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The high contribution limit allows account holders to fund the retirement portfolio much faster to invest in real estate or other capital-extensive investments.
Los Angeles, CA (PRWEB) October 27, 2014
Huffington Post issued an article on October 21, 2014 discussing the latest trend in real estate market, which is the growing market for upscale rental apartment. Younger generations nowadays tend to wait before purchasing their first home. Reasons include tightened credit market, life changes, unstable job market, and more. Tenants now prefer to rent upscale apartment with added amenities that they wouldn’t be able to afford if they buy their first home.
Due to this growing demand, investors are now presented with a great opportunity to capitalize on this trend. This trend can benefit plan holders of self directed 401k plans too, Sense Financial explains. As a self directed 401k plan, often known as Solo 401k plan, allows investment in real estate assets, rental properties can be a valuable addition to the portfolio.
There are many reasons why a self directed 401k plan can help plan holders to invest in rental properties. First off, Solo 401k contribution limit is among the highest of qualified retirement plan. In 2014, account holders can contribute up to $52,000. Those above 50 years of age can put in an additional $5,500 in catch-up contribution. The high contribution limit allows account holders to fund the retirement portfolio much faster to invest in real estate or other capital-extensive investments.
Not only that, with a self directed 401k plan, debt financing is allowed for real estate investment. An IRA account can be taxed with Unrelated Business Income Tax if a loan is used to fund a real estate purchase within the plan. With a self directed 401k, however, the use of non-recourse financing is permitted. This allows retirement funds to invest in larger properties that would be otherwise out of budget.
Rental properties have long been known as a good way to generate passive income. Adding rental properties is a safe way to diversify a retirement plan. Now with this growing demand for upscale rental apartments, investors can potentially grow their saving nest more securely and effectively.
Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.
To learn more about Solo 401k, please visit sensefinancial.com