Historically, investors considered real estate an asset to hold for tax benefits and future appreciation. "That may be changing," said Humphrey.
(PRWEB) December 28, 2011
Bill Humphrey, CEO of New Direction IRA asks a question that could turn retirement investing upside down: "Is real estate the new bond?" New Direction IRA, a leading self-directed retirement plan administrator, reports an increase in Real Estate IRA investors who want cash flow during retirement. Historically, investors considered real estate an asset to hold for tax benefits and future appreciation. However, Humphrey reports, in today’s market, many investors are turning to real estate as an alternative to fixed income investments such as bonds, dividend paying stocks, and CDs.
Humphrey has heard many of his clients report the surprise of opening their IRA statement and seeing positive cash flow from a real estate investment. Historically, investors considered real estate an asset to hold for tax benefits and future appreciation. "That may be changing," said Humphrey. Humphrey has seen many rental properties provide cash flow at rates of return unattainable in the traditional market, but he advises that with a self-directed account, the individual investor is responsible for finding and investing. The self-directed IRA allows for direct purchase of rental real estate, but Humphrey reiterates that the investor is responsible for everything but the tax records and other administration duties of the plan.
Some experts theorize that the current debt crisis in Europe combined with low interest rates world wide are causing investors to search for new alternative options. Humphrey reports that the search for alternatives is leading more investors to New Direction IRA. "We've seen many investors rejuvenate cash flows and strengthen assets in their self directed IRAs and other tax sheltered accounts."
Many financial advisers do encourage both cash-flow-positive investments and capital appreciating investments. "The conventional wisdom is you can't have both," Humphrey said. Real estate is often perceived to be a capital appreciating investment only, but given current economic conditions, that perception may be changing. Humphrey wanted to be clear that New Direction IRA never provides financial advice. "The investor is responsible for what, when, how much to invest," he said.
New Direction IRA has been seeing many new accounts opened with the specific intent to buy rental real estate. Humphrey reports that some of these properties are purchased with a loan, but more are straight cash investments within the IRA. The cash flow from an un-financed property can result in returns not available elsewhere. Investors with real estate experience or knowledgeable property advisers understand that, while still not a guaranteed return, rental property can provide stable long term cash flow as well as the hope that appreciation will return some day.
Investors wishing to take advantage of debt financing within their IRA often find that the higher down payments required by banks lending to IRAs leads to better cash flows as well. Those cash flows can be used to pay down the debt or make other investments within the IRA. For more information on the tax consequence of debt in an IRA visit newdirectionira.com
Price appreciation for real estate may return eventually, but today’s real estate investor is turning to real estate for current cash flows from their retirement assets.
The large number of foreclosures in the US has had two side effects:
1) There are more renters
2) There are more homes for sale, often at discounted prices.
Because foreclosure sales often require cash buyers, sufficient cash balances are often only available in retirement plans. IRA owned property can also be financed after the purchase.
Humphrey recommends visiting newdirectionira.com for more on owning real estate in an IRA. Humphrey continued, "You will find more details on our efficient processes, innovative investment options, and a through description of the rules." Humphrey said, "Although the process isn't difficult, for many clients the process is new. We are here to help you take charge of your retirement future."
New Direction IRA, Inc., a self-directed IRA plan administrator with half a billion dollars in assets, also offers self-directed Health Savings Accounts and can be reached at 303-546-7930 or toll free at 877-742-1270. New Direction IRA teaches hundreds of free webinars and classes to educate new and experienced real estate investors and real estate professionals, so even a person with a small IRA fund can make big money for their IRA. Visit their website at NewDirectionIRA.com.