Karen Libin, KL Realty

Karen Libin, KL Realty

Investment professionals always advise to diversify your portfolio. The current dramatically fluctuating market conditions are an excellent example of why to do so! Real estate in Boulder County has historically been an outstanding investment, outperforming most US markets. Some people think real estate investments are inherently risky. But with planning and forethought, over time a Boulder County real estate investment may yield the largest returns in one’s portfolio.

Why use a self-directed IRA to purchase real estate

Self-directed IRAs offer the ideal opportunity for those looking to invest in rental real estate. News to many is that real estate can be held in an IRA or 401(k) accounts in the same manner as traditional securities. Furthermore, yielded income and equity will bear those same tax advantages.

Also consider this: Your IRA can borrow money to purchase real estate. Yes, your IRA can actually hold a mortgage up to 65% of the price of the purchase. Your IRA can’t borrow money to purchase stocks or gold bullion!  

Of course, there are rules associated with IRA real estate purchases. For instance, an IRA cannot purchase a property for the IRA holder or their family to live in. The intent is the property is purchased by the IRA for investment purposes. It is important you work with someone who understands the rules and can educate you so you are not participating in any prohibited transactions.

Self-directed IRAs help you invest for retirement

With employer-provided 401(k)s and other retirement plans, you may not have the option to choose where your funds will be invested, which reduces your control over the returns. Investing your savings in property now will add up to major gains by the time you reach retirement age, due to our incredible local market gains and compounding interest. Since your IRA owns the property, it collects all the rent and takes care of any maintenance. Rental income and equity go back to the IRA, growing your account.

Picking the right self-directed IRA to meet your real estate investment goals

Not every self-directed IRA will allow you to make investments in real estate, so it’s important to review this option before you pick one. Choosing the right custodian for your IRA is also as important as picking the right account type, since they can help you invest IRA in alternative assets of your choosing. A knowledgeable Realtor can connect you with trusted providers of IRA accounts, help you locate a suitable property, finalize the deal and help you through the closing.

By Karen Libin, KL Realty. Karen is the owner and managing broker of KL Realty, and has more than 29 years of experience in the Boulder County real estate market. Contact her at 303.444.3177, e-mail team@klrealty.net or visit klrealty.net.