Whether you are a young adult skittish about investing in stocks or a baby boomer who wants a passive income in retirement, real estate investing in Denver is an appealing option. Using a self-directed IRA is one “thinking outside the box” option for people looking to purchase rental properties in Denver. According to a report by CNBC, many young investors want nothing to do with stocks. A UBS survey found the typical Millennial investor has half of his or her portfolio assets in cash. Owning stock in companies can be risky, especially if the company goes bankrupt. Baby boomers nearing or in retirement are also looking for a safer way to fund their retirement. A Fox Business article points out the advantages of using a self-directed IRA for real estate investing. The key is to hire a professional Colorado property management company after buying a rental property so that your asset is protected.
Investing in what you know
Financial experts often tell people to invest in what they know. Real estate as an investment is easy to understand. Clearly, people will always need a place to live. With the help of a Denver property management service company, you can benefit from their knowledge. Some of the good places to own a rental property include Highlands Ranch, Aurora and Washington Park. Even if you don’t know how to fix things for tenants, you can count on a property manager using licensed, insured and bonded companies to perform maintenance and do repairs on your rental property.
Putting your retirement dollars to work
If money sits in a money market or cash type position within a 401(k), Roth IRA or Traditional IRA, it’s not going to grow. Money invested in mutual funds can actually see a negative return if the market corrects or crashes. It’s possible to roll over money from one of these traditional retirement accounts into a self-directed IRA. You can then buy real estate. You are prohibited from using the self-directed IRA to buy real estate to live in yourself or for your children or immediate relatives. The idea is to generate passive income in the form of rental income that will supplement your retirement. Younger people can simply save their monthly profits.
Another benefit of using a self-directed IRA for real estate investing, according to Fox, is that all rental income and capital gains from the property is tax deferred. For people who end up in lower tax bracket in retirement, it’s a positive situation.