Ready for Retirement?

Denver Realtor gets Retirement Investing in Real Estate

There are a number of companies in Denver that can assist you in using your IRA to purchase real estate. And when you look at the potential return it is a pretty good deal. Over all the steps to get your IRA funds (Roth or regular) into a true self directed IRA with a qualified administrator is just a rollover or transfer. Then using a bank that will accept a non-recourse loan with 25-35% down is the next step. It is done all the time. Want to look at prospective rental property in Denver, or somewhere else in the country....let's talk! But first read on...

It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?

The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.

Investing in a mutual fund has more risk but also a greater opportunity to earn a higher rate of return. An estimated 7% return would project an accumulated value of $99,713.14.

Using the $35,000 for a 20% down payment and closing costs on a $150,000 rental home could realize much higher proceeds. Using a familiar investment analysis spreadsheet, the $35,000 could grow to a future wealth position of $153,302. This analysis considers leverage, 3% appreciation, re-investing cash flows, 7% sales expenses and paying applicable taxes which the previous examples do not.

The rate of return on these three examples are 2% for the CD, 7% for the mutual fund and a comparable 14.19% return on the rental. As the rate of return increases on investments, additional risk is reasonable.

Most people are much more familiar with homes than they are with mutual funds, bonds and other similar investments. The same REALTOR® who helped you with your home can help you invest in a rental home.