Florida is blessed with mile after mile of ocean front property. If you include the Gulf coast, that number of miles more than doubles. Florida’s reasonable climate and fortunate geography (except for the occasional hurricane) makes it extremely unlikely that its position as a top tourist and retirement destination is likely to change any time soon. In fact, over the next few decades, Florida is expected to overtake New York as the third most populous state in the US.
Taken together, all of these facts point to Florida real estate as being a hot, growth market in the years to come. This has also, unfortunately, fueled intense speculation in the state with many investors making poor investment decisions in order to get ahead of the curve. Do not forget that for every mile of available beach-front property, Florida also has an acre of available swamp-land.
Many traditional IRA custodians do permit investors to purchase real estate on a limited basis but because of the necessary fees and expenses involved with real estate transactions your custodian may reap a windfall in additional fees. Such custodians often charge transaction fees every time your IRA pays an expense (in addition to the management fees, annual fees, and asset fees). Your best bet is to open a self-directed IRA for real estate transactions.
The Self-Directed IRA and Real Estate
By opening a self-directed IRA LLC, you gain checkbook control over your account so you can pay all the associated expenses directly without triggering custodial fees. You also gain the ability to move quickly on desirable properties, which is crucial to success in real estate. The ability to move quickly and circumvent oppressive fee structures makes the self-directed IRA a superior account for building wealth with real estate.
Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)
For more details on the Self Directed IRA go to www.nafep.com.