Real Estate Investments
With the real estate market so low an opportunity becomes available for those with the capacity to invest in property and begin collecting rents. If you are looking at real estate as purely investment income then you have two points to consider: 1) When you invest in the real estate you begin collecting rents that are subject to increase with the market and/or inflation, and 2) if you believe the market is in a trough, or at least that it is lower now then it will be when you need to sell the assets, then you will realize an increase in the value of the property, depending on the length of your holding period, at a long-term capital gains. If you, however, default on a loan then you could be left with bankruptcy. So there is some degree of risk associated.
Investing With An IRA
Once you begin investing with your IRA you may find there are a few technical issues that are prohibited buy government regulation. For example, if you have an IRA that you have contributed $5000 into for 3 years (only $5000 because of the contribution limits), you can use that money as a down payment for some investment property. Now, assume your income on that property is limited for a few months because you cannot find renters and you have run out of money in your IRA to pay the monthly loan payment. Rather than being allowed to pay that loan with your own income, even if you have hundreds of thousands of dollars in the bank, you have to let your IRA default on the loan because you are prohibited from investing personal funds with investments from your IRA.
Needless to say, you need to be a little more careful when investing with an IRA than you do when investing with personal funds. However, if you have a very close and trustworthy friend, not a family member because that would create a prohibited transaction, you can sell some of the equity in the property to that individual. Your IRA, however, will still be the one bound to pay the loan by the bank.
SilverStone specializes in the set up and middleman work required for keeping IRA investments from becoming prohibited. Our professionals understand the laws and regulations involved with such investments.