How to Double Your Money in Real Estate (Tax-Free)

Real estate investing can be a lucrative investment, returning consistent passive cash flow from a rental or a lump sum profit from a flip. 

It's also becoming more popular as we see more and more reality shows like Fixer Upper, Flip or Flop, etc.

Many people still think it's outside their reach because they don't have the extra money to explore the market.

But if you've got an IRA or 401(k), you've got the first step covered. 

With a real estate IRA – just another name for an IRA that invests in real estate – you can purchase real estate to flip or rent as a way to increase your IRA's income. 

Whether it's a multi-family dwelling, a rehab-and-flip, or buying property near a university to rent to students, you can make as much money on it as you're able to generate. 

All the money you make goes back into the IRA tax-free or tax-deferred.

For example, we've seen clients buy a house, renovate it, and then resell it at a profit, and then put that money back into the IRA. Then they'll turn around, and flip another house or even a few houses, and build their IRA that way.

We've also had clients who purchase a house that they rent out. The rent payments all go back into the IRA as passive investment income. This way, you have a regular source of income coming into your IRA, rather than waiting for renovated houses to sell. And of course, you can rent it for a while and then sell it. When your IRA grows large enough, you can purchase another rental or flip to add to your portfolio.

Let's say you buy a distressed property for $50,000, spend another $10,000 from your IRA to fix it up, and then sell it for $120,000. That's a $60,000 profit and a total of $120,000 going back into your IRA. 

You just doubled your money! 

(Let me know if you find another asset with this type of return. I'm all ears.)

"Now it's time to find another flip."

I believe this to be a more stable and reliable source of income than, say, the stock market which can plunge just on a misspoken word by a CEO or even a celebrity whose favorite social network changed a little.

Bottom line, real estate is a good investment for a self-directed IRA. 

You can choose when and where the money goes, and with the right properties, you can add a regular source of income to your IRA. And it's often a safer bet than in a volatile stock market or letting someone else control your mutual fund investments.