With a Self Directed IRA you can use your IRA money to buy income-producing Real Estate. Investing in real estate can be as simple as purchasing a single family home to put into your portfolio as a rental property or as complex as partnering with a group of individuals to own a large office or medical building.
Long-Term Residential
The vast majority of Self Directed IRA investors focus on condos, single and multi-family homes and small apartment buildings. In regions where these types of properties haven?t taken huge hits because of massive overbuilding, there are still very good opportunities for excellent cash flow and long-term appreciation. In fact, now that most of the de-leveraging (de-valuation) of real estate has taken it?s toll, the next few years may be the best buying opportunity in a generation.
Short-Term Residential
During the ?real estate bubble?, much attention was payed to short-term residential investments, otherwise known as ?flips?. These investments were very successful for many Real Estate IRA investors. Now, things have literally ?flipped? and only professionals who really know what they?re doing are able to make a profit with this type of investing. So, proceed with caution.
Land & Lots
Investing in raw land or finished lots has always been a popular buy-and-hold strategy and is still viable. However, in this environment, great care should be taken to diligently research the opportunities and pick only the very best deals.
Be aware that buying undeveloped land is entirely different than buying a lot where water, sewer, electricity and telephone lines are readily available. When buying raw land, you cannot make assumptions that these utilities will be available. In other words, be absolutely certain the land will legally, geographically, geologically and environmentally support the type of building suitable for the property.
Commercial Properties
These properties include, but are not limited to, retail, wholesale, hotel and service businesses. In many ways, owning these types of properties can be better investments than residential properties because businesses pay much higher rents per square foot. The downside is that the owner?s success is dependent upon the tenant?s business.
In today?s market, that means being diligent to understand and comprehend everything possible about the business and the business owner?s finances. Always depend on the expertise of a commercial real estate professional to guide you. And, remember, in the next few years, there will be tremendous opportunities to pick up some fantastic deals.
(In general, because of the size of most commercial investments, partnering is an excellent option. Contact us to learn more about this strategy.)
Real Estate Options
For many people, owning investment real estate property is too expensive, too risky and too time consuming. Real estate options are a low-cost way for investors to control interest in a property without having to buy it outright.
An ?option? is a legal instrument that gives the holder of the option ?exclusive right? to buy or not to buy a property. No one else can buy or sell the property during the terms of the option set forth in the option document.
This strategy is one of the most popular for Self Directed IRA investors who have a limited amount of funds in their account, but want to maximize opportunities.
If you?re not familiar with real estate options, there are many good books and articles available on the subject.
But, no matter what the investment, the key is having the available assets and funding to make it happen. Self Directed IRA?s are also a great way to retains and control profit and taxes.
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