Across the United States, individual investors are using self-directed IRAs to invest in real estate. The combination of low housing inventory, favorable interest rates, and an increasingly robust economy combines to create a housing demand. This demand means that real estate, especially single family homes, is a profitable market for investors using self-directed IRAs to fund their retirement. Analysts see strong growth in the use of self-directed IRAs as the real estate market continues to offer investment opportunities that provide better returns than more traditional retirement investment vehicles.
Self-directed IRAs allow investors to use their retirement funds for assets other than the traditional stocks, bonds, and mutual funds. A self-directed IRA for real estate investors, sometimes referred to as an IRA with “checkbook control,” allows investors to use their retirement funds to make real estate and other investments tax-free and without custodian consent. Investors can make real estate purchases and generate tax-deferred or tax-free rental income. This is an incredible opportunity to build wealth in a retirement account.
For investors with an interest or background in real estate, the self-directed IRA is ideal. Instead of buying real estate with personal funds and being subject to tax on the income, the self-directed IRA allows an investor to buy and sell property, including rental property with income, with paying tax immediately. While individual results will vary, some investors are able to “flip” houses in their self-directed IRA, often making tens of thousands of dollars profit with minor financial outlay. For the educated investor, these opportunities offer asset growth and diversification not available in more traditional retirement accounts.
A variety of companies are established to help individual investors regain control over their retirement funds. Investors with an interest in self-directed IRAs are encouraged to seek out further information. It is essential to fully understand any investment vehicle prior to use. There are risks and limitations with non-traditional investments, but the opportunities for growth and future retirement stability are there for the right investors. The outlook for real estate investments in self-directed IRAs is strong.
