Help Yourself While Helping Others With Unique Self-Directed IRA Real Estate Investments

I attended a real estate seminar years ago. The instructor was a brilliant man. He pointed out that with real estate virtually any individual could receive phenomenal rates of return. As part of his presentation he compared real estate to other investments. He was especially fond of drawing parallels between real estate and the stock market.

First he said that he didn’t have anything against the stock market – that is, if you were happy with a return of around 10 to 12 percent a year. Of course, he showed the class many examples where real estate investors were making as much as 50 percent returns per year and more on carefully chosen properties.

Another one of the differences between real estate and stocks was that people controlled their own destiny with real estate while with stocks they had to depend upon the skills and savvy of a CEO and board of directors. I distinctly remember how I appreciated the autonomy involved with real estate investing. I liked the idea of directing my own investments.

Well, never before in my lifetime have I seen the above-mentioned philosophy hold so true as it does today. By the looks of things in the stock market the folks steering publicly-traded companies have made a mess of things. It seems that every day the stock market continues to decline while more and more capital simply evaporates into thin air. Where it will stop, nobody knows.

And in fairness, I guess one could say the same thing about real estate. On the heels of the sub-prime mortgage crisis property values around the country are falling fast. But here’s a little secret: there is still tons of money to be made with real estate. The only thing you’ll need to understand is that there are proven methods that will work in this type of market – all you need to do is become acquainted with them. And again, real estate is still an investment where the individual owner has complete control.

Understanding that, an adjustment to traditional real estate investing strategies itself is powerful enough. But couple that with another technique that might be considered unconventional and you’ve got a real winner.

The unconventional strategy is to buy and sell real estate in your IRA. Yes, you can do this. What you first need to do is convert your retirement account or accounts to self-directed IRAs. A self-directed IRA, or individual retirement account, is one that you, rather than a banker of broker control exclusively. Before we get further into that, let’s first take a look at the main advantages of IRAs.

  • Gains realized in an IRA are tax deferred until the time an individual retires and begins to receive distributions (payments) from the account. At that time the distributions are taxed as regular income.
  • With the tax deferred status of IRAs your money is able to compound quicker. This is because the principle balance stays intact as you have no need to withdraw funds to pay taxes.

These are the main benefits of an IRA. By themselves they’d be great. But couple these two advantages with opportunities to pick up phenomenal bargains in many of our country’s real estate markets and you’ve got a formula for some very nice returns.

That alone would be enough to motivate many folks to at least investigate the possibilities in real estate. But it gets better. There is a unique program available where everyone involved in such a transaction is far better off than before. The investor benefits by the current low prices of property and significant resale returns. And here’s an additional bonus: in many cases there are qualified buyers waiting for the house.

The community is better off because an empty and potentially problematic house is now occupied. The municipality is better off because there is now a family living in the home and paying property taxes. The family is better off because they’ve gotten into their first home or have upgraded to a more desirable one. Oh, there’s another great feature that comes as a byproduct of this plan. The program is carried out almost exclusively with private, rather than taxpayer’s money. The entire program is a winner for all. Pretty neat, huh?