A challenging fact of Self-Directed IRAs is that the standards of compliance due diligence have become multiplied exponentially when attempting to buy real estate with your IRA retirement savings. Not only do you have to navigate a myriad of strict prohibitive transaction requirements mandated by the IRS, which could cause your account to lose its tax-preferred status, but the current downturn has created additional challenges for SDIRA account holders as well.
Student housing sector demonstrates one of the best passive investment solutions for SDIRA account holders.
Consider these obstacles. The IRS requirement that you use only non- recourse loans is a deal-breaker. Since the financial crisis has occurred, practically no banks are making non-recourse investor property loans. In general, these loans simply no longer exist. If you can find one of these rare birds, the required equity cash down payment is 30% or more. As an individual SDIRA investor and having no investor financing available, the only way to purchase real estate is to pay all cash. The result is that SDIRA real estate investments have now become a very limited option for most people. Namely this is due to the low national average savings amounts in SDIRA accounts, which is approximately $40,000.00. Transactions in real estate markets that have high barriers to entry, such as metro California cities, are out of contention. Regardless of the amount of funds in your SDIRA you can participate in real estate ownership too!
The above SDIRA real estate “do-it-yourself” investment challenges can be overcome by investing in boutique student housing. As the old saying goes, there is “more than one way to skin a cat”. Whether you have a low SDIRA savings amount and would like to own real estate or you are in the position to acquire income generating real estate now for the benefit of your IRA but you can’t find a non- recourse loan, there are alternative niche real estate investments which can meet all or most of your real investment objectives. In today’s market, alternative real estate investments provide the best solution for SDIRA account holders. When cost averaged, you will experience the benefits of Self-Directed IRA real estate investing and none of the “do-it-yourself” pitfalls.
The student housing real estate market has recently come into its own as a bona fide real estate sector. For Example: the first American student housing REIT went public in June 2004 and the first National Student Housing Conference took place in February 2008. A main reason for this market acceptance trend is student housings historical recession resistant qualities and a bourgeoning college age population. When operated efficiently this industry has a better return on investment (ROI) when compared to conventional apartments or office buildings. The primary reason for the higher return is due to renting “by- the- bed” not by the unit. Additionally, unique ancillary sources of revenue serve as drivers for increasing net operating incomes (NOI).
Top reasons to look into a student housing real estate sector investment with your IRA:
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
– – Higher NOI than many other real estate sectors
– – Safety of principle due to prime, revenue generating student housing properties
– – The rental rates for the students rise in proportion to tuition, which serve as
an automatic hedge against inflation
– – Investment diversification with added flexibility to maximize occupancy
– – Higher sale prices than conventional apartments
– – More resilient/less tied to broader economic trends than the rest of the real
During your sector evaluation process, a part of your due diligence needs to be consulting with a specialist. A specialist in this area has significant value. Mr. Shawn Loddy is the Head of Investor Relations for Dwell Trends Advisors, LLC a San Diego based student housing expansion company. Shawn holds FINRA licenses 6 & 7. He is knowledgeable about investing in the public and private equity student housing sectors. Shawn specializes in helping small and medium sized business retirement plans access this sector, as well as private equity funds and accredited investors. Contact him to discuss the various options for investing and profiting from the upcoming 2010 to 2013 tidal wave of bank foreclosures through student housing. For more information visit www.dwelltrends.com.