by Daniel Ortega, Head of Retail Sales of Vantage Self-Directed Retirement Plans
For many Americans, these last two years have been a foggy blur with what seems like a new COVID variant becoming prevalent every few months and an outlook that the pandemic isn’t ending any time soon. For some, that can be a depressing point of view, but I’m a glass half-full kind of guy and my optimism is telling me that better times are ahead. For example, through all this chaos going on in our country, home values have increased nationwide, and the housing market has gotten extremely competitive. A recent article from CNN confirmed that even with the COVID-19 pandemic expected to carry on into 2022, housing prices are set to continue to increase, which is great news for real estate investors that made purchases prior to 2020.
According to a report done by ABC-15, the Phoenix market is trending toward a 15% appreciation in 2022. For buyers of single-family homes or residential apartment complexes that might not be welcoming news to your ears, but for investors trying to decide how they get in on the action, there may not be a better time to get into the real estate game than buying raw land.
I recently had the opportunity to speak with a prominent land developer in the valley and here are some gems from our conversation.
Daniel: What do you think about our current Phoenix real estate market?
Developer: I love it! For a guy that makes a living on purchasing land at a reasonable price and selling it a premium. I love it.
Daniel: Is there any land in Phoenix left to buy?
Developer: Absolutely, Phoenix is consistently ranked as one of the nation’s largest cities, and with more companies relocating or building facilities here, the increase in population isn’t slowing down any time soon.
Daniel: I agree with your assessment, but most of the places being developed are either in the far west or far east parts of the valley.
Developer: Still within the Phoenix Metro area! With the new loop 202 connecting the east and west valley getting around in the city has never been easier. Therefore, buying land in the Laveen, Buckeye or south Chandler-Gilbert areas is probably the best investment one could make right now as those areas are going to see a large increase in commercial business within the next 3 to 5 years, which will lead to continued real estate development.
As our conversation continued, I reminded him on how purchasing land with a Self-Directed IRA could help offset the gains when the land is sold. The strategy explained by this developer and the structure of a Self Directed IRA are a perfect match, especially when you consider that most land investments require the investor to be patient. In other words, land investments can really pay off as a long term hold so buying this type of real estate asset within a Self-Directed IRA aligns well with the investing objective. Illiquid holdings are best to be held by illiquid structured investment vehicles, like an IRA. Since you must reach the age of 59 ½ before you eligible to take money out of an IRA without incurring a tax penalty, a Self-Directed IRA can help support long-term real estate investments that need you to be patient to reap the returns you are projecting to receive.
If you’ve followed Vantage throughout the years, you know we take pride in educating real estate investors on the advantages of Self-Directed IRAs. So, before you close on your next real estate opportunity, visit our website at www. VantageIRAs.com/events and register for our next workshop, Set Your IRA Free, to learn how you can get the process rolling to be a landowner.
On behalf of everyone at Vantage, happy new year and as always, happy investing!