5 Reasons to Choose Real Estate Investments for Retirement

What comes to your mind when you hear ‘retirement plan’? For most of the people, it means investing your money in stocks, bonds, and mutual funds. One of the primary reasons why people, especially small business owners or self-employed realtors, do not contribute in retirement plans is the lack of investment choices and rewarding returns. Some may say that stocks can offer decent returns but its volatile nature makes it an unpredictable investment option.

Every real estate professional would prefer investing money in real estate rather than any other investment options and for the valid reasons.

1.Real estate appreciation: Real estate investments appreciate over time, especially during the periods of heightened inflation. One could always sell the property with handsome returns and use it for other investments opportunities.

2.Rental real estate is a retirement plan in itself. Self-employed individuals, especially realtors, may find it difficult to put money in an IRA regularly. A rental real estate investment is rather a retirement strategy that offers a continuous additional income stream.

3.Inflation can boost rents. Most of the other investments including stocks and bonds might struggle during a recession or inflated market conditions whereas real estate flourishes. Historical records have shown that rents maintain a direct relation with inflation and offer heightened earnings during inflated environments.

4.Build more equity: One could increase real estate equity by paying mortgage payments and build equity. You can leverage more credit with this equity and use it for secondary investments.

5.Higher returns in comparison to government or corporate bonds: Real estate offers higher returns in comparison to government bonds and with proper selection, one could make an equally safe investment in real estate too.

Would you prefer a retirement plan that allows real estate investments?

For real estate professionals, a retirement plan that offers real estate investment could be the answer. Solo 401k is a retirement plan that allows real estate investments and it comes with large contribution limits. One can contribute up to $52,000 in 2014 and $53,000 in 2015 in a Solo 401k plan. It is unique in terms of its investment options and in addition to real estate; you could invest in precious metals, tax liens, private businesses, and similar opportunities.

You can start by opening a Solo 401k account for self employed and transfer your existing IRA balance into it. The next thing is to find a qualified property and purchase it in the name of Solo 401k account. One could even apply for a non-recourse loan for funding the transaction. The key is to ensure that every transaction is processed through the Solo 401k account. That is all you need to do. With a Solo 401k retirement plan, your investments would grow tax-free and any taxes would be paid only at the time of withdrawal.