Are you a new REALTOR® looking to maximize your retirement savings and grow your business? Do you have retirement savings from a previous career or job?
If so, a Self-Directed IRA (SDIRA) can be a powerful tool. You can transfer an old 401(k) or IRA to a SDIRA to invest in real estate. This is not a taxable event. These accounts allow you to invest in all types of real estate, penalty free.
As a real estate professional, you have a unique understanding of the housing market, allowing you to make informed investment decisions. You come across the good deals first! Understanding how self-directed retirement accounts work can help you stand out in a growing market of real estate investors.
Here are five reasons why REALTORS® with old 401(k)s or IRAs from a previous job view self-directed IRAs as an excellent tool to build retirement wealth and diversify their business to stand out.
5 Reasons REALTORS® Choose Self-Directed IRAs
- Leverage Your Expertise: As a REALTOR®, you possess a deep understanding of the real estate market. An SDIRA empowers you to put your knowledge to work and invest in properties that align with your investment goals.
- Build a Retirement Nest Egg: Real estate investments can provide a steady stream of rental income and appreciation, helping you build a substantial retirement fund.
- Diversify Your Portfolio: Adding real estate to your investment mix can help you diversify your assets and reduce risk.
- Passive Income: Rental properties generate passive income, providing a valuable source of revenue in retirement.
- Stand Out and Diversify Your Business: When you open your own self-directed IRA, you position yourself as an expert in the field. Many investors seek representation in real estate transactions, but not all agents are equipped to assist them with SDIRAs. By understanding this investment strategy, you can attract new clients and expand your business.
"I had an old 401(k) from a previous 34-year career. I wanted a retirement plan that was less risky than the stock market. After attending an IRAR webinar, I realized that self-directed IRAs were the perfect solution. Now, I'm investing in real estate through my IRA, building my future and legacy for my family.”
Maria Gutierrez, REALTOR® and IRAR Client
How does it work?
- Open a self-directed account at IRAR. This is a simple online process. Complete this form to take advantage of your NAR Member Benefits. All you need is an ID.
- Rollover Your Old 401(k) From a Previous Job or IRA: Moving the funds from your old 401(k) or IRA into a Self-Directed IRA is not a taxable event. You are just moving your account from one custodian to another without taking possession of the funds. You don't have to transfer all your savings. There are no minimum or maximum limits to open an account.
- Invest in Real Estate: Use the IRA funds to purchase real estate, such as rental properties, land, or even commercial properties. If you do not have enough funds for an outright cash purchase, there are investment strategies you can explore. You can even partner with other IRAs or personal funds, your IRA can get a non-recourse loan, or both!
- Enjoy Tax Benefits: The growth and income generated from your real estate investments are tax-deferred within the IRA because it goes back to the IRA. If you sell the property, there are no capital gains. All income and expenses are managed through the IRA.
How can this strategy help you fuel your real estate business?
One effective strategy is to focus on nurturing your existing relationships and identifying potential opportunities within your current clients. Many of your clients may be approaching retirement age and have accumulated significant retirement savings. Introducing them to the idea of real estate investing with an IRA can position yourself as a trusted advisor and generate new business.
If you are a real estate broker, it's crucial to familiarize your agents with this strategy. All IRA investors need representation when buying and selling their investments. Create your own specialized team of Real Estate IRA buyers and sellers (by the way... that doesn't exist yet!)
Leveraging your existing client base
Identify Potential Opportunities
Your database might hold millions in retirement dollars that you can use to invest in real estate. You can't keep selling your current clients a family home. However, you can offer them investment properties for their IRA.
Most of your clients are probably not aware that they can use the funds in the stock market to invest in real estate. Creating an educational campaign about using retirement funds for real estate investing can help you identify qualified individuals in your database. This campaign will provide valuable information helping you to focus on the hot leads.
You may also be helping clients that are considering relocating, potentially leaving an old job and 401(k) behind. Their old 401(k) can be transferred to a self-directed IRA to invest in real estate.
If you work with solopreneurs or contractors, they need a retirement plan too. Small business owners can benefit from tax incentives to save for retirement. If they have an account at a brokerage firm, they can move it to a self-directed IRA for real estate.
Understand Their Retirement Goals
Engage in open and honest conversations with your clients to understand their goals, including their interest in real estate. A client may have enough funds in their retirement account to purchase their future retirement home. They can't live in it while it's in the IRA. However, you can help them make a plan for when they retire.
Cross-Selling Opportunities
If your clients are interested in real estate investments in their IRA, consider cross-selling related services, such as property management, which is a good idea for self-directed investors to protect their IRA. This can provide additional value and strengthen your relationship with your clients.
Tips to get started
Due Diligence is Essential
Whether it's for you or your client, thoroughly research potential real estate investments to ensure they align with your financial goals.
Seek Professional Knowledge
Schedule a call with IRAR, your Self-Directed IRA benefits partner to help you navigate the different strategies for this type of account. Send clients our way, we will help them set up their self-directed IRA for a real estate transaction.
Understand the Rules
Because these accounts have many tax advantages, like any other IRA they have rules. Familiarize yourself with the specific regulations governing SDIRAs to avoid any penalties or restrictions.
Take advantage of the extensive range of educational resources available in our newsletter, which includes articles, guides, and expert insights to help you better understand and navigate the world of self-directed IRAs and real estate investing.
Bottom Line
By leveraging a Self-Directed IRA, you not only capitalize on your real estate expertise to build a prosperous future but also deepen your relationships with existing clients generating new business and word of mouth referrals.
To learn more about how a Self-Directed IRA can benefit your real estate career, schedule a free consultation with our team today.
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