Real Estate IRAs are a type of self-directed IRA investment, designed to give investors more control over how much, and what they are able to invest their IRA funds in. With Real Estate IRAs, investors have the option of investing in both residential and commercial properties, provided their IRAs are structured correctly. This article will provide some basic facts about self directed real estate IRAs, and how they can benefit you.
Some benefits of this type of IRA include the avoidance of the custodian fees typically applied to every IRA transaction, and this includes the normal minor expenses that are associated with the purchase or sale of a real estate property. In some cases, depending on the structure of an individual IRA the holder of the IRA may not have to receive the permission of the IRA custodian to move forward with a real estate transaction involving real estate, which, in the time sensitive environment of real estate acquisition, is a definite plus.
In addition, with a traditional IRA, once your IRA owns the real estate property, any additional repair or renovation expenses must come directly from the IRA, which means that your custodian will collect additional fees. Be wary of companies that offer self directed IRAs but implement their own set up fees, asset fees, transaction fees, management fees and other fees, as these are not truly self directed IRAs of any type.
Many people make money by flipping real estate properties, which means that they purchase properties at below market value and then sell them at or above market value. With traditional IRAs, this is not possible, due to the amount of time that real estate is required to be held before sale, but with a self directed IRA, you can take advantage of tax lien properties, probate properties, and properties that appear on the market at a price that is too good to pass up.
This type of investment opportunity may not be for everyone however, so be sure to speak to your financial advisor, and to research all of your investment options carefully before deciding on any type of investment. Remember, your IRA is your revenue source for your retirement, so you owe to yourself to choose wisely. Above all, do not assume that the IRA plan offered by your employer is your only choice until you have looked at all of your options.
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For more information and tips about an real estate IRA please visit our article section.
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