IRA Real Estate Investing

Path to Building Wealth

Indeed. A few years before retirement, they are jolted by the fact that their savings may not be sufficient to give them the comfortable lifestyle they had aspired for. The costs of medical care continue to spiral up, and the prospect of dipping into their emergency funds is looking more and more like a real event instead of an imagined fear.

So what are some of them doing? They’re looking for lucrative business ventures that hopefully will yield impressive ROIs to allow them to be part of the leisure class. Better that than to go back to being part of the working class all over again.

Real Estate is Creative Investing

Many retirees and would-be retirees are being encouraged to roll over their traditional IRAs into self-directed IRAs so that they can be allowed to engage in real estate investing and at the same time maximize on legitimate tax deferment options. It is a creative way of investing hard-earned money because self-directed IRA funds can be used to invest in either local or foreign real estate. This explains why an increasing number of mortgage lenders and other pertinent businesses are offering their expertise and due diligence to Americans who are looking beyond US borders for properties that they can maintain within their IRAs on a long term basis.

Seasoned investors recognize the advantages of real estate investing because even if the housing industry goes through boom and bust cycles, it has demonstrated a high survival rate. In fact, sophisticated investors who are accustomed to investing in the bricks and mortar trade know that the best time to go into real estate is when it is experiencing a temporary slowdown.

At this time the country is feeling a downturn and foreclosures are hugging the headlines. Inventory was at all time high 12 months ago, but it looks as if inventories are whittling down at a healthy rate. In some states, builders have stopped applying for permits until they can clear the last chunk of inventory off their ledgers.

This is the creative element in real estate investing. The cycle continues, but there’s never a bust or a bursting bubble because the industry goes on correction mode automatically until activity picks up again.

Real Estate: A Full Time Business

When investors pour money into foreign real estate, few people realize that this is an investment that is fully approved by the US Internal Revenue Service. Provided that all legal and financial requirements are complied with, investors can invest wherever they want and enjoy the benefits of smart, strategic investing. For investors who want to manage their properties on a full time basis, it is usually recommended that they establish an LLC so that all profits and tax savings go into the LLC and not to the pockets of investors and their family. To establish the LLC, investors need to engage the services of an IRA trustee or custodian who will handle the paper work required by the authorities.

An LLC needs an investor’s full time attention. There are resolutions to be filed as well as deposits that have to be made by partners of the LLC. As cumbersome as the “housekeeping” details might sound, the rewards of real estate investing can be phenomenal. The adage, “invest in real estate and wait” has never been truer.

One restriction that real estate investors should be aware of is that where self-directed IRA holdings in real estate are concerned, they cannot live in the properties they have invested in. Their custodian or trustee should define this very clearly because one wrong move could lead to severe tax penalties.

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