Three Advantages to Real Estate Investments in a Self-Directed IRA
Retirement investors are allowed to invest in a range of assets with their Self-Directed IRAs, including one of the most important investments types you can ever make: real estate.
Stocks. Mutual Funds.
These are a couple of the typical investments most people associate with IRAs. Of course, if you’ve been reading our website here at AmericanIRA.com, you know that these limits don’t necessarily have to apply. Retirement investors are allowed to invest in a range of assets with their Self-Directed IRAs, including one of the most important investments types you can ever make: real estate.
Real estate is one of the great investments one can make because there is a finite amount of land in the world. Over time, real estate tends to go up thanks to this scarcity. And when it comes to Self-Directed IRAs, real estate can be an ideal vehicle in which to store your money because of a number of reasons. Let’s explore three such advantages right now:
Advantage #1: Flexibility.
Putting your money in the stock market is partially considered a safe bet because there are so many different types of stock you can invest in in order to protect your portfolio. Luckily, that advantage isn’t lost on real estate investors, either. Real estate investors have a multitude of options to consider, including raw land, single family homes, townhouses, condominiums, resorts, duplexes, apartment buildings, and commercial property. You don’t have to isolate yourself to one specific sector when it comes to real estate, and this flexibility allows for some really interesting ways to allocate your retirement money.
Flexibility is important in Self-Directed IRAs because you’ll want to be able to have your money set aside in a range of different ways. This is also known as diversification. Real estate offers the ability to diversify within itself, just as the stock market does. That’s one reason we think real estate investments can be so valuable for someone looking to save up for retirement.
Advantage #2: Appreciation Over Time.
Real estate has its ups and downs just like any other market—just look at the late 2000s to see that. But real estate has a key advantage in that it has a large amount of growth potential as well as stability in appreciation over time. Unlike a car, which depreciates the “moment you drive it off the lot,” a real estate investment can often get more and more valuable simply by leaving it be.
What’s more, the income generated through real estate ownership is a major advantage that works on top of appreciations in order to help you expand a cash flow, which is so important for peoples’ retirement needs. In other words, real estate has the potential to work perfectly within your retirement plan so you can enjoy a comfortable living long after giving up the daily office work.
Advantage #3: Applying Leverage.
One of the beauties of real estate is that you can use leverage in a real estate transaction. Luckily, within a Self-Directed IRA, you can still use debt to finance property within the IRA confines! There are certain restrictions you’ll want to be aware of, of course, but all you have to do is be mindful of them and work accordingly in order to start using leverage in your real estate transactions.
“Leverage” is a very real financial concept that allows you to really go for more value when it comes to your investments. Needless to say, it can be a great course of action for a great many people. To begin finding out whether you’re one of those investors, get in touch with us here at AmericanIRA.com and call us at 866-7500-IRA(472) to start a dialogue about real estate investing with an IRA.