreement that will require an owner who stops making payments to sell his share back to the other partners at an amount determined by an appraiser.

Douglas F. Wasser, a real estate lawyer, said the partnership agreement should address as many issues as possible, even those that might seem mundane and unnecessary at the beginning. For example, he said, the agreement should say who is responsible for maintenance of the property and whether money should be held in a fund for repairs.

It should also spell out how use of the property is going to be allocated: will all parties have an open-ended right to use it anytime they wish, or will use be allocated on a particular schedule?

Another issue to address is whether an owner can allow someone else, including grown children, to use the property and what, if anything, happens if a couple who are owners get a divorce. Issues related to things like pets, smoking and using the property for parties should also be addressed.

“When there are multiple owners, each of these decisions can be based upon a unanimous vote, a majority vote or a vote by a specified number of the owners,” Mr. Wasser said. “And though you may think these things are not important, when a dispute arises, even little things can cause big problems.”

“How would you like to take title to your new home, Mr. and Mrs. Buyer?” the attorney or title closing settlement officer asks.

Thinking fast, you wisely ask, “Well, how do most married couples take title?”

The reply is usually something like: “Most couples take title in joint tenancy.”

Not wanting to appear stupid or uninformed, you reply, “That’s fine with us.” But do you fully understand the pros and cons of holding joint-tenancy title?

THE PRIMARY JOINT-TENANCY ADVANTAGES. To be legally correct, joint-tenancy real estate ownership means “joint tenancy with right of survivorship.” A few states require use of those exact words on the deed. But in most states, “joint tenancy” is sufficient.

Survivorship means the joint tenant who outlives the joint tenant co-owner(s) automatically receives the deceased’s share of the property without probate court costs or delays. Probate court avoidance is considered the major joint-tenancy advantage.

All that is usually necessary to clear the title of a deceased joint tenant’s name is to record a certified copy of the death certificate and an affidavit of survivorship with the local recorder of deeds.

The will of a deceased joint tenant has no effect on their joint-tenancy property. However, joint tenants still need a written will. In the event of simultaneous death of all the joint tenants, such as in a plane crash, the will of each deceased joint tenant determines who receives their share of the property.

Or, in the unlikely event one joint tenant kills another joint tenant, the wrongdoer cannot receive the deceased joint tenant’s share by survivorship so the deceased joint tenant’s will then becomes important.

Although joint tenancy usually involves two co-owners, such as husband and wife, there can be an unlimited number of joint tenants. But they all must take title at the same time by the same deed, and they all own equal shares.

For example, suppose John and Mary Buyer purchase their home as joint tenants. Each therefore owns a 50 percent share. However, when their daughter, Suzy, becomes 18 they decide to add her as an additional joint tenant.

To add Suzy to the title, John and Mary sign and record a quitclaim deed from themselves to John, Mary and Suzy as joint tenants with right of survivorship. The result is each of the three joint tenants now own a one-third interest in the home.

TENANCY BY THE ENTIRETIES FOR MARRIED COUPLES. In 24 states, a husband and wife can hold title as tenants by the entireties, which is very similar to joint tenancy. However, neither spouse can convey their tenancy by entirety share without the other spouse’s signature.

This ownership form overcomes the joint-tenancy disadvantage that one joint tenant can transfer his/her share without approval of the other joint tenant(s), thus breaking up the joint tenancy and creating a tenancy in common.

Tenancy by the entireties for husband and wife is allowed in Alaska, Arkansas, Delaware, Florida, Hawaii, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, Wyoming, and the District of Columbia.

SEVEN PROS AND CONS OF JOINT TENANCY. Before consulting your attorney or other trusted adviser to determine if joint tenancy with right of survivorship (JTWRS) is right for your situation, it pays to know the pros and cons:

1. A JOINT TENANT’S WILL DOES NOT AFFECT JTWRS PROPERTY. Except for joint-tenancy simultaneous death or murder situations, a written will has no effect on JTWRS property. Especially in second marriages, where each spouse often wants to leave their half of the property to children of their first marriage, better alternatives might be holding title in a revocable living trust or as tenants in common.

