Real Estate Investments That Make Sense

Our mission is to provide unbiased information and advice to residential real estate investors nationwide. Steve Setka, the owner and primary consultant at Nationwide, is available to provide you with information and insights that will position you to acquire income property investments with a high probability of yielding an exceptional return with a minimum amount of risk. Real estate investments are an essential componant to increasing level of wealth.

BUY REAL ESTATE WITH RETIREMENT FUNDS

Some people who want to invest in real estate mistakenly believe that can’t because all or most of their investments are held in retirement accounts. Funds invested in a 401k or 203b account with a current employer generally can only be invested in the investments that the employer’s plan offers; so diversifying those funds into direct real estate purchases is not normally possible. Retirement funds held within an IRA account can be invested in the direct purchase of real estate or the investment into a corporation or partnership investing in real estate. 401k/203b accounts with previous employers can usually be converted into IRA accounts and then the funds can be diversified into real estate investments.

Normally IRA or other retirement funds limit your investment choices to the stock and bond market. The IRS allows you to invest in other investments, such as real estate, notes, and artwork, by using a self-directed IRA. Most firms that handle IRA accounts, such as Fidelity, American Funds, and Bank of America, do not have the expertise or procedures in place to facilitate your self-directed investments; they normally limit your options to marketable securities that are traded in the major stock and bond markets. There are a number of firms that specialize in self-directed IRAs; investors who want to use a portion of their retirement funds to invest in real estate or other non-publicly-traded investments transfer those funds to a self-directed IRA firm, who then buys the investments you specify in the name of your IRA.

The benefits of income and gains not being subject to income tax within the IRA prior to taking monthly distributions at retirement is the same with regular and self-directed IRAs. All cash flow from the investment is paid to the self-directed IRA firm on your behalf and held in your IRA account invested in a money market, stock, and/or bond account selected by you; the cash flow is accumulated and re-invested when received. When the property is sold, your profit is also sent to the self-directed IRA firm and gets re-invested into the investments you selected. At any time you can transfer all or a portion of the funds to another IRA firm or direct the self-directed firm to make another purchase of real estate or another publicly or non-publicly traded investment. The bottom line is that all income and profits have to stay within the IRA account to avoid an immediate income tax liability.