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Self-directed IRAs are the only retirement accounts that allow investors to pursue alternative investments. Among those alternatives, the most popular is real estate; a broad asset class that includes many different investment opportunities. This article describes some of those opportunities by exploring seven types of real estate that can be held in a self-directed IRA.
1. Single-Family Homes
Single-family homes are the most common type of residential property, and the most common type of real estate found in self-directed IRAs. These properties can be key to both short-term and long-term retirement strategies, with tenants bringing in regular rental payments to help boost savings.
2. Multi-Family Units
Multi-family units, such as apartment or condo complexes, are similar to single-family homes in that they can bring in regular rental income. However, because multi-family units are larger and bring in more tenants, they have greater potential to boost your savings. They can also require more maintenance, on the other hand, so be sure to consider all the angles before choosing an investment opportunity.
3. Tax Liens
A tax lien is an indirect way to invest in real estate, but remains a popular option. Investing in tax liens can generate consistent income, and they can also be resold at a higher value. Additionally, it is becoming more common to find tax lien auctions online, making this a very convenient investment option!
4. Mortgage Notes
Another indirect way to invest in real estate with a self-directed IRA is by funding mortgage notes. You could use your savings to be a real estate lender and help others purchase homes while also bringing in a profit for yourself.
5. Commercial Property
Commercial property is a broad category of real estate investment, including anything from a grocery store or office building to a billboard or baseball field. Commercial property is another way to generate rental income over the long term.
6. Real Estate Options
Purchasing real estate options is a good way to invest in real estate without actually having to deal with maintaining properties. By purchasing a real estate option, you can make a profit simply by taking advantage of a recovering market. This strategy can also be a great tool in building real estate knowledge and navigating the available opportunities.
7. Undeveloped Land
Undeveloped land offers great potential, acting as a blank canvas for investors to build their dreams. While this may not be a great choice for generating immediate rental income, these properties can be developed to produce a profit, sold to developers at a profit, or even sold to the government for use by the state.
To learn more about real estate investing with a self-directed IRA, set up a complimentary consultation with one of our trained professionals.