2. PROBATE COSTS AND DELAYS ARE AVOIDED. When a joint tenant dies, his or her share automatically passes to the surviving joint tenant(s) without probate court interference. This is considered the major joint-tenancy advantage.

3. JOINT TENANT’S SHARE CAN BE ATTACHED BY JUDGMENT CREDITORS. Unknown to most joint tenants, judgment creditors of one joint tenant can attach that person’s share of the property. Or, if a joint tenant files bankruptcy and there is sufficient equity in the property, the bankruptcy court can order the property sold with the proceeds divided among the co-owners.

However, after a joint tenant dies, creditors cannot attach the deceased’s share, which automatically passed to the surviving joint tenants.

4. IN A PARTITION LAWSUIT, ONE JOINT TENANT CAN FORCE A SALE OF THE PROPERTY. In most states, one joint tenant co-owner can bring a partition lawsuit to force a sale of the property. The same result applies to tenants in common.

5. ALL JOINT TENANTS CAN OCCUPY AND MANAGE THE PROPERTY. Although each joint tenant has the right to occupy and manage the property, this can become a problem if one joint tenant refuses to pay his or her share of the property expenses.

However, if one joint tenant pays all the expenses, there is a right of reimbursement for necessary costs, such as property taxes.

If a joint tenant is under 18, a minor cannot convey title or pay their share of the property expenses unless represented by a court-appointed guardian. For this reason, minors should usually not be added to the title as joint tenants.

Similarly, if a joint tenant becomes incapacitated, such as with Alzheimer’s disease or a severe stroke, a court-appointed conservator might be necessary to represent the incapacitated joint tenant. However, this problem can be avoided if title is held in a revocable living trust instead of joint tenancy.

6. APPROVAL OF CO-OWNERS IS NOT NEEDED TO BREAK UP A JOINT TENANCY. Except for tenancy by the entireties between husband and wife, one joint tenant can secretly convey his/her share to a third party, thus breaking up the joint tenancy and creating a tenancy in common.

The most famous court decision on this issue is the 1980 decision in Riddle v. Harmon (162 Cal.Rptr. 530). Shortly before her death, the wife secretly conveyed by a quitclaim deed her joint-tenancy share to herself as a tenant in common. After her death, the surviving husband presumed he owned the entire property as the surviving joint tenant. But the court ruled the late wife’s secret deed to herself as a tenant in common made her half of the property subject to her will, which left her assets to a third party. The widower husband retained his 50 percent share as a tenant in common.

7. NONSIMULTANEOUS DEATH OF JOINT TENANTS CREATES UNINTENDED RESULTS. When all joint tenants die at the same time and the order of death cannot be determined, such as in a plane crash, the share of each deceased joint tenant then passes according to his/her written will (or by the state law of intestate succession if no will is found).

However, if one joint tenant survives the other for just a short time, his or her heirs receive the entire property. That happened a few years ago in Berkeley, Calif. Joint-tenant property owners Larry and his girlfriend Lana were on an evening walk. A drive-by shooter’s bullets hit both Larry and Lana.

They were rushed to a nearby hospital where Lana died at 2:58 a.m. Larry was kept alive on a ventilator until 4:55 a.m. when he died. Because Larry survived Lana, he was the surviving joint tenant of their properties. His heirs inherited all the joint-tenancy property under his will and Lana’s relatives received nothing because she was not the surviving joint tenant.

CONCLUSION: Although holding title as joint tenants (or tenancy by the entireties between husband and wife where allowed) offers many benefits, it also provides possible disadvantages. Other co-ownership alternatives to be considered include tenants in common and revocable living trusts. Consultation with your attorney and tax adviser is recommended.

Homeowners who want to tap into their house’s equity typically face three choices: sell and move to a less expensive place, take out a home-equity loan, or refinance the mortgage and pull cash out. For older owners, reverse mortgages are another option.

Now yet another alternative has emerged that allows owners to extract cash from their homes without having to take out a traditional loan.

The latest alternative is called a Rex Agreement, marketed by Rex & Company in San Francisco, and it gives the homeowner an up-front cash payment of 12 to 17 percent of the house’s existing value. In exchange, Rex gets half of the increase in value of the house when it is eventually sold.

