Why Real Estate
Direct Ownership of Real Estate in Self-Directed Retirement Plans
One way to invest in real estate through a self-directed retirement plan is to own property directly. This means you can purchase a rental property or a vacation home and use the rental income or appreciation in the property's value to fund your retirement. With a self-directed IRA, for instance, the rental income generated from the property can be tax-deferred or tax-free, depending on the type of IRA used for investing. In addition, the sale of the property won't generate capital gains, since the proceeds of the sale will go back to the IRA
Investing in Real Estate Using Non-Recourse Loans
Another way to invest in real estate through a self-directed retirement plan is by purchasing a piece of real estate using a non-recourse loan. If your retirement plan doesn't have enough assets to buy a property outright, it can borrow money through a non-recourse loan. However, the property must qualify for the loan based on its own merit, as the retirement plan owner cannot use their credit to obtain the loan. While the taxable portion of the income generated from the property is called Unrelated Debt Financed Income (UDFI), Solo k's are exempt from UDFI, while IRAs are not.
Investing in Real Estate through REITs and Private Real Estate Funds
Investing in Real Estate Investment Trusts (REITs) and private real estate funds are also viable options for investing in real estate through self-directed retirement plans. REITs are companies that own and operate income-generating real estate, and buying shares in a REIT is a great way to invest in them. Private real estate funds, on the other hand, are investment vehicles that pool together money from multiple investors to buy and manage a portfolio of real estate properties. Both options can offer potential returns, including regular income and capital appreciation, depending on the specific fund or REIT and the properties it invests in.
Steady Cash Flow
Access deals that are not available to the public by partnering with a reliable syndicator. This approach gives you the best economics and enables operators to focus on what they do best.
Private equity investments can generate returns without any input from the investor. The key is to choose the right private equity funds to match your risk tolerance, businesses and selling them...
Long Term Security
When you invest in a private equity fund, you have the opportunity to have a diversified portfolio. In addition, most sponsors will own multiple businesses...
Most private equity firms require investors to commit their funds for ten years. This gives the fund a chance to turn a profit even if any of the businesses hit a rough spot. Longer-term investments usually have a higher rate of return...
Private equity funds offer investors the potential to earn higher returns than stock exchanges, with an average return of 48% over the last 20 years. This makes private equity a popular investment choice for those looking to maximize their earnings potential.
Protection Against Inflation
Private equity can be a great way for investors to get involved with startups and small businesses, as it allows for a long-term view and can help companies access capital that they may not be able to raise through traditional means.