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APRIL 26, 2017 | AHWATUKEE FOOTHILLS NEWS
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Real estate becoming attractive option for IRA investments, lawyer says BY MELODY BIRKETT AFN Contributor
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here’s a growing trend toward real estate investing, according to a local attorney who has advised federal officials on retirement accounts and the tax code. “You’ve always been able to buy real estate with a retirement account — whether it’s an IRA or 401(k),” said attorney Matt Sorensen, adding people don’t do it or don’t know about it. Sorensen has advised over a thousand clients with self-directed retirement plans. He is a partner at KKOS Lawyers and an associate broker for Arizona's thirdlargest brokerage firm, which serves Ahwatukee. He’s also the author of the Amazon best-seller “Self-Directed IRA Handbook.” Sorensen also has been a consultant for the federal government on tax code changes and retirement account regulations. The Mesa lawyer is not all about crunching numbers. The father of three girls is an avid cyclist and races road, cyclocross, and mountain bikes. He also was a guitarist in a classic rock cover band called Spilbeedog. Sorensen said many investors don’t know about a real estate option for their money because of financial advisors. “Financial institutions sell financial products so they typically tell you what’s on the menu and you just buy what’s on the menu,” he said. “But in reality, retirement accounts can buy small business stock, real estate,
precious metals, oil futures…a lot of non-standard or unconventional investments.” Sorensen said with the internet, there has been a growth in the last 10 years in the number of companies that allow retirement accounts to buy real estate. With the memory of the housing market crash in 2008 still fresh in their memory, investors could be fearful of investing their retirement money in real estate, Sorenson said. “The stock market dropped, too, with the real estate market as well,” explained Sorensen. “If your retirement account was in stocks, you were affected either way.” Sorensen admits that investing in real estate isn’t for everyone. He doesn’t recommend investors abandoning the more typical retirement account investments unless they have expertise in real estate. “You can buy a bad real estate investment just like you can buy a bad financial investment like a stock or a mutual fund,” said Sorensen. “So you don’t want to jump into it, you want to get educated and maybe start out with a property first before you go buy five or six.” “Just like buying stocks and mutual funds, with real estate, some clients do really well, some do ok, some clients do bad,” he added. “So, it just depends on what they put it into when it comes to real estate.” Sorensen said some people are more comfortable investing in real estate since it’s a tangible asset. “You still own a piece of real estate
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(Melody Birkett/AFN Contributor)
Attorney Matt Sorenson says real estate can be a good investment for an IRA.
so it doesn’t go for broke or zero like maybe an investment in a tech start-up that could go to zero,” he said “There’s a floor on it so at least it’s going to have some value.” Sorenson said interested investors should do research or get into a real estate investing group where they can learn. “Self-directed retirement accounts are different than investing in real estate in your personal name or even investing your retirement account with your broker or through your 401(k) with your company,” said Sorensen. “The rules aren’t complicated, but they’re just a little unique and new.” A good idea is to seek out a professional such as an attorney or CPA, he said, because there are common things that are easy to make mistakes on.
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