Now Might Be A Good Time To Invest Your IRA Into Real Estate!

You've heard it before for many years, "Buy low, sell high" The stock market has hit several all- time highs over the past 12 months. As a registered investment advisor, I make a part of my living offering diversified portfolios of stocks, bonds, mutual funds, and ETF's. I have a team of money managers to assist me daily.

However, I spend the better part of my time on my real estate practice.
During the last recession, most of my clients lost a great deal (on paper) of their portfolio values of their retirement accounts. During this time, the markets continued to spiral downward hitting lows at a rapid pace. The Dow Jones Industrial Average hit 6,443.27 on March 6, 2009, having lost over 54% of its value since the October 9, 2007 high. Most of my investors took my advice during this time to stay the course. Eventually the markets would come back and then some. Today, the DOW has topped over 22,500.

I had met many investors from 2008-2009, (not my clients) who were mostly "self-money managers", who would come to my office to seek advice after they had already sold off their investments at a loss. The stock market is paper money. It is not a tangible item like real estate. Investing requires two important items diversification and discipline. During this time if anyone of these investors had a part of their IRA invested into a Real Estate IRA, with a tenant paying rent, (commercial or residential) most likely would not have sold off during the recession. Why? Because they would have an income still coming in, and real estate is not "liquid" like other investments. Ironically, dividend stocks work the same way but some investors panic and sell off when they lose value.

Most brokers and investment advisors will not recommend investing your retirement directly into real estate. This is partially due to the fact that they cannot generate any commissions if your money is invested directly into real estate. Good thing about that is you save on ongoing loads, fees, etc. on these types of investments. However, you can invest into a REIT (real estate investment trust) through most brokers and advisors. These high commission investments are generally sold with the promise of steady dependable income, a promise of steady or increasing value and with little discussion of the fact that the investment cannot be sold on any conventional exchange. I prefer an investor to be in control of their investments. When setting up a self-directed IRA, you choose the investments. In a REIT the managers choose this.

When investing into a self- directed IRA, you are in total control of your real estate investment. However, the IRS has very strict guidelines that you will need to know. You need to make sure you have the proper custodian hold your IRA funds, (some of the institutions will insure them through FDIC) and will need to understand how you can generate income with the real estate once your IRA purchases the property. If you would like to know more the "Real Estate IRA", please feel free to contact me.

*This is not an investment recommendation. You should consult with a registered investment advisor or broker for further information and/or prospectus.


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