Many people think of investments as a side job. It is a common perception that it is just a money-generating mechanism that requires no time or looking after. Though this might be true in most cases, it is not for real estate. To fruitfully invest in property, one has to donate a considerable amount of time and money. In return, the real estate investor will earn higher levels of profit, compared to the traditional, stocks bonds and mutual funds. If you are wondering whether it is possible to invest in real estate using a retirement account, the answer may surprise you. Most Americans like to stick with the 401k that their employer sets up for them and are satisfied with low returns. But that doesn’t mean you should do the same.
With a self-directed IRA, not only can you invest in a wide range of commodities, but you also have full control of your money. This means that, unlike traditional retirement accounts including the 401k, using the checkbook model of the self-directed IRA, you can pay anyone anytime for investment purposes using the funds in you self-directed IRA account.
Of course, wherever there is money involved, you can’t be too sure of what you are doing. Luckily, there are many ways to verify the legality of financial institutions who offer services of opening up a self-directed IRA. Once verified, you should take a look at the regulations of the IRS pertaining to the investment in real estate using a self-directed IRA.
One of the most prominent rules is that the property that a self-directed IRA account holder wants to invest in must be only an investment property and not a residence. Another frequently forgotten rule is that the money for the purchase of the real estate must come directly from a self-directed IRA and the profits gained must stay in the account until the age of retirement.
It is okay to provide the brokerage company with personal information such as date of birth, address and Social Security number as this information is required for the pre processing of your self-directed IRA account.
While filling out the application form, you can choose whether “checkbook control” stays with the custodian or is handed over to you. If you take it upon yourself to make payments for potential investment opportunities, you would want to go for checkbook control. This will do away with the need to call your custodian every time you want to make an investment. Also, you will have to pay no transaction fees.
Remember that it is not only real estate that you can invest in using a self-directed IRA. Anything that has the ability to generate profits is considered an investment option for the self-directed IRA account holder. Whether it is gold bullion, real estate or a small business, open up a self-directed IRA and start reaping the benefits.
What is a Safe and Easy Way to Invest In Real Estate?
No comments:
Post a Comment