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If you’re interested in real estate investing to diversify your portfolio but don’t know where to start, there are more options than you might realize.
Here are 23 real estate investing techniques, plus details on how real Equity Trust clients are using these approaches to grow their wealth. As diverse and wide-ranging as these examples are, they all have one thing in common: they all involved funding from a self-directed IRA or other account, enabling the investor to enjoy tax-deferred or tax-free profits.
23 Self-Directed Real Estate
- Seeking to diversify, Alan of Texas opened a self-directed IRA to invest in a foreclosed home and rehabbed it as a rental property producing passive cash flow.
- David rolled his 401(k) into a self-directed IRA to buy a rental property in a nearby Kentucky neighborhood, giving a woman and her four children a place to live after losing their home to a fire.
- Experienced real estate investor Jan of Missouri buys discounted properties with her retirement accounts, oversees high-end renovations, and sells them at top dollar. She even got her teenage daughter involved, getting her well on her way to financial freedom.
- Mark of North Carolina’s first rehab in his IRA was a home that looked like it hadn’t been updated since the 1970s. After flipping the house and selling it 14 months later, he returned a profit of $45,000 to his IRA.
- Learning of a homeowner looking to sell their home quickly, Bret of Louisiana offered the seller $100 to put the home under contract. Bret then assigned the contract to another real estate investor in exchange for $21,000.
- Carmen and her teenage son bond over real estate investing. She purchased two duplexes near a local hospital using her IRA, performed necessary updates, and rented them to medical professionals and others looking for housing.
5. Real estate option
- At age 19, Ryan of Maryland purchased a real estate option for $10, allowing him to find a buyer for a pre-foreclosure home. A real estate investor purchased the option from Ryan for $4,800.
6. Vacation rental
- Susan, a teacher from Texas, bolstered her retirement savings with an investment property in one of her favorite vacation areas in Florida.
7. Resort campground rental
- Colin of Utah bought land in the popular resort town Bear Lake with plans to rent the space as a campground. Read more.
- David of Ohio learned that a neighboring home in his rural community was near foreclosure. He made an offer to the owners and bought the property with his IRA, helping them avoid foreclosure and preventing blight in the neighborhood. He receives income back into his IRA by renting the home.
- Joel of Buffalo invested his IRA in a run-down property containing a storefront and second-story residence and transformed it into a two-family residential income-generator for his retirement account.
10. Raw land
- Brian partnered his IRA with his children’s Coverdell Education Savings Accounts to purchase land, and after two investments, returned a total of $130,000 to the accounts in the same proportion in which they came from the accounts.
- Josh expects a significant return on his IRA’s raw land investment. Two weeks after his IRA purchased the land for $2,243 an acre, he was offered an additional $1,720 per acre for the property – but he held out to grow timber and cultivate even higher land value.
11. Trustee/tax sale auctions
- Through her regular research of her county’s real estate trustee and tax sale auctions, Kay of California learned of a distressed single-family property going to auction. Her Traditional IRA bought the property for $65,000, but she moved the property to a different account before it was rehabbed and sold, helping her reap additional benefits.
- Christine of New York used her IRA to purchase a property that was left to a family as part of an estate. She then had it cleaned out and repaired and sold it to other investors, earning a 151-percent return for her IRA.