Are You Secure? Three Protections of the Real Estate IRA

Posted on December 11, 2015 by

How secure is your retirement nest egg? If you own a Real Estate IRA, you might have an idea about what kinds of protections your retirement income has; but if you’ve never heard of the things, now’s as good a time as any to learn what your options are.

While many people associate an investment in real estate with speculation, the truth is that real estate can be a highly secure way to ensure that you have enough for retirement. Not only does real estate provide an opportunity for growth, but it’s capable of providing you with a stable income that you can use when you need it the most. And with the following three protections built right in to the Real Estate IRA structure itself, you’ll see that these investments can be much more secure than you originally thought.

Non-Recourse Loans with a Real Estate IRA

Many people are hesitant to invest in real estate through an IRA…until they realize that they can indeed borrow money for real estate purchases this way through non-recourse loans. Non-recourse loans refer to the types of loans in which the lender can’t come after the debtor, but only the property for which it loaned you the money. This protects your retirement and, indeed, your entire portfolio. Even if you default on the non-recourse loan, you’d only stand to lose the property.

While that might seem a small consolation to anyone who’s very risk-averse, it’s actually a great protection: this emphasis on non-recourse loans allows you to separate your real estate from the rest of your portfolio in the event of a default. This helps grant you piece of mind while your wealth builds.

IRA Tax Advantages Pair Well with Real Estate

Real Estate might not seem like it on the surface, but it’s actually an ideal match for the tax advantages of an IRA account. For example, the growth potential of real estate is a great way to ensure that you’re maximizing on the value of your IRA account. And because real estate can generate income and grow in value at the same time, it’s a rare kind of investment that’s good for both short and long-term success.

Because the IRS allows plenty of flexibility when it comes to real estate investments in a Real Estate IRA, you can also focus on a wider selection of real estate investments, including raw land, apartment buildings, townhouses, and the like.

Separating Yourself from Your Investments

If you like to keep your investments separate from your usual day-to-day finances, a Real Estate IRA is a good way to go about it. Not only does this type of IRA afford you the protections listed above, but you’ll find that it’s easy to live up to requirements like hiring a property manager for your real estate, as well as not living within the real estate in which you invest.

These might seem like basic requirements to some, but they’re also a great way to practice financial discipline. Keeping your portfolio separate from your day-to-day finances will help you to preserve a long-term view on your investments—and when it comes to retirement, having that long-term perspective can be the difference between success and failure.

If you want to learn more about the benefits of investing in real estate through a retirement account, be sure to view our guide to Self-Directed Real Estate IRAs. There you’ll learn about investment options, important rules, and more. And if you still have questions, make sure to call us at 1-866-7500-IRA(472) or continue reading more material here at AmericanIRA.com.

Jim HittJim Hitt is the Chief Executive Officer of American IRA and he has been committed to all aspects of investing for more than 30 years, using self-directed IRAs for his own investments since 1982. Jim’s forte is the financing and acquisition of real estate, private offerings, mortgage lending, business’s, joint ventures, partnerships and limited liability companies using creative techniques.

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