Real Estate Investment Options With Your Self Directed IRA

Many are trying to determine whether to invest in real estate considering in some areas prices are stagnant or there is regional economic uncertainty that could affect their investment. As with ANY investment, perform your due diligence. Overall, the real estate market nationally has rebounded and prices are continuing to surge. There are NO guarantees in any investment. But careful planning, research and due diligence can minimize risk. Below are some of the more common real estate strategies being executed nationwide. The option(s) you select would require careful research and due diligence to determine the outcome of the investment. Unlike traditional investments, you are in control. If you are not comfortable with ANY investment, please refrain from investing until you are. The best protection against losses and protecting your investment is education and ongoing education. It is recommended that you not depend on someone else’s advice alone, you too should be knowledgeable of your investment selection in order to make sure you are able to make sure the professional you chose to represent and/or assist you is properly advising you.

If you are considering some form of real estate investment, below are some aspects of real estate investing whereas investors are still turning profits and building their retirement accounts:

Buy & Hold – Purchase real estate to realize immediate cash flow now to build their retirement with equity to follow over time. This method of investment allows you to build your retirement account with two components to build equity within your retirement account.

Buy and Sell – Purchasing real estate with the intent of turning a profit by buying low and selling high is a popular method of building your retirement account. It’s recommended that you perform your due diligence in pre-determining cost and expenses associated with this method of investment as there is a potential for loss if your forecast of value relative to acquisition cost, rehab cost and ARV (After Repair Value) is incorrect.

Grant Loans secured by Deed of Trust – Some investors want to take a more hands-off approach to investing whereas there is little or no participation on the behalf of the accountholder after investment. Loaning money secured by a Deed of Trust is becoming more and more popular amongst SDIRA investors. Unlike some other investments, you have a collateralized asset to minimize the risk of loss. There are many other investment opportunities out there outside of real estate requiring investment capital. Using your SDIRA can be the answer to building your retirement account as well as serve a purpose in your community by supporting business growth by loaning much needed capital. As with any investment, perform your due diligence and be knowledge of the investment you are taking on.

Invest in Other Regions – In the past it was recommended that you “invest ONLY in your backyard “. As of recently, that mindset and investor philosophy is changing as a result of faltering state and local economies, high unemployment, declining and/or projected decline in property values, etc… It may be worth looking into other regions of the country for investment opportunities that may offer deep discounts and all the variables for sound and stable growth of your investment vehicle. It is highly recommended that you perform extensive due diligence on such an investment opportunity and maybe partner or form some form of consulting alliance with professionals very familiar with the area to aid in reducing the risk for loss.

Commercial & Multi-Family Properties –There are no restrictions on what types of real estate your retirement plan can hold. Therefore, some investors are investing in commercial and multi-family properties. While these are more expensive investments, it’s a chance to further diversify your investment portfolio by including commercial and multi-family properties in your portfolio. As like with any real estate transaction you may partner with other investors using retirement funds and/or personal funds via a TIC (Tenants In Common) or via an LLC.

Raw Land – Your retirement plan can also acquire raw land both developed and undeveloped land. As the real estate market heats up and land values increase, many investors are opting to invest in land on a buy/hold and/or buy/flip basis. You have the option to acquire the land and have a structure built on the land for resale. This is becoming strategy some investors have employed to avoid competing on acquiring properties whereas there are multiple offers resulting in paying at or above market value for the properties. Acquiring the land and building a structure allows you the ability to control the acquisition cost and increase your resale yield. There are private and institutional non-recourse loan sources to provide financing for such projects.

There a multitude of options available to you when considering investing with a Self-Directed IRA, the above listed are just examples of the many options that being used to grow the retirement accounts.
AIC, LLC does not provide, legal, financial and tax advice. The above mentioned was intended for educational purposed only. All investors are encouraged to consult with a professional for tax, legal and financial advice.