Real estate is an ideal investment for baby boomers who want retirement income as well as younger investors. Experts with a self-directed IRA company say there are 5 key ways real estate investing beats the stock market. Of course, ultimately you want to take control of your retirement future with a self-directed IRA. People who invest in target-date funds often grow frustrated and upset when the stock market declines. If you take back control of your retirement money by working with experienced self-directed IRA companies, you decide whether to remain invested in stocks or whether you rather get a great return on investment with real estate properties. With a self-directed IRA, it’s up to you whether you buy commercial, business or residential real estate.
When it comes to turnkey real estate, the added benefits include the ease and simplicity since you don’t have to do the hard labor or management side. Experts say ideal is an appropriate acronym for the issues that make real estate investing so attractive.
Ideal because of the income
Stocks go up and down in value, but turnkey real estate investments produce monthly income that is stable and reliable especially for retirees. When you hire a property manager to screen tenants, you worry less about tenant turnover or renters who fail to pay on time. According to experts, most stocks put you on a roller coaster ride unlike income-generated turnkey real estate investments. A self-directed IRA lets you take advantage of high market rent across the country.
Ideal because of the depreciation
Real estate offers tax benefits including depreciation. People who invest in real estate have a tax shelter for their money. When you sell stocks, you often pay more in taxes. Rental income has a greater value because you don’t need to pay social security taxes on the income. Also, depending on your situation, you may or may not have to pay a long-term capital gain on your turnkey real estate investment.
Ideal because of equity
When your tenants pay their rent, you in turn pay your mortgage if you have one. If you use a self-directed IRA to buy real estate, your retirement account grows when you receive a rent payment. As your loan balance goes down, you build equity which increases your net worth. A self-directed IRA company can fill you in on all the legal ramifications such as how to avoid self-dealing and how to invest in alternative investments without triggering early withdrawal or IRS penalties.
Ideal because of appreciation
In most cases, a rental home appreciates in value, especially homes in hot rental markets such as Dallas, Denver, Houston, Washington D.C., Miami and Los Angeles. When the rental market is booming, homes increase in value. Although values went down during the housing decline, the situation was temporary.
Ideal because of leverage
Another reason to buy real estate is to leverage your money. Instead of tying up your cash in the stock market, you can take out a mortgage at a low-interest rate to buy real estate. You can’t buy stocks or bonds without a full investment. With real estate, you have a variety of financing options. When you use a self-directed IRA, you can often pay cash for a rental home or real estate investment. In that case, you leverage your retirement money by putting it to work for you.
At New Standard IRA, we take the headaches out of investing in alternative investments such as precious metals, tax liens, real estate, limited liability companies, deeds, foreign currencies and mortgages. Talk to us about a self-directed IRA with checkbook control as the easiest way to buy real estate to supplement retirement income. For more information about self-directed IRA accounts with checkbook control, please contact us.