Real estate is one form of investment that can back up a self-directed IRA. With a real estate IRA, your investment options are not just limited to stocks, bonds, and mutual funds. You can also use your retirement savings to invest in property. The question is, what really makes this method of retirement saving worthwhile?
Here are four of the most compelling reasons why real estate IRA is considered a good investment for the future:
- Real estate is one of the leading investment choices for people who want to grow their wealth using retirement savings. Much of this has to do with the fact that property is tangible and always in demand. Prices of land are much more stable than that of stocks, which tend to fluctuate almost every single minute of the day!
- Unlike paper money, real estate can be protected against common forms of loss. For example, an insurance cover can be bought to protect a residential or commercial building from threats like fire, floods, and earthquakes. This greatly reduces the amount of risk involved should an accident occur or a natural disaster strike. It is therefore safe to argue that utilizing IRA savings to invest in real estate is a good way to protect your retirement savings.
- Using IRA savings to invest in real estate also opens up many opportunities to grow one’s wealth further. There are many forms of real estate that qualify for investment though IRA funding. These commonly include rental and commercial properties, mobile homes, condominiums, raw land, long-term holdings, trust deeds/mortgages, as well as single or multi-family housing units. With self directed IRAs, you have full control when it comes to choosing which real estate market you want to invest your retirement savings in.
- By using an IRA in real estate investment, you can tap into a very lucrative industry. The potential for financial growth is immense if you can manage to become a land or property owner. While there are some factors that can bring down the value of land, but it tends to depreciate at a lower rate in value compared to other commodities, because there is always such a high demand for land and housing.
How to Ensure You Get the Best Returns
It is easy for an amateur investor to get confused when trying to figure out how to properly navigate the murky waters of IRA real estate investments. Since buying property involves huge financial transactions, the last thing you want is to make a loss on a property sale or purchase. For that reason, it is important to seek out professional help when looking for the best way to invest your retirement savings in real estate.
If you want to spot the best property deals, it is advisable to create and maintain good contacts with reliable and experienced real estate agents. Preferably, seek out agents who are conversant with laws and regulations that govern real estate investments using IRA savings as capital.
This is an especially important factor because the federal government and IRS set many requirements that investors must abide by when it comes to real estate IRA investments. To be on the safe side, ensure you remain diligent and do your research well in advance, before you dive into the property market!
