Ever wanted to invest in real estate but didn’t have the money? How about being a part time real estate rental investor, without the responsibilities of being a landlord? More and more companies are getting into the real estate rental business. One of the newer ones, called RoofStock, will allow you to buy a stake in a rental property. According to a recent Wall Street Journal article, RoofStock says you can see a 5-7% return on your investment (ROI). Further, you can invest as little as 10% in a property, meaning you don’t need to make a large investment.
The great thing about real estate investing is that you can invest in something you understand, it can help diversify your portfolio and hedge against inflation. Further, if you use retirement funds for the investment, all gains and/or income generated will be tax-deferred, or tax-free in the case of a Roth account.
What is RoofStock?
RoofStock is a service that allows you to invest in rental properties. You can buy and sell houses without ever disturbing the current tenant. Plus, it allows you to buy a stake in one, or several properties. You can make an offer on a property, and if it’s accepted, RoofStock earns a minimum of $500 on the transaction.
According to RoofStock data, the single family rental market is THREE TRILLION DOLLARS, with 16 million rentals. They expect that number to rise by 13 million by 2030. Investors have been stocking up on properties ever since the housing crash. Obviously, there’s a ton of money to be made by renting out properties.
Since RoofStock allows one to buy a smaller stake in properties, you can spread your funds around to different areas of the countries. You don’t need to worry about collecting rent, making repairs, or anything else a typical landlord has to deal with.
Investing in Real Estate Rentals
Real Estate investing, particularly rentals, is a huge marketplace. Less people are willing to commit to a 30 year mortgage or simply can’t afford to buy in their desired neighborhood. They also like the fact that they’re not on the hook for major repairs. Just pick up the phone and call the landlord and he or she will take care of it.
Unlike flip houses that take time to renovate and sell, many rentals are turn-key and will start seeing a steady stream of income in no time. That stream is what drives people to the rental space. Receiving that check every month (with the right tenant) is hard to pass up.
But what if you don’t have the cash on hand to buy a rental (or even a stake in one)? This is where your retirement funds come in to play. By self-directing your retirement plan, you can use 401(k) or IRA funds to make alternative investments, like real estate.
Using Retirement Funds to Invest in Real Estate
It’s a little known fact that you can use your retirement funds to invest in real estate rentals. Savvy investors already knows this however. By using a Self-Directed IRA or Solo 401(k) plan (if you are self-employed), you can invest in just about anything you want. (Follow the links to see how each plan works.)
Basically, if your plan administrator allows it, you can fund your self-directed retirement plan and invest in real estate. IRA Financial gives you checkbook control of your funds so you can make your real estate rental investment as soon as you find one you like.
What’s great about RoofStock is that all the information about a property is right there on the site. You don’t have to leave the comfort of your home to check out a property, or to put in an offer. The one caveat, at least for now, is that you must be an accredited investor to utilize RoofStock. This means you must earn $200,000/year or have a net worth of $1,000,000. Hopefully, sooner rather than later, everyone will be able to invest.
Note: We have no affiliation with RoofStock and do not offer investment advice. This is an informative article and you should always consult with a financial advisor when making investment decisions.
Final Thought About Real Estate Rentals
The diversity of real estate rentals in your retirement plan is a huge plus. Not only can you spread your money around different properties, but RoofStock and similar platforms now makes it easier than ever. Real Estate will always be a solid investment, after all, there is only so much land on the planet.
Interested in using your retirement funds to invest in real estate rental properties? Please check out how to use the Self-Directed IRA to purchase real estate and contact us @ 800.472.0646 for more information.