Only owners of single-family detached houses can qualify and only those with average, or higher, credit scores are accepted. People with houses valued in the top or bottom 10 percent of their local markets are not eligible.

This is how it works: say the house is worth $600,000 and the owner signs a Rex Agreement for a $100,000 payout. If the house is sold 10 years later for $720,000, Rex gets $160,000: $100,000 in repayment and half of the $120,000, the house’s increase in value. If the value is flat after 10 years, Rex gets only $100,000.

If the house’s value decreases by $120,000, Rex and the homeowner share the loss equally, $60,000 each. That is, Rex subtracts $60,000 from its $100,000 payment and gets back $40,000.

Rex’s chief executive, Thomas Sponholtz, said homeowners who received money from Rex and invested that cash in an aggressive financial instrument would come out ahead in a stagnant housing market.

“If the housing market is flat, and you earn 10 percent a year with the money you get from Rex, you’ve done well,” Mr. Sponholtz said. “If the market goes up, you’ll have gained something, and in the meantime, used the money to meet whatever life needs you’ve had.”

“The need we want to address is for baby boomers who have a lot of equity in their homes, and for whom more debt doesn’t make sense,” Mr. Sponholtz added. “We’re proposing to sell a piece of that, get some liquidity, diversify your investment portfolio and meet your life needs.”

Kevin Depew, the executive editor at Minyanville Publishing and Multimedia, a New York-based investment education Web site, said that a Rex Agreement may make sense for some homeowners, but not all of them.

“It’s a unique and interesting idea, and there’s nothing inherently wrong with these,” Mr. Depew said. “But people need to understand the worst-case scenario before flocking to them.”

For instance, Mr. Depew said, owners who put their Rex money into high-risk investments, and whose homes lose value, could be hit particularly hard. Mr. Depew recommends that owners who are thinking about Rex Agreements talk to their financial advisers before signing.

Alan Cohn, the president of the Sage Financial Group, a financial advisory firm in West Conshohocken, Pa., noted one attractive feature is that the proceeds of a Rex Agreement are tax-free.

“And there’s a lot of equity people have in their homes that they really can’t access today,” he said. “This could be used as a very effective financial planning tool. But it has to be done within the context of a comprehensive financial plan.”

Homeowners who arrange for their Rex Agreements directly from the company pay no fees, but financial advisers, mortgage brokers and real estate agents licensed by Rex to sell the product can charge fees of up to $2,000.

Rex Agreements are available to residents of nine states, including New York and New Jersey, and Mr. Sponholtz said that Connecticut would soon join the list.

If your retirement garden — specifically your individual retirement account or IRA — hasn’t been growing fast enough to meet your future retirement needs, you might want to join a club of contrarians: those who have decided to take matters into their own hands. Literally.

Self-directed IRAs are billed as “putting the ‘I’ back in IRA.” They let individuals determine what, when and where to invest their retirement money. And they are catching on — in no small part thanks to the stock market’s volatility and the real estate market’s recent riches.

Real estate has always been permitted in IRAs, but few people know about this option. Financial institutions — mutual funds, stock brokerages, banks — are typically where IRAs are held. But investments in other things, most notably real estate, are fully permissible under the Employee Retirement Income Security Act of 1974. It prohibits retirement plans from investing in just two types of investments — life insurance contracts and collectibles. Everything else is fair game.

But ERISA or no, the other thing standing in your way may be your employer. If your IRA is held in a company plan through your job, the plan’s guidelines may specify what type of investments can be made — and real estate is rarely among them. If this is the case, establishing a self-directed IRA isn’t an option until you and your employer part ways. Once you leave, no matter the reason, you can roll over the funds in your IRA and 401(k) to a self-directed IRA.

It is estimated that only about 4% of America’s retirement funds are held in nontraditional accounts, including IRAs invested in real estate. But the trend, experts agree, is toward more money being funneled into these little-known, little-used, self-directed IRAs.

Although investors use self-directed IRAs for a variety of investments, among nontraditional accounts, real estate is by far the most popular.

