According to some statistics, there are some 44 million renter-occupied homes in the U.S., which compares to 75 million owner-occupied homes. With those numbers in mind, it is fair to say that real estate investors who want to build wealth for retirement have plenty of options. But how does Self-Directed IRA real estate investing work, after all, and what are some ways that investors who are considering this route can get started? Let us take a closer look.
Why Investors Move to Real Estate
According to RealWealth, many millennials are choosing to move to real estate rather than the stock market. In 2007, about two-thirds of investors put their focus on stock market investments. But these days, the number is closer to 50%. What is going on here?
Well, you will notice that date: 2007. After the 2008-2009 Great Financial Crisis, which impacted real estate as well as stocks, many investors must have realized that they lacked diversification within their portfolio. People who were too invested in any one asset may have found that a crisis like the GFC was simply not within their wheelhouse.
But that’s not the only reason investors move to real estate. Investors may also realize that a Self-Directed IRA makes it possible to invest in real estate for the long-haul, adding tax protections to a real estate investment while keeping it separate from their personal accounts. This can be tremendously beneficial for investors who simply want to maximize their investment dollar.
Investors may also like real estate because it can begin producing immediate returns within a retirement portfolio, as long as the investment was well-researched. But this is the rub: A Self-Directed IRA administration firm like American IRA does not provide specific investment guidance, but rather serves as custodian on the account itself.
Getting Started with Real Estate Investing?
Obviously, real estate investing is such a huge field that we cannot cover all of its finer points here. In fact, Self-Directed IRA real estate investing is its own thing, and that is why we often put on seminars talking about the ins and outs of using a Self-Directed IRA with real estate.
But when it comes to the bird’s-eye view of getting started with real estate investing, we are fairly confident there are some good habits you can incorporate as you get started.
First, make sure that you work with a reputable Self-Directed IRA administration firm. This will help ensure that all of your paperwork is in line and that all of your administration is handled nicely. We at American IRA, for example, serving as the custodian for the account, have lots of experience in handling Self-Directed IRAs.
Second, make sure that you do your homework. You will want to know all about real estate as an investment period, not to mention how it might work within a Self-Directed IRA. You will want to get a sense of how these things work, how to move forward, and how it might fit within your retirement plan.
Getting started with real estate investing might be a multi-year journey, as you build up wealth for the long-term future. That is why we encourage you not to swallow too much at once. Take the first step by reaching out to a Self-Directed IRA administration firm, for example, and learning all there is to know. As you go through the process, you will pick up all of the important bits along the way. Do not get discouraged when there is a lot to know. Knowledge, after all, is power.