Why Physical Real Estate May Not Belong in Your IRA

For many investors, real estate is a cornerstone of building wealth. It provides potential appreciation, steady rental income, and diversification outside of traditional stock and bond markets. But when it comes to retirement accounts like IRAs, directly owning physical real estate often creates more headaches than benefits.

Before we dive into why, let’s acknowledge what makes real estate powerful in the first place.

The Power of Real Estate Ownership

Real estate can be a highly effective wealth-building tool for several reasons:

• Cash Flow: Rental income can provide steady, inflation-resistant income streams.

• Appreciation: Over time, real estate has the potential to grow in value, helping build equity.

• Leverage: Mortgages allow investors to control a larger asset with less upfront capital, magnifying returns when property values rise.

• Tangible Asset: Unlike stocks and bonds, real estate is a physical asset with intrinsic utility.

And perhaps most importantly—

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