If a lack of cash on hand is all that is holding you back from buying real estate in Mexico, perhaps it’s time to consider buying property with an IRA account, which offers a variety of benefits and none of the negatives that come with going into debt to fund your real estate investing goals. At Investment Properties Mexico, we have already helped hundreds of happy clients buy real estate with their retirement accounts, so here are some tips to help you get familiar with the process.
Basics of Buying Real Estate with an IRA Account
Buying property with an IRA allows you to own real estate with no penalties or tax consequences, as long as it is used as an investment property. This is a smart choice for a number of reasons, but perhaps most importantly because any rental income is tax-free, as are the capital gains when and if you decide to sell. Of course, investing in vacation home rentals in a gorgeous destination like Playa del Carmen also means you get to be the proud owner of an amazing vacation property in one of the world's most popular tourism hotspots!
What Brokerage Firms Aren’t Telling You
If you haven’t been told about buying investment properties with your retirement account before, it’s probably because most IRA custodians are also brokerage companies that tend to stick to what they do, which is typically stocks, bonds or mutual funds. Since they also don’t make a commission from you on real estate purchases, why would they suggest it? Some brokerage companies will even make it as difficult as possible, hoping their clients will give up, stay at the brokerage and keep paying commissions. This is where a Self-Directed IRA account comes in handy.
Buying Real Estate with a Self-Directed IRA
To purchase property with an IRA is actually quite simple and although you might not realize it yet, real estate is actually one of the top investments in Self-Directed IRA’s, due to the ease and safety of the transactions and the many benefits this purchase strategy provides. Start by setting up a Self-Directed IRA and then transfer the funds from your existing retirement account to the new IRA custodian. We can even help you by setting up a conference call with the new custodian so you can ask questions and address any concerns. We can also help you set up the account properly for the transfer of funds to pay for the property, which will have zero penalties or tax consequences, since it is a simple rollover from your old IRA custodian to your new IRA custodian, which permits real estate investment.
Benefits of Real Estate Investing with an IRA
If you invest wisely in turnkey vacation home rentals located in places like downtown Playa del Carmen, buying property in your IRA can result in excellent return on investment. For smart buyers, the benefits of buying real estate with your IRA account include:
- Security – Real estate investment is 100% secured against a tangible asset.
- Returns – The returns from real estate investing beat the stock market over time.
- Appreciation – Buyers get to enjoy appreciation + income with little risk.
- Diversification – Investors who diversify with real estate outperform those who don’t.
- Income – Turnkey vacation home rentals offer income from high-value guests.
- A Hedge Against Inflation – 6-7% stock market returns will be much lower with inflation.
So, what’s the catch? The answer to this question is simple: Real estate is not a liquid investment, so it will take some time to find a buyer for your property should you decide to sell. However, most buyers don’t want to sell an income producing property like a turnkey vacation home in Playa del Carmen, especially when the returns are far outpacing the rest of their investment portfolio. For the best results, partner with an experienced turnkey property manager who can handle all maintenance concerns, booking and scheduling, leaving you free to collect your ongoing return on investment and to enjoy the property whenever possible.
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Would you like to know more about how to invest in real estate using an IRA account? Click the link below and discover why buying real estate with an IRA in an ideal location can diversify your portfolio and provide a hassle-free revenue stream to dramatically improve your ROI!