6 Investing Tips for Your Real Estate IRA

My Mutual Funds Are Falling. What Should I Do?

Self Directed IRA Rental Property

In the past, workers saving for their retirement would sink their money into common investments like mutual funds, stocks from their favorite companies, or bonds. These were worthwhile and steady opportunities for tax-free income for many decades. However, the economic fluctuations of 2008 and 2009 caused many people to lose thousands of dollars in just a few weeks. Many people have turned to alternative investment options since the stock market crash and real estate collapse. Opening self-directed IRAs could give you a chance to purchase affordable properties and use them for a steady and easy to manage investment income.

May Mutual Funds Be Converted Into Real Property?

Buying foreclosed homes and reselling them may sound appealing as the real estate market slowly recovers. Most savers use rental properties to generate investment income that remains tax free, as long as it all goes into your Individual Retirement Arrangement. However, you can also sell the property without paying taxes if the money all remains within the account. Since you can’t live in the home or part of the property while using it as an investment, don’t start renting out rooms in your primary residence to fund your retirement savings. You will need to buy a home or building and rent it to tenants to qualify for tax-free investment.

 Is Real Estate Healthy for My Sick Retirement Account?

If you have a sizable amount in your retirement fund, but you have been experiencing low returns, using the savings to purchase a piece of real estate could jump start a sluggish account. The Wall Street Journal says that you will need to consider the extra challenges and work that comes with owning a rental property. Many people have sunk $100,000 into a commercial property only to decide to sell it a few years later after too much hassle with delinquent tenants or endlessly escalating costs.

 I Have No Management Experience. Can I Do This?

Experienced landlords may find handling repairs and choosing the right tenants to be a breeze. However, newcomers to property management may want to outsource the work to another company. House Logic recommends hiring a management company that can handle the work for a percentage of the overall rent. If you own a few properties, you can often lose less than 10% of your total income on management and save yourself hours of work each week. The management team will handle all of the routine tasks for you, including background checks on applicants, maintenance and repairs, eviction of renters that fail to pay and tours for prospective tenants.

Will My Rental property Rehabs Go Up In Value?

When you sink a certain amount of money into a property, you can expect it’s value to be worth at least what you spent after a few decades. This requires proper maintenance and care, but it is possible with appropriate management. House Logic says that this can provide a big chunk of income after you reach the retirement age. For example, you could add a full $5,000 to your qualified plan each year just with the rent, after deducting expenses. In addition to that money, you will earn income from your account balance. Selling the property after you retire will provide a chunk of money again, on top of every other dollar you’ve earned. You can also continue to rent the property out and enjoy a monthly income with minimum losses to taxes.

Master The Self-Directed Arrangement Rules – Win The Game.

There is a total minefield of IRS regulations surrounding the use of real estate in IRAs. By reading the regulations in their entirety, you will avoid any tax violations and attendant fees. Spending thousands of dollars on fees will only end up draining your retirement savings rather than increasing them.

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