In a recent interview with CNBC, when asked if a young individual investor should buy stocks or his first single-family home, Warren Buffett recommended buying a single-family home with a 30-year mortgage. In fact, “if the young individual investor is a handy type, he could buy a couple of them at distressed prices and find renters,” said Buffett.
Warren Buffett is a man known for his tremendous success in investing in assets he believes are undervalued, so with the US real estate market at record lows, why not heed Buffett’s advice and invest in real estate? Because of the absence of big institutional investors in the US residential real estate market, it is less competitive that even the stock market!
A great way to invest in real estate without having to pay huge upfront costs, is to self-direct your IRA into real estate. There are several ways that an IRA can participate in a real estate transaction. The self-directed IRA owner has the choice to direct the IRA to purchase the entire property within the IRA, to purchase an undivided interest alongside other investors, or to purchase a property with leverage utilizing a non-recourse loan.
If you are an experienced real estate investor, and you know you can earn an attractive return by buying raw land or fixing up rental properties, and the income you earn by doing so would normally be taxed at your ordinary income tax bracket, then you may see a tax benefit from owning real estate in your self-directed IRA. With a self-directed IRA behind the investment, the gains go back into the retirement fund either tax-free or tax-deferred, depending on your IRA.
If you agree with Warren Buffett that the real estate market is currently undervalued and you’d like to take advantage of this investment opportunity with a real estate IRA, our Florida self-directed IRA administrators are here to assist you with your self-directed real estate transaction. Reduce your dependence on the stock market, and use your knowledge and experience to drive your IRA growth. Give us a call today at 407-367-3472 to get started self-directing your investments!
