Diversify Your Retirement Account with Short-Term Real Estate Opportunities

Let’s start by explaining why short-term real estate is beneficial for long-term retirement planning.

Why Long-Term Retirement Accounts Should Include Short-Term Real Estate Investments

• Diversification. Diversifying is key when investing because spreading your capital among multiple asset classes helps protect your portfolio as a whole if one sector declines. The housing market does not necessarily correlate with the stock market, so residential real estate values can rise even when Wall Street stagnates. 

• Limited exposure to market volatility. Real estate is historically less volatile than the stock market, so even short-term real estate projects may be less susceptible to extreme highs and lows.  

• Potential for higher returns in shorter periods. Short-term investments are designed to work with fluctuating markets to maximize returns while conditions are favorable. This can result in higher returns than you would achieve by limiting yourself to long-term investments.

• Flexibility to reallocate capital more frequently. Short-term investments allow you to get in and out of a deal quickly, freeing your capital (plus any returns) to be reinvested into a new project so you miss fewer time-sensitive opportunities.

• Quicker compounding returns. The higher returns over shorter periods and more frequent reallocation allow you to reinvest proceeds more quickly to compound growth faster. 

• Hedges against inflation. Real estate values typically increase during periods of inflation, allowing you to protect the value of your retirement account while inflation is devaluing the dollar. 

• Tax advantages. Real estate investments offer impressive tax benefits, which can be combined with tax savings from investing through a retirement account for maximum effect.  
  
  

7 Short-Term Real Estate Investments Well-Suited for Retirement Accounts

1. Real estate notes. You can buy or originate promissory notes, secured by real estate, that mature in as little as one year.
2. Fix-and-flips. Purchasing a distressed property, rehabilitating it, and reselling it at a profit can provide exceptional return potential under the right market conditions.  
3. Wholesaling. Wholesaling is when you get a property under contract, then sell the contract to a buyer for more than the property’s purchase price. In a hot market, well-connected investors can complete these deals in under a month or two. 
4. REITs. REITs (real estate investment trusts) are companies that invest in income-generating real estate. You can buy and sell shares in a REIT similarly to buying and selling stocks. Some are even publicly traded on the stock market. REITs are required to distribute at least 90% of their taxable income to shareholders as dividends.  
5. Real estate-based ETFs. ETFs (exchange-traded funds) are bundles of stocks or bonds that can be traded throughout the trading day at market prices. You can invest in ETFs that specialize in stocks solely from real estate-related companies for a short-term real estate investment. 
6. Ground-up development. New construction projects, even multi-family developments, can often be completed in under two years, with strong return potential coming from the opportunistic forced equity of the new build. 
7. Short-term crowdfunding and syndication. Crowdfunding and syndication are similar real estate investment models that pool funds from multiple investors to finance a specific project (like a flip, development, or rental property). The pooled funds allow investors to buy into pre-vetted, high-value deals with low investment minimums. And these versatile projects are professionally managed by a real estate sponsor who handles every detail on behalf of the investors.  

How to Invest in Short-Term Real Estate Opportunities Through Your Retirement Account

• Open an account with a qualified custodian.
• Consider eligible short-term real estate opportunities. If you have selected crowdfunding or syndication, choose a platform that accepts investments from retirement accounts (like Gatsby Investment).
• Have your custodian place the investment on behalf of the retirement account. 
• Make sure all income and/or profits flow back to the retirement account.
• Follow all IRS rules, paying special attention to prohibited transactions to make sure you don’t accidentally disqualify your retirement account. 
  
  

Invest in Short-Term Real Estate Opportunities with Gatsby

1. Register for a free account at GatsbyInvestment.com.
2. Choose either “Individual” or “Retirement Account” as your investment method when prompted.
3. Enter the relevant information about your identity and/or retirement account. 
4. Complete the online accredited investor verification (Gatsby covers the cost for you), as required by the SEC. 
5. Explore available investment opportunities and choose the project(s) you want to invest in.
6. Fund the investment yourself (or have your custodian fund the investment on behalf of your retirement account if applicable.
7. Monitor the progress of your project through the personalized online dashboard.