Form Object

The Unlimited Real Estate IRA

Today’s market options for investors is like a double-edged sword; on one hand it has become ridiculously easy to purchase shares in nearly any market you want to, but on the other the companies you can invest in are currently doing so poorly that there is little chance to them providing a significant return any time soon. 

One market that has recently caught long-term investors’ attention is the real estate market.  Long term investors tend to look to the benefits of an IRA.  A real estate IRA is not unheard of, and in this volatile market it is becoming more and more popular.  However, there are just a few things to take into consideration before you decide to go this investment route.

First off, you are going to need a self directed IRA custodian for your real estate IRA.  You can try to handle everything, but you can have someone else do it for you.  A custodian allows for a third party to provide you with payment on your IRA, and also allows for you to bring in someone who may have additional insight or expertise concerning your IRA.  Also, because you have a custodian, you aren’t directly handling your IRA.  Currently, it is still illegal for you to be your own custodian, but having a third party keeps you legal.

The nice thing about working with a custodian is they will manage more than just IRA funds, but also mortgages, trust funds, stocks, bonds, and any other source of market income.  Custodians can combine these into profitable ventures for you and advise you on where to go concerning the markets state.

While your self directed IRA custodian cannot tell you how to spend the money inside your real estate IRA, they will probably point out that there is a hefty market right now for home buyers that have been, until now, financially unable to afford a home.  Before the housing bubble burst, too many investors were hedging their bets with high cost homes and hoping that either someone rich would come along or that a bank would clear a sub prime loan for the property as a good investment.  Right now the odds of either have diminished, and many investors have panicked and written this off as a buyers market. 

Something that short-term investors seem to be forgetting is that despite the current economic situation, banks won’t stop giving out loans.  As long as there are home buyers with steady incomes out there, banks will continue to finance them; the trick is finding a home they can afford.  Many can only afford something in the form of government housing, but now with the bubble having burst on the housing market, values on property have dropped to the point where homes are vastly more affordable than they were two years ago.

Still, why consider a self directed real estate IRA?  Consider that the traditional method of investing solely in stocks and bonds has become too risky for most investors.  Most stocks are only going up temporarily as a result of market driven panic, only to fall again the next day as investors hoard their shares.  With traditional stocks behaving in such a manner, some smart investors have started looking elsewhere, and property is a great long-term investment.

When you consider that the need for homes has never dwindled, and that the recent dip in market prices has opened the door for a new level of investor, it is only a matter of time before the housing market becomes flooded with new buyers.  Having a real estate IRA in place and the right custodian behind it can make all the difference.  It may not be as quick to turn a profit as some more traditional IRA investments, but you’ll be the one in charge of where your money is going and with the right advice, you’ll see your investment grow with time.