12A — August 28 - September 10, 2020 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
Next Generation Services, LLC Investing in Private REITs with a Self-Directed IRA
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real estate investment trust (REIT) is a com- pany that invests in/
public, traded or listed REITs), there are also private REITs; like their stock exchange-trad-
vs. private REITs is that the latter are not as susceptible to demand-driven price volatility
grows in value over time. Real estate is a popular hedge against inflation/stock market volatility and enables investors to diversify their portfolios. REITs require a relatively low minimum investment to get started. Renters are on the rise— and so is rental property popularity Multi-family housing rep- resents a large portion of real estate investments, thanks to an increase in the renter population, which has been in growth mode for a few years
and continues to rise. There are several reasons for this: Baby Boomers are downsiz- ing into amenity-rich luxury rental apartments; the 2015 Census Bureau projected that by 2020, five million Baby Boomers will make an apart- ment their next residence. Millennials are delaying home ownership and looking for smaller domiciles in more urban, denser areas; they value the flexibility of apartment liv - ing and are paying off student debt. Right behind Millennials is Gen Z, whose members have started entering the rental market. Investing in private REITs with a self-directed IRA As you know, a self-directed IRA can include many differ- ent types of nontraditional investments, with real estate being the most popular class of alternative assets within these plans. When your self-directed IRA invests in a private REIT, all income and expenses related to the asset flow in and out of the retirement plan. However, private REITS are not the only type of real estate in- vestment you can include in a self-directed IRA. Other types of real estate investments might allow you to partner your self-directed IRA with another buyer, transact a “fix & flip” and take the profit on the sale of the property, or buy and hold the asset, so the IRA earns tax-advantaged rental income over time. After you’ve researched a REIT or any other real estate investment you’d like to in- clude in a self-directed retire- ment plan, it’s time to open and fund your account. At Next Generation we not only provide comprehensive trans- action support, we also provide client education about invest- ing in real estate and other alternative assets through a self-directed retirement plan. Of particular importance is understanding prohibited transactions and disqualified persons as defined by the IRS. If you have questions re- garding this strategy, don’t hesitate to contact Next Gen- eration at NewAccounts@ NextGenerationTrust.com or call 888.857.8058. Alternative- ly, you can schedule a compli- mentary educational session with one of our knowledgeable representatives. MAREJ
owns and usually operates all types of income-producing commercial real estate: multi- family housing/apartment buildings, student housing, re- tirement and senior communi- ties; warehouse and industrial properties; retail centers, hos- pitality, and office buildings. In order to qualify as a (REIT), the company must file with the SEC and meet certain SEC requirements. Although most REITs are publicly traded on stock exchanges (known as
REITs provide access to dividend-based income in the short term, and long-term return on investment as the property grows in value over time.
ed counterparts, private REITS must register with the SEC and are subject to the same IRS regulations. That includes the requirement to return 90 per- cent of their taxable income to shareholders annually. One big difference in public
as public REITs, whose value fluctuates daily; private REITs are valuated annually. Why invest in a REIT REITs provide access to divi- dend-based income in the short term, and long-term return on investment as the property
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