How to improve IRA returns by investing in real estate

If you’re looking for a guaranteed IRA interest, you need a few facts. The only return that is accompanied by a guarantee is a government bond or a federally insured certificate of deposit. The problem is that the returns on these types of investments are very low. Three percent interest is all you can hope for. There are much better options for financing your retirement.

Advisors always recommend that you use your tax-protected retirement account for your most profitable investments. That may seem like common sense, but some people don’t think of it that way. Real estate investors use their retirement accounts to finance the trades they believe will generate the most profit. That way, they keep more of their earnings in their pockets. It’s not guaranteed IRA interest, but it’s a hefty return.

If you didn’t know you could use your account to invest in real estate, you may want to change custodians. You may only transact real estate through a self-directed account. Even some self-directed custodians don’t offer the option.

Numerous success stories have been posted by custodians that DO allow the option. One client turned $20,000 into $1.2 million in just three years. If you had chosen a Guaranteed Interest IRA with a Certificate of Deposit that earns 4.07% (the highest in the country today), you would have $22,597 today.

There is simply no way to finance your retirement that way. It’s barely enough to keep up with inflation. I realize that some investors are “risk averse”, but what risk is really involved in the real estate market? As long as you’re not buying Florida swamp land or investing in a new, untested development, there’s very little risk involved. Investors typically start by looking at homes that need repair or potential buyers that need financing. Both are easy to find right now.

Due to numerous foreclosures, many homes have been left in a “shabby state.” Sometimes it is possible to pick them up for a small percentage of their fair market value, do a little work, and resell them for a large profit. Also due to numerous foreclosures, banks have tightened their lending practices. There are a lot of people out there who “want” to buy a home, but can’t qualify for the higher credit standards that banks are applying now.

Eventually, they may qualify for traditional financing, but they want a place to live “now.” They can jump into a “rent to own” contract. In lieu of guaranteed IRA interest [http://smart-ira-investing.com/] you’d get from a certificate of deposit, your account receives rental income for the entire year, and then the proceeds from the final sale.

This is how account holders are turning small initial investments into millions of dollars in a relatively short time. This is a particularly good investment option for those of you nearing retirement age. It takes ten years to turn $20,000 into $30,000 with IRA guaranteed interest rates. There’s no way you can make it a million. Think about it.