Investing in real estate offers a stable, proven way to create ongoing investment income, but many would-be investors still don’t realize they can buy real estate with no money down using funds in their IRA account instead. Yes, you read that correctly… Money that is currently tied up and invested in the stock market and/or mutual funds in your individual retirement account can legally and easily be used to buy investment properties anywhere in the world!
“In what’s called a Self-Directed IRA, you are free to invest in just about any investment”, wrote Investopedia. “Your IRA isn’t restricted to financial instruments that appear on the floor of a major exchange. You can buy real estate, too”.
Still, certain types of investment properties are better than others if you’re looking for proven returns that will beat traditional investment options and protect your assets from ongoing stock market volatility. Read on to learn more about buying real estate with an IRA and see how to use a Self-Directed IRA account to invest in real estate with no money down.
Self-Directed IRA Rules for Buying Real Estate
First of all, if you don’t already have a Self-Directed IRA account, you’ll need to open one and transfer the assets from your existing IRA, 401(k) or other retirement plan. Insider Tip: It’s always best to work with a team of experienced real estate investment advisors who are familiar with this easy process and can guide you through every step of the way.
“Putting your hard earned IRA assets into a ‘Self-Directed’ IRA can be a very good idea to grow long-term, tax-deferred or tax-free assets”, wrote Forbes.
Here’s a quick rundown of how the process works:
Next, you’ll need to find a suitable investment property. Eligible properties include any that will be used strictly for investment purposes, including turnkey vacation home rentals and other types of rental properties, such as businesses and apartment buildings. Also, it’s important to note that you can’t use an IRA account to buy property that you already own elsewhere – it has to be a new purchase directly into the IRA.
Best Investment Properties to Buy with Your IRA
Since the Self-Directed IRA real estate rules laid out by the IRS also require a hands-off approach for owners when it comes to maintaining and managing investment properties that are held in the IRA account, turnkey rental properties and raw land are two of the best options to consider. Properly managed, a turnkey rental property – such as an apartment building, luxury condo or vacation home – can be a highly lucrative and stress-free way to benefit from real estate investing without any of the headaches that typically come with ownership. Also, buying raw land in the path of growth and essentially adopting a “buy and hold” mentality, can pay off big time when you invest in a region that is growing and still offers great value for your money.
But keep in mind that some of the most lucrative and low risk turnkey rental properties in the world are probably not located in your home town! Don’t be afraid to think outside the box and consider investment properties located in one of the world’s top vacation destination, which will maximize your return on investment and can even provide a great reason for your own family to get away from it all more often.
What questions do you have about buying investment property? Post them in the comments!