Real Estate Investors Improve Neighborhoods, One Home at a Time
There is no doubt about the critical need for affordable housing in America today. Affordable housing allows families to have a stable home, offering countless benefits to children by helping families stay connected to the communities they choose where they have found medical care, churches and schools. Stability helps keep families together.
However, there is another benefit of providing affordable housing: it becomes a pathway to homeownership, a way to build financial security.
Members of the National Real Estate Investors Association (National REIA) work every day to improve neighborhoods, one home at a time, doing our part to help provide safe, affordable housing to Americans at all income levels. Whether it is rehabbing an older distressed home or providing rental housing, our members are on the front lines of this important issue.
However, there are some concerns about housing in general that need addressed. Well-intended regulations often drive up the costs of rehabbing older housing and building new housing. In some areas the opportunity for developing affordable housing is so diminished it is non-existent.
What little housing is built tends to be higher-end where the profit-margins are greater, and the costs more easily recouped. Often this creates a disincentive to develop affordable housing.
With the best of intentions, lawmakers often respond to the lack of affordable housing by passing more laws and regulations. Each new law starts the cycle of unintended consequences.
Role of real estate investors
In reality, America actually has a huge supply of affordable housing, though much of it is in rough shape.
That’s where investors can play a vital role. In many communities across the country, deferred property maintenance has taken a heavy toll – especially on older homes. Whether it was because of neglect or a lack of resources from the owner, a lot of homes are in dire need of rehabilitation.
This causes legislative knee-jerking in the form of punitive property maintenance codes and regulations.
In reality, America actually has a huge supply of affordable housing, though much of it is in rough shape. That’s where investors can play a vital role.
Rebecca McLean, Executive Director, National Real Estate Investors Association
We like to say neighborhoods can be improved one home at a time and it is certainly true. National REIA members often seek out and identify distressed properties in neighborhoods that no one wants to touch. They rehab those properties and add value not only to the community (removing blight, abandonment, etc.) but strengthening the local tax-base as well through increased property values.
Families looking for starter homes (to buy or rent, depending on their situation) are then able to find quality, affordable housing in a neighborhood that meets their needs in a location of their choosing.
This is a big deal for those in lower income communities especially when it comes to accessing good paying jobs and quality schools. Many families also want to put down permanent roots. Buying a home allows them to build financial security while providing stability for their family. It is a win-win.
Finally, there is one item on the horizon that will potentially have an incredible impact on the supply of affordable housing – Opportunity Zones. As part of the Tax Cut & Jobs Act of 2017 (now law), these zones have the power to profoundly impact distressed communities across the nation.
We believe the tax incentives provided by this new law will spur a wave of redevelopment that will not only provide a steady supply of affordable housing, but embody the old axiom of a rising tide lifting all boats.
After all, a diverse housing stock providing affordability at all levels of income is key to helping Americans attain the American Dream – whether it is homeownership or a comfortable rental home, National REIA members are helping families make that possible….one home at a time.
1
I plan to purchase a rental property with my IRA. Does the rental income have to go back into my IRA?
Yes, all income generated by an IRA-owned property must return to your IRA. This ensures that you retain the tax-deferred or tax-free status of the investment.
2
Am I restricted to only purchasing residential property with my IRA?
You are not limited to residential real estate. Your IRA can hold various investment properties such as commercial buildings, vacant land, condominiums, mobile homes and apartment buildings, in addition to residential property.
About the Author
Rebecca McLean is the Executive Director of the National Real Estate Investors Association. National REIA is a federation of local associations or investment clubs throughout the United States that represents local investor associations, property-owner associations, apartment associations, and landlord associations on a national scale. By representing the interests of approximately 40,000 members across America, they are the largest broad-based organization dedicated to the individual investor.
Rebecca McLean is not an employee of Equity Trust Company. Opinions or ideas expressed are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and their affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.
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