A lot of folks are scared off from taking on a self-directed IRA because they’re not sure they have the investment chops to see decent returns. On the other hand, self-directed IRAs offer a great variety of investment choices. Traditional IRAs are quite limited by comparison, and one of the most lucrative investments right now is real estate.
It’s no secret that the value of real estate has steadily increased since housing collapse of 2008. Real estate prices now are hitting the same levels or even higher than we saw right before the bubble burst.
That investment bubble had little to do with the real estate itself. It had more to do with the quality of mortgages that were being offered to homeowners. Modern real estate investing that invests in the property itself can be a sure thing when done properly.
Finding a Sure Thing for Your Self-Directed IRA
One of the reasons that so many investors lost so much money was because they invested in the debt associated with mortgages. When millions of homes were foreclosed on all over the country, much of the anticipated returns evaporated into the thin air.
Those investing their IRA into various ventures are not going to want to leave their money to chance. One sure fire way to get a return on their investment is by finding those who are willing to invest in distressed properties.
In case the terminology is new to you, a distressed property is one which, for whatever reason, is run down to the point of being uninhabitable. It may fail housing inspections or a housing authority may deem it unsafe for renters. In that event, the property is still valuable, but the original owners may be unwilling to put more money into the property. An investor then buys the property and fixes it up. This entails both bringing it up to code and making it desirable to tenants for the purpose of inhabiting. The capital that’s invested there then needs to be replenished. That’s where passive investors come in.
With a typical IRA, holders are left to choose from a set of handpicked mutual funds. A self-directed IRA offers a much larger set of options, and one of those options is real estate. For the aforementioned reasons, real estate offers investors an excellent opportunity for returns. An investment in an already performing asset offers the holder of an IRA excellent security.
For investors that may be leery about taking on the responsibility of a self-directed IRA, opportunities to become a passive investor should not be overlooked. A qualified professional can help you spot and exploit these.