If you are looking for a Roth IRA investment that can yield good returns with little risk, you may want to consider real estate. The more common Roth IRA investments may still be working for you, but adding real estate to your portfolio could be a good way to diversify.
Many people are unaware that they can use their retirement accounts to invest in real estate. Most people and most brokers tend to stick with a more traditional Roth IRA investment, but the laws that govern IRAs do allow other types of investments.
Lawmakers have two basic concerns in mind. They want you to have the money that you need for retirement and they want your Roth IRA investments to be fairly liquid. If you want to be safe, you should keep those things in mind, as well.
What makes a safe liquid investment? Sometimes it is easier to understand if you look at something that is not easily liquidated.
Some people are fond of antiques and collectibles. A few are actually able to make a living out of selling and trading them. But, antique dealing is not an allowable Roth IRA investment. The reason is simple, when you think about it.
In order to liquidate antiques or collectibles, so that cash can be accumulated to settle a person’s debts or to pass on to their beneficiaries, an estate sale or auction is required. It is difficult to assign an accurate value to the items. They may go for more or far less than the appraised value.
An antique appraisal is typically inflated. It is largely for insurance purposes. The chances of finding a collector that is willing to pay that much are slim. Liquidating assets can often yield less than expected, but some assets are more likely to sale for at or very near to their appraised value. The best example for this case is real estate.
Buying houses, apartment buildings, raw land and other types of real estate are “legal” Roth IRA investments. Even tax appraisals are fairly accurate, so the value of the property can be easily established. When the need to liquidate arises, it is usually fairly easy to sell a property and the final price is usually fairly close to the appraised value.
In order to add real estate to your portfolio, you need to be able to make self-directed Roth IRA investments. That means that you may need to change brokers. Most do not offer their clients the option of investing in real estate. Equity Trust Company is one that does.
The best real estate deal for a Roth IRA investment is a cash deal. You may be able to obtain a mortgage in the name of your account trustee, but the process can be complicated and the interest charged can off-set or outweigh the possible profits.
What you might want to look for is a house that you can buy “cheap”, with funds already in your account. The biggest profits usually come from fixer-uppers. The cost of purchasing and repairing is often far less than what the house can be resold for in “prime” condition. If you have any experience in flipping or rehabbing houses, you probably have an idea of what to look for.
If, on the other hand, you have no experience, you might want to get some help. There are a few real estate investors that are willing to help you find the right deals and make big profits for your retirement. If you get the right help, real estate might become your favored and most profitable Roth IRA investment. It’s definitely something to consider.
