If you’re like me, you want your Roth IRA investment to be safe and still make a good return.
Well, people in our situation have found real estate is an investment option that gives them both security and high returns.
You might want to consider adding this to your Roth IRA investments, and so let me explain why it works well for many people and show you how to begin investing in it with little personal experience.
First, I should say that not everyone realizes they can put their Roth IRA contributions into property investments. You can’t do that with a traditional IRA (or a 401k for that matter) but in the mid-1990s Senator Roth deliberately included real estate when he was setting up the special IRA investment vehicle that carries his name.
Part of the reason is the brokers. They tend to simply recommend shares.
Possibly because it is easy for them, since in order for real estate investments to be simple, predictable and attractive you need to know what you’re doing or have an experienced partner. There are specialized brokers who have this experience in real estate investing, but many don’t.
As a result your Roth IRA investments can be less rewarding than they should, because real estate has the potential to strikingly grow in value over time.
Buying houses relatively cheaply, renovating quickly at little cost, then flipping them on for a profit is a standard real estate investment model.
My wife and I are doing something like this with a home we own. We are able to completely modernize the kitchen for a third of what other people in our situation frequently pay, and when we have done this, by the end of this year, we expect the market will pay us considerably more than we put into the upgrade.
But there are other types of real estate Roth IRA investment that can be just as profitable.
You can use your Roth IRA to invest in bare land, for example. Or apartment buildings.
(Although I would be quick to say I would never invest in an unbuilt apartment complex. My wife and I have several friends who did this in a large project that went spectacularly belly-up last year, taking all their retirement investments with it. Always invest in apartments that are finished and ready to rent. That way you are dealing with something real, not just a fast-talking promoter’s assurances.)
Earlier I mentioned tax law. This is significant. Your Roth IRA investment is tax free. Both your contributions to your account and the growth in value of that account are yours to withdraw tax free. Now, real estate almost always increases in value, as you know, and this makes a Roth IRA investment in property particularly attractive.
So I would recommend you consider making some (or even all) of your Roth IRA investment in real estate. If you have enough in your Roth IRA right now, think about making that investment using cash because you can negotiate the best deals when you have cash to offer for purchase and your capital gains in years to come will be greatest.
Your account will have to be self directed, however. If it is not currently set up this way talk with your broker. Unfortunately there’s a chance he may be unable to help you with real estate investing, and if that’s the case then look around for one who can. (I have some suggestions on how you can find one at my web site, if you would like to start looking there.)
But whatever you do, investigate the real estate option carefully. There are experienced brokers out there who can help you invest wisely and conservatively and yet make major profits from your Roth IRA investment money for a comfortable retirement.