At this point in time, I’d say we have two different investors in the Charlotte real estate market: those who are actively investing and those who are sitting on the sidelines.
With market values at their lowest level in years, along with a saturation of foreclosures on the market, many are aware of the advantages to invest now as the opportunity to benefit from this cyclical real estate market will assuredly not be around forever.
Even though investors are aware of this fact, many may either lack the real estate experience needed or may not be able to fully invest the time and energy required for success. But what if there were a way to take advantage of this buyer’s market and capitalize on the foreclosure crisis by investing passively in properties without having to invest the time and energy?
Well, for all investors that are disappointed and frustrated with the volatility of the stock market and low bank certificate of deposit returns of 1.5 percent to 2.2 percent, there is an alternative, one that the majority of investors are unaware of as being an viable option.
By investing in real estate as a private money investor, you can earn a 6 percent to 10 percent annual percentage rate while having your investment secured by a “real asset” that is worth more than the money you have invested, something you won’t find on Wall Street.
By investing in income-producing properties, you can enjoy solid returns that are both secured and insured as well as being tax deferred.
One of the greatest benefits of investing passively in income-producing properties is that the investments are individual retirement account-eligible. The majority of investors don’t realize that an IRA will allow them to invest passively in real estate, which can keep them off that real investing sideline and allows them the opportunity to take advantage of the foreclosure explosion that has swept across the country, Charlotte being no exception.
With these types of investments, the owner typically receives the deed to the property or is registered as the first lien holder at the county courthouse.
Properties can be either residential or commercial. The term the investment is held for can be months or years and can also offer the investor options on how to receive interest on their money, such as monthly or quarterly interest payments.
So why haven’t more investors looked into this as an option? Well, as mentioned earlier, many didn’t even realize it was an option, at least not for an IRA.
Most custodians that offer IRAs, such as banks, typically focus on mutual funds and CDs with the reason being that they have a vested financial interest in having you select those particular investments from them. And because of this focus, there is a misperception that these are your only investment options. However, a self-directed IRA allows you to diversify your retirement plans into assets such as real estate in addition to traditional investments such as stocks and mutual funds.
Another reason may be that investors think they have to reach an accredited investor status before being able to invest in real estate. That simply isn’t the case, as most private money investments can start in the neighborhood of $50,000.
So what better way to take advantage of the current mortgage foreclosure crisis by investing passively in the Charlotte real estate market while allowing all management issues with the property to be handled by a professional property management company?
It’s definitely an option worth exploring for every investor out there as it truly diversifies your investment portfolio. Think of it as a hands-off approach to taking advantage of the current real estate market while enjoying solid and secured returns on your investment.
Plus, by investing in properties right here in the Charlotte market, you are investing in an area you already know and understand.
Rory Cummins is a Charlotte landlord and real estate investor and the operator of charlotterealestateloop.com.