“After the Bay Area housing market’s biggest price run-up in years in 2013, with frenzied bidding wars in some markets and cash investors snapping up homes in others, experts are predicting a much calmer market in 2014. That’s good news for potential home buyers, since there will be more homes to choose from, fewer bidding wars and less worries about spiraling prices”, says San Jose Mercury News Business writer Pete Carey.
This is even better news for Self-Directed IRA investors. Those in the know have been using Self-Directed IRAs to invest in real estate for years. There are many advantages to using your retirement plan to invest in real estate. You can invest tax-free and not need to pay the taxes right away. In the case of a Roth IRA, you never need to pay taxes! There’s also no time limit for holding the property. Your IRA can borrow money and leverage your investment with non-recourse financing. Lastly, there’s the potential to earn a larger rate of return on invested capital.
Investing in real estate with a Self-Directed IRA is quick and easy! First, you setup a Self-Directed IRA LLC. Next, you identify the property you want to invest in. You can then use your IRA funds to purchase the property. No need for custodial consent when you have “checkbook control”! The title to the property (and all transaction documents) should be in the name of the Self-Directed IRA. Documents must be signed by the LLC manager. Finally, all expenses paid from the investment property go through the Self-Directed IRA LLC. Likewise, all rental income checks (and the like) must be deposited directly in to the Self-Directed IRA LLC bank account. No IRA related investment checks should be deposited into your personal accounts.
For Bay area investors, the East and South Bays should see continued growth. Zillow is predicting moderate price increases; “We think there’s going to be more construction and a lot of people who have been freed from negative equity will put homes on the market,” said Zillow’s chief economist, Stan Humphries.
Even if you’re not on the West Coast, there’s plenty of opportunities to invest in real estate in your area. Just get out there and look! But be wary, a bad investment can cost you your retirement savings. Also, the IRS sets guidelines on how you can invest your savings so be careful and don’t engage in any prohibited transactions.