Life expectancy in United States is growing for some time now, and currently is around 78 years. This leaves us with around 20 years of living on IRA, which is an indicator of how important good retirement plan is, but also that investing in real estate can be a good way to make retirement living more substantial.

Buying a real estate during retirement years is one of the toughest decisions a person can make. Investing can be guided by different objectives. Person can buy real estate for purpose of providing home for him/herself or the family. Real estate purchases can also provide steady income from rent, and the last objective that rarely guides retirees to invest in this market is to earn significant funds by reselling the property later. In accordance with these objectives there are different ways how to obtain enough funds for investing. In this article we’re going to list some of the most popular ways retirees use for buying real estate.

Selling Property First

Lot of retirees decides to move to neighborhoods that are friendlier toward the needs of senior citizens. Buying and selling property at the same time can be a little bit of a drag. It is very important to the seller to research the real estate market beforehand, and never fully rely on real estate agents. Current market situation can favor buyers or sellers and these trends should influence future decisions.

Selling old property before buying a new one is good because future buyer knows the amount of money he/she can work with . Overestimating current property and being to much of an optimist can result in serious finance troubles. If current home still requires mortgage payments, it is much easier to get and handle one mortgage payment at a time.

Disadvantages of this kind of deals is that seller will need to rent another real estate before buying a new property, which sometimes means that some of the seller’s belongings would need to be kept in storage. Probably the biggest disadvantage is that sometimes it’s hard to follow real estate market trends when deciding to sell property first.

Taking a Mortgage Loan

Taking a mortgage loan for a new home is advisable especially if debtor already paid off all his/her previous loans. Taking a new mortgage can be little bit tricky for retirees. Lender might ask for clean credit history and healthy retirement accounts. In addition to this and depending on the amount of money retiree wants to lend from the bank or credit union, lenders may also ask for proofs of consistent monthly income. There are also lenders who don’t ask for this, but the rule of the thumb is that lenders who have less requirements also have the higher interests.

Very important thing when it comes to taking mortgage loans during retirement yeas is to decide for easier and more affordable payment plans. Choosing bi-weekly payment plans for example results in one additional monthly payment annually which significantly lowers the interest and shortens repayment period. Benefits of these payment plans are obvious when using bi-weekly mortgage calculators that can be easily found online.

Buying Real Estate with IRA

The best thing about buying real estate this way is that it doesn’t require paying taxes, especially if you have enough funds for the purchase on Roth IRA account. Unfortunately there are also a lot of complications that might invalidate IRA-based investments.

 Establishing Self-Directed (Roth or regular) IRA is one of the requirements and this sometimes mean that retirees need to set up a limited liability company to hold their assets. Finding a plan administrator who’s going to allow a retiree to use IRA funds for real estate purchase is another necessary requirement. Administrator should be a person or a company that doesn’t sell or promote properties, because some commission-based administrators just want to sell their investments.

For buying real estate with IRA, possible buyers need to have large funds on their accounts. More money they have, the better their self-directed programs will be. Real estate in some nicer and more expensive areas can be very costly, and the only way how this purchase can be affordable is if buyer plans to earn significant profits on this property, by renting or reselling it after the market trends change.