4 Things to Keep in Mind When Buying Land in an IRA
Use of the Land
The land must be for investment purposes only. IRS regulations prohibit personal use of the land.
You can own 100% in your retirement account. Or, you can split ownership with yourself using personal funds or another investor.
Midland is not a lender. What we do is help investors use their funds creatively, including retirement funds, to invest in real estate.
Long-Term Plans for the Land
If you are looking to buy and hold the land, you probably want to open an IRA with us. If you are looking to develop the land, you may want an LLC. We do both!
Types of Land Investments
Raw Land Investments
Your IRA purchases the land, and you can resell when property values increase, providing a good return. There is the potential for economic growth, urban sprawl, or large corporations to build nearby. Any of these would increase the land’s value.
Your IRA hopes to receive the same gains as with long-term holdings. However, these gains happen in a much shorter timespan. As with long-term options, these holdings require minimal effort. The cost of maintenance or upkeep is low.
Development and Subdivision Potential
These investments can be tricky but lucrative if the timing of the purchase and potential returns align with the stars. As this category indicates, land can sell in parcels rather than one giant tract. Savvy investors might be able to obtain significant returns using IRA funds to invest in land.
Farmland is generally considered a viable investment vehicle. It’s potentially a fixed resource that provides the means to grow and harvest crops, raise cattle, chickens, and other critical food sources. The risk in these investments can be minimal and provides stable returns. Farmland investments offer a hedge against inflation and stock market assets.