Real Estate IRA – How to Maximize the Value

If you want to secure a financially free and happy retirement, you’re going to have to get the most for your money with a Real Estate IRA.

Everyone knows that; no one’s debating it. The problem comes when the rubber meets the road. How do you maximize the money you earn? How do you make sure that your strategies to maximize your retirement portfolio’s value are the right ones? We can think of no better way to demonstrate how to maximize the size and value of your portfolio than through the Real Estate IRA.

A Real Estate IRA is simple: it’s a Self-Directed IRA in which you invest in real estate. By adding real estate to your retirement portfolio, you diversify; sure, real estate prices are something of the product of the economy at large, but real estate is also separate from the stock market in many ways. And if you’re interested in real estate, you know that it’s important to make the wisest investments possible so your real estate is earning you money even while you pay it off. Here are some of the ways you can maximize the value of your Real Estate IRA in order to secure that kind of financially free and happy retirement:

Utilizing Leverage in a Real Estate IRA

The first strategy is simple: leverage. You borrow money to make a purchase you otherwise wouldn’t be able to make. In real estate, the strategy is simple: your goal is to earn more money in charging rent than the real estate itself costs. That way, you can earn money even while you’re paying off the loan; and at the end of the loan, you own the real estate free and clear, which means you’re free to collect even more profit. That’s maximization at its finest.

In borrowing through an IRA, however, you will have to know the rules if you want to maximize value. Specifically, loans to a Real Estate IRA are to be non-recourse, which means that a lender can’t come after the rest of your assets if you default on the loan. This is good for offering your overall net worth protection even while you invest in real estate. Another rule is that you can’t live in the real estate in which you invest with your IRA.

Getting the Most of Retirement Investment Flexibility

One of the most attractive aspects of investing in real estate through an IRA is that you have a lot of options. By Self-Directing your IRA, you’re free to invest in a range of different real estate types, including:

  • Raw land
  • Condominiums
  • Single family homes
  • Townhouses
  • Commercial property
  • Apartment buildings
  • Duplexes

With all of these options available to you, you’re able to choose the type of real estate investment that makes sense for your situation. For example, if you don’t have a lot of money but you are interested in investing in real estate, you can look at raw land as an option—undeveloped real estate tends to be the cheapest, depending on a number of factors. Matching your strategy to the type of real estate is important for making sure that you’re as efficient with every dollar as possible.

If you want to learn more about real estate, check out our section on Real Estate and Real Estate IRAs or call us at 828-257-4949. We’ll be glad to talk to you about the concept of Self-Direction and what it might mean for you. At the very least, you can explore our website to learn more about Real Estate and self-directing—and the ways in which they can help you plan for your retirement.

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