You’ve probably heard that most Americans don’t have enough money saved for retirement. This statement is often followed up with statistics and dire warnings about how many of us fall short in our level of preparedness for this life event.
Your retirement savings only tells one part of the story. If you’re only relying on raw savings, having enough money put away is going to be an uphill battle. Yes, you do need to set aside money, but that money needs to be dedicated to a purpose that generates income if you want to grow your retirement savings faster. A self-directed IRA gives you many avenues for growing the money you’re saving, in a tax-advantaged way. One option to consider is owning real estate for use as rental property.
It should go without saying you need to do your due diligence on every investment decision. Purchasing real estate and maintaining rental properties takes time, money, and knowledge. Fortunately, you don’t have to try to figure this out on your own. Developing your resource team of legal, financial, investment and tax advisors is just as vital as finding the right property. There is also a wealth of knowledge online to help you learn the facets of investing in real estate. For example, you can find an extensive series of articles
devoted to just to being a landlord.
Expert guidance can be very beneficial for answering questions such as:
Is the property in an area attractive to renters?
What insurance or legal concerns do you need to be aware of and are you properly covered? Are you in compliance with laws regarding taking on tenants?
How involved do you want to be in the operations of your rental property? The IRS dictates you keep an arm’s length away from your investment when your IRA owns a property. Do you have a plan of action for handling regular and emergency maintenance situations?
How much rent should you charge? Is it competitive while still covering expenses and providing an acceptable rate of return on your investment?
Equity Trust has a long history of helping clients hold real estate in their self-directed IRAs. When your IRA holds real estate, all of the funds for expenses need to come out of the IRA according to its percentage of ownership and all of the income needs to return back to the IRA following those same percentages. As a custodian, we provide the structure that allows your account to be an IRA and profit from the tax advantages available with the different types of retirement plans.
So what is your money doing? Schedule a time
to talk to one of our Senior Account Executives and discuss your options for adding real estate and other alternatives to your retirement fund-building plan.