Profit potential of your real estate IRA

Why invest in real estate IRA?

Simply put, real estate IRA is one of  the best investment vehicles. It is a given that when investing in real estate, you would be yielding both capital appreciation, income and an essence of capital preservation. A home/shelter is one of an individual’s most important needs. It is less likely that demand for shelter will decrease as time goes by. With the increase in population and no increase in land area, it is safe to say in general, that the amount of land available per individual will decrease in the future. When this is realized, intense competition will occur that could drive the increase in the prices of real estate. With this established, it is just intuitive that in the long run, real estate is your best investment option.

Your real estate IRA

Did you know that you could use your IRA for investing in real estate? All you have to do is to switch to a self-directed IRA or to look for custodians or trustees which include real estate as one of their investment options. As an IRA, you will benefit on tax-deferred profits; wherein gains from your real estate investment will only be taxed upon distribution. Having real estate as one of your investment choices in your IRA is best aligned with the objective of your IRA. It is to secure your future and it is for the long-term.

Real estate IRA and profitable activities

In a real estate IRA, you could either be a passive or an active investor. For the passive investor, income is realized through rental income, investing in commercial real estate loans, REO property, high yielding real estate notes, foreclosed property, etc. For the active investor, income is derived more on the development on the purchased property, this include: flipping properties, investing in commercial properties, hotel development, storage facilities, golf courses, apartment communities, etc. One factor best paired with real estate is timing. Correct timing on the purchase and sale of real estate to be able to maximize returns.

Basic considerations for your real estate IRA

Things you need to consider are: income and expenses on your real estate investments must go into and must be paid out of your IRA. So it would be good to always make sure that your IRA is solvent. Have good estimates of the cash flow of your real estate IRA. Additional funding for your real estate IRA comes with penalties. You are still covered by the prohibition on “self-dealing”. You cannot directly or indirectly sell, exchange or lease any property to or with you or a disqualified party.

We at myrealestateira.com would like to enlighten and help you understand your options specifically on real estate IRA. We will help you build your future.