A great way to take advantage of Real Estate in a self directed IRA is through Fractional Ownership. Fractional ownership is a type of situation where multiple investors pool together their funds to make one larger purchase. For Example:
Joe and 4 of his friends each invest $50,000 from their self directed IRAs to buy a $250,000 4-flat rental property. Now Joe and his friends each own a 20% interest in a cash flow property. By pooling together funds and buying properties for cash there is no dilution of returns.
Real Estate is a logical addition to many retirement portfolios for 4 key reasons.
1) It is totally transparent.
- Real Estate is a tangible asset and is not subject to the same volatility or vagary many traditional Wall Street products are.
2) It offers strong cash flow
- Many income properties are generating between an 8% and 10% annual cash return
3) It can be acquired at bargain prices
- With many landlords needing to liquidate properties, today’s market offers great opportunity to acquire real estate at below-market prices
4) It acts as a hedge against inflation
- With the fear of inflation looming over the economy, real estate has always acted as a hedge and performed well in times of high inflation
In today’s uncertain economic times, having a portion of your retirement invested in Real Estate will give you greater diversification and greater returns.
August 14, 2009 at 9:41 pm |
Thank you for the information. I have further questions about where to find services companies for these self-directed IRA’s…I have clients in the Indianapolis market that is inquiring. What choices are out there?
Look forward to more info…thanks.