If you’re familiar with multifamily real estate investing, this could be the ticket to your potential financial freedom in retirement. Investing in real estate with a self-directed IRA lets you take a more hands-on approach to growing your retirement funds. And, multifamily properties present great potential to help you build that critical wealth.
If you’ve invested in property in the past, you already have the knowledge. All you need is a real estate IRA to get started and a little thought as to whether these investments are a good fit for you.
Some people prefer buying rental homes one house at a time. If the income from one or two homes is all you need for a secure retirement, that’s great! But, consider not having to worry with several different properties in several different locations. Would you like to ease that burden a bit? That’s where multifamily real estate investing comes in.
The goal? Work smarter, not harder!
How Does Multifamily Real Estate Investing Work?
Multifamily real estate investing can deliver a consistent rental income stream housed under the same roof. Your choices range from duplexes, to apartment buildings, townhomes, and everything in between.
Multifamily properties usually mean easier management, as the rentals are in the same location. Additionally, improvements can be made at that one location to benefit your current renters and make renting more attractive to potentials (i.e., a fitness room, an on-site laundry room, or a playground). Keep your tenants happy, and they will stay!
Another important consideration: While you are unable to perform repairs yourself on your IRA-owned property, you still have to coordinate any repairs to be made by a third party. But, if you don’t want to worry about issues such as fixing toilets and dealing with tenants every day, you can hire a property manager to do so. While this is an additional expense, it can free up your time for more important things—like scoping out future lucrative investments.
Multifamily properties, if properly and creatively maintained, can present greater value and returns on your investment than a single-family residence.
Tips to Follow Before You Invest
No matter which investment property you choose, be sure to do your due diligence.
Request all financial records including: income and expense reports, service contract, copies of leases, rent rolls, etc. Why? Because this information can help you determine if the property is worth the investment. Comparing past income generated from the property to the expenses can help you judge if the asset is viable.
Additionally, keep in mind that your self-directed IRA must pay all expenses—so make sure the account has the capital to do so after your initial investment.
The IRS has strict rules regarding investment in real estate using your self-directed IRA. Surround yourself with a team of professionals such as the right real estate broker, administrator, financial advisor, and attorney to ensure that you stay on track for retirement investment success.
It’s also a good idea to use a self-directed retirement plan administrator who is experienced in multi-family real estate investing. You want to make sure your account operates within compliance of IRS rules and maintains its tax-sheltered status.
Advanta IRA has both the experience and the knowledge to help you navigate the addition of these assets to your self-directed IRA. If you want to learn more, give us a call. We’ll explain how multifamily real estate investing can help you build tax-sheltered wealth for your retirement for years to come.