By J.P. Dahdah, Founder & CEO of Vantage
Investing in properties can provide a great potential for returns and a steady income stream for your Self-Directed IRA. But like any investment, you have to watch out for potential risks!
What do you look for in a property? There are no consistent answers except for high rates of return. But what should you look out for, in order to avoid a bad investment? Here are early warning signs of an unworthy investment deal, during the first few stages of your deal-making.
1. The numbers are too good to be true. Some investments look good on paper but are not so attractive on proper investigation. So, be sure to exercise discretion when giving weight to net operating income or cash flow being represented by the owner. These figures, although essentially an educated guess, are merely projections made to entice a potential investment from your Self-Directed IRA.
2. It has been on sale for months. There are many possible reasons for this happening and often location is the problem. It’s no secret that location plays a huge role in determining the overall marketability and the expected returns on an investment opportunity, so don’t attempt to reverse a trend by investing your hard-earned money in declining neighborhoods.
3. The price doesn’t add up. Some properties may appear too cheap, but when you perform a site visit and inspection, you find that it’s worth less than you hoped for. There are troubled properties that are beyond rescue—and if they can be helped, the costs and effort may not be worth it.
Armed with this information, you can be assured that you are only investing your hard-earned Self-Directed IRA in the real thing!
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.