As a real estate agent you are used to helping people find and buy the perfect house or investment property. From commercial real estate to residential real estate, to undeveloped land – you are an expert in your market. You know that real estate is one of the best investments to create long-term financial stability.
What if you could use your expertise to increase your retirement savings? Consider a IRA with own directors (SDIRA). It allows you to go beyond traditional stocks and bonds and invest in what you know best: real estate.
What is SDIRA?
Self-managed IRAs are the only retirement accounts that allow investors to seek alternative investments, such as real estate. Investing in real estate with SDIRA offers numerous benefits to those looking for creative ways to save for the future.
There are many tax benefits associated with investing in real estate with SDIRA. The exact benefit depends on the type of account used, but the most common individual plans are traditional or Roth IRA. The two are very similar, but differ in their retirement benefits.
For example, with a self-governing traditional IRA, you don’t pay tax on contributions or earnings until you retire and start taking distributions. However, with a self-governing Roth IRA, you pay income tax on the go. This means that they will then grow tax-free if you meet certain conditions.
If you are self-employed or business owner, you have other options such as SEP IRA, SIMPLE IRA and Individual 401 (k) s. These types of accounts have higher contribution limits and additional tax breaks.
What are the benefits of using SDIRA to invest in real estate?
Some of the advantages of using SDIRA to invest in real estate are:
- Increased growth potential: Opening a self-governing retirement account gives you the freedom to invest in almost any type of property – you will have more flexibility in the amount of risk you take and greater potential for a higher rate of return.
- Greater control of your financial future: Use your knowledge of real estate. With SDIRA, you can make investment decisions based on assets you know and understand to increase your retirement savings.
- Protect your wealth from economic fluctuations: Portfolio diversification by investing in alternative assets such as real estate can act as a hedge against market fluctuations and volatility. You can also use SDIRA to invest in precious metals, private placements and other assets.
- Savings on a favorable tax account: Investing over time in a self-governing IRA that allows for deferred tax or non-taxable growth can have a significant positive impact on future wealth.
How does it work?
Investing in alternative assets such as real estate with your self-managed IRE is not too different from the usual purchase of real estate. However, there are important rules which you must follow to do it properly.
Are you looking for a real example of how this works? Check out this story about real estate an investor who increased his pension account with SDIRA.
Education about the potential benefits of SDIRA can help you achieve your financial goals and save for retirement. It can also set you apart from the competition. How? Some of your clients may be interested in new ways to increase their retirement savings. Be the first to tell them about this strategy and position yourself as a valuable resource. You sell more real estate, and your clients open their retirement accounts. It’s a win / win.
Want to learn more? Get your free copy of ours 5 steps to investing in real estate report today.
For nearly 40 years, The Entrust Group has been providing account administration services for self-governing retirement accounts and tax plans. Entrust can help you and your clients buy alternative investments, such as real estate, using pension funds. In addition to guiding investors through the process, we provide a wide range of educational resources. Want to know more about how it works? Look for our guide how real estate transactions work in IRAs.