It certainly was the motivation for Anthony Moreno, 56, of Oceanside, Calif., to establish his self-directed IRA.

Moreno retired in July 2005 after working more than 24 years as a nuclear computer technician at San Onofre Nuclear Generating Station. When he left Southern California Edison’s employment, he initially left his pension and 401(k) with the company — primarily because he didn’t know what else to do with it, he said. But concerns about a low rate of return and a lifelong desire to own international real estate led him to research self-directed IRAs with the idea of putting his money into real estate. Opening one simply made sense for him, he said.

Now Moreno is in escrow on a pristine 68-acre private island 300 yards off of Roatán Island in the Caribbean Honduras. It was listed at $850,000, and he plans to develop a day resort on it, ferrying cruise-ship passengers by private speedboat to his island. Carnival Cruise Line is building a $50-million terminal at Roatán Island that will be able to accommodate two mega-ships and 7,000 passengers a day, and Moreno plans to tap into this burgeoning tourist market.

Moreno’s self-directed IRA was set up by Guidant Financial Group, which specializes in facilitating real estate investments using an IRA.

“I don’t see it as gambling,” Moreno said of investing his retirement funds in this venture, although he acknowledges that “conventional thinking would probably view this as very risky for someone of my age” and that “there are many ‘safer’ investments which I could have chosen.” But, he added, none of those other investments had “the potential for making my dreams come true.”

“I don’t know of anybody who ever realized a dream by allowing their fears to prevent them from giving it their best shot. Regardless of the outcome, I will never regret going for my dream. If I hadn’t tried, I would have always wondered: What might have been?”

As romantic as the idea of buying your own island sounds, many caution that real estate purchases made through self-directed IRAs aren’t the answer to everyone’s investment goals. Experts, such as Jeff Nabler of the IRA Assn. of America, strongly urge people to consult a professional advisor before moving their money into one.

For one thing, the tax laws concerning self-directed IRAs are complicated — and likely beyond a layman’s interpretation. Mistakes can be costly; early withdrawal penalties may be imposed if funds are misused.

The Internal Revenue Code 4975 defines what are prohibited transactions for IRAs, said David Nilssen, chief executive of Guidant Financial Group, a Washington-based company that he says is rolling over about 200 accounts each month. Basically, any investment the IRA participates in must be for the exclusive benefit of the IRA, Nilssen said.

For instance, you can’t use your IRA to buy a home for your mother to rent because there might be a conflict of interest to act in the best interest of the IRA (eviction) should Mom fail to make the rent payments.

For the same “exclusive-benefit” reason, self-directed IRAs cannot be used to purchase a principal residence or a vacation home. They can be used to buy income property, such as land or an apartment building. The title to the property would be held by a custodian, who acts as a trustee for the account and does not offer investment advice but functions essentially as a conduit for your wishes as they relate to buying and selling. The custodian would collect rent checks, pay the mortgage and taxes and handle the other financial aspects of your ownership — for a fee.

The fees vary, and investors are advised to check them carefully and do some price-comparison shopping before moving IRA money from a traditional fund to a self-directed one.

In the last seven years, Guidant’s Nilssen said, the self-directed IRA industry has “exploded.” Before 2000, “investors couldn’t justify leaving the stock market because it was performing too well,” Nilssen said. “The industry has more than doubled since that time.”

Self-directed IRAs can produce great returns, Nilssen said, but he too cautioned that there are specific guidelines an investor must adhere to. “This is why we recommend that people not try to structure these investments themselves without the help of a qualified professional.”

IRAs and real estate investing

Where to find more information online:

• Internal Revenue Service: http://www.irs.gov/retirement/article/0id11141300.html <252>• Guidant Financial Group: http://www.guidantfinancial.com <252>• Pensco Trust Co.: http://www.penscotrust.com/

• IRA Resource Associates Inc.: iraresource.com/<252>• SelfDirectedIRA.org: http://www.selfdirectedira.org/

• Bankrate.com: http://www.bankrate.com/brm/news/sav/20010213a.asp and http://www.bankrate.com/brm/news/ira/20070417_real_estate_self-directed_IRA_a1.asp <252>