You’ve likely heard that a well-rounded portfolio, one that can accumulate substantial wealth over time, may include real estate. One might have visions of grandiose hotels, “fixing and flipping” a house or duplex, or running a vacation rental at the beach. Whatever your vision, real estate can be a great addition to your portfolio. It may surprise you to know that real estate can be an alternative investment in your portfolio, without becoming a landlord, owning property outright, or giving up your nights and weekends. It can be done through passive investing in your Traditional or Roth IRA, or 401k retirement accounts. Or, if you’d like to really be involved, you can actively invest and own property directly through those same retirement accounts.
If you are like many people, you have pre-tax money put into your retirement accounts through a direct deposit by your employer, or perhaps you write a check or transfer post-tax funds from your checking to your Roth account. Retirement accounts are one of the greatest accumulation vehicles for wealth for many Americans. The question is, how can we unlock the value in these accounts to invest in real estate? These types of alternative investments are likely not offered in your employer’s retirement plan. Alternative investing, even passively, still requires knowledge and vetting of the various types and offerings to help you make a good decision. Employers typically do not have the resources to help you do this. Even if your employer plan is held by one of the bigger commercial custodians, such as Vanguard, Fidelity, State Street, or others, the representatives for those firms likely do not have the wherewithal to assist you with alternative investments. We can! If you would like to add real estate to your portfolio, we can help you further diversify with alternative investments that align with your risk tolerance and investing horizon.
Investing in real estate generally falls into one of two categories…