“You know what happens when you assume, right?” This famous quote goes on to talk about the first three letters of the word “assume” and—well, you can probably fill in the rest from there. But when it comes to investing, it’s true: many assumptions do end up being false or, at the very least, faulty. And this is particularly true when it comes to Real Estate IRAs, an investment strategy with which even savvy investors often don’t have experience.
Today, rather than talk to you about the benefits of Real Estate IRAs—you can find plenty of those littered about AmericanIRA.com—we thought we’d talk about these faulty assumptions. After all, if you spot one of your own…well, we’re not saying that you’re making a fool out of yourself, but you could certainly stand to investigate these IRAs a little bit more.
Bad Assumption #1: Real Estate IRAs aren’t realistic for the average investor.
First, define the “average investor.” It’s a myth. It doesn’t exist. What you actually have are a lot of people across the United States who try all sorts of different investment types when it comes to their retirement. There might be a “usual” strategy, but that doesn’t mean that even first-time investors are locked out of any hope of success simply because real estate isn’t the usual path. If anything, real estate can be a great alternative to the usual route, especially for those who like to think outside the proverbial box.
Even investors without tremendous wealth can use leverage in Real Estate IRAs, which is a short way of saying that you can get a loan to build wealth through your real estate. You don’t have to be a magnate in order to invest.
Bad Assumption #2: Real Estate IRAs preclude any other type of investment.
Wrong. Diversification is a healthy thing, which is why many people advocate against putting all of your retirement nest eggs in one basket. Other types of investments including precious metals, private companies, and even the stock market will always be available to you whether or not you do decide to invest in real estate.
Bad Assumption #3: You can live in your real estate investment at the same time.
Unfortunately, this is not true: there are certain restrictions on your real estate investing through Real Estate IRAs, and this is one of them. You can’t live in a piece of real estate that you own through your IRA, which means you’ll have to keep separate, no matter how convenient it may seem to live in a home that is also an investment.
Bad Assumption #4: Real estate is too complicated for most investors to understand.
More complicated than the stock market? Private companies? Precious metals? Granted, it’s not always easy to succeed in investments without forethought and research…but the same is true of all investment types. You don’t have to be an investment whiz to grow wealth over the long term as long as you’re prudent in your choices and willing to take consistent action to make sure that your retirement investments are growing.
Bad Assumption #5: It’s not worth learning about real estate because real estate is different everywhere.
True, real estate is different everywhere…but not so different as to preclude learning about it. If you’re interested in learning more about Real Estate IRAs and other ways of building your retirement wealth with a Self-Directed IRA, be sure to contact us at 866-7500-IRA(472). You can also continue to view AmericanIRA.com and read all of our resources about Real Estate IRAs and more.