Real Estate In IRA Can Skyrocket Your Tax-Deferred Income
By Adam D. King Platinum Quality Author

Real estate IRA investments are becoming increasingly popular and for good reason. Until recently, only a few people understood how to hold real estate in IRA accounts and protect their profits from excessive taxes. Now, there are experienced trustees and investors that are willing to help the average guy.

One of the first things that any investment counselor will tell you is that you need to diversify your portfolio, if you want continued long-term growth. The instability of the markets means that relying on one investment type to fund your retirement is not a good bet. It's like "putting all of your eggs in one basket". This is where real estate IRA investments come in.

The stock market is flat or falling. The success of mutual funds relies on the stock market. Certificates of deposit have low yields and often don't even match the rate of inflation. But, real estate is always considered a good investment if you buy it for the right price. Putting real estate in IRA portfolios is one of the best ways to diversify.

In order to make successful real estate IRA investments, there are several things that you will need to do. You need to be able to self-direct the funds in your account or convert your traditional IRA into a self-directed IRA. If you have a Roth-IRA, you should be able to withdraw money for real estate deals and then return the profits to the account, but you may not be able to hold a deed in the account, as you would if you were investing in rental property.

You will also need a custodian that offers their clients the ability to invest in real estate. Not many do. And, you want a custodian that understands the tax laws and regulations concerning real estate in IRA accounts. Once you take care of these things, you should have no problem funding your deals. But, wait, unless you have the time and the knowledge, you could be in for a lot of stress.

The saying that real estate is always a good investment is true, but you can lose money, if you buy the wrong property at the wrong price. When you get into self-directed real estate IRA deals, your custodian or trustee cannot make the deals for you, nor can they advise you about what deals to make. You need a third party for investment advice.

When you hold real estate in IRA accounts for rental income, you become a property manager, unless you hire one and then you would have the added headache of dealing with an employee. That might not be what you want to do. For quick returns, you probably want something a little different.

Not long ago, an IRA account holder turned $28,000 into over $90,000 by buying a run-down house, remodeling and reselling it a couple of years later. He had done those kinds of deals before, using other assets. In this case, he decided to use the IRA account because of the tax advantages.

You probably do not have the time that it takes to find a fixer-upper and you probably do not have the knowledge to get the work done, but you can still take advantage of real estate IRA investments. You just need a little help from the right people. Luckily, there are a few experienced real estate investors who are willing to take you by the hand and help you avoid the stress and the headaches that do-it-yourselfer runs into. It's a new investment idea that's worth investigating.

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