Leveraging Commercial Real Estate For Retirement

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Commercial real estate is one of the most popular non-traditional asset classes for retirement investing. An investment in real estate has the potential for long-term appreciation as well as consistent cash flow. Combined with the potential tax advantages of a qualified retirement plan, an investment in real estate may present a compelling case for building a sufficient nest egg.

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Retirement funds and REITS

A simple way to invest in commercial real estate is through a Real Estate Investment Trust (REIT). REITs are a diversified basket of commercial real estate and can have the objective of appreciation and cash-flow, without any of the day-to-day property management responsibilities for the investor.

The RealtyMogul platform allows investors to use retirement funds from their Self-Directed IRAs (SDIRAs) to purchase shares in public, non-traded REITs. By allocating to real estate, investors diversify their portfolios and potentially generate income that can grow and compound within a tax-sheltered IRA over time.

REITS: A Retirement Investment Tool

REITs are known for their objective of regular, passive income, because they are required to distribute at least 90% of their annual taxable income to investors on a yearly basis through distributions. Another characteristic of commercial real estate is the potential to protect against inflation. This benefit arises because property values and rents have historically been correlated with growth in inflation.

DIVERSIFICATION

Real estate has a low (or negative) correlation to other asset classes, which means REITs may shield IRAs from market volatility.

PASSIVE INCOME

REITs are designed to generate monthly or quarterly distributions, which investors may elect to automatically reinvest.

LONG-TERM GROWTH

Over time, real estate has the potential to grow in value and may even outpace inflation.

Disclosure

Comparisons are shown for illustrative purposes only and do not represent specific investments. Equities are represented by the total return of the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the NAREIT Equity REITs Index, both of which are subject to market volatility risk. The S&P 500 Index is an unmanaged, capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries and is adjusted to reflect dividends paid. The NAREIT Equity REITs Index is an unmanaged, market-weighted index of publicly traded, tax-qualified REITs traded on the New York Stock Exchange, the American Stock Exchange, and the NASDAQ National Market System. The NAREIT Equity REITs Index reflects dividends paid. The S&P 500 Index and the NAREIT Equity REITs Index shown in this chart are meant to illustrate general market performance; it is not possible to invest directly in an index. The returns shown above are net of all fees and expenses. The performance of the indices has not been selected to represent an appropriate benchmark to compare to RM Income REIT or RM Apartment Growth REIT’s performance, but rather is disclosed to allow for comparison of RM Income REIT and RM Apartment Growth REIT’s performance to that of well-known and widely recognized indices. A summary of the investment guidelines for the indices presented are available upon request. Past performance is not a reliable indicator of future results.

Investing in REITS for retirement

Over the long-term, REITs compare favorably to traditional investment indexes, such as the S&P 500 and U.S. bonds. When distributions are automatically reinvested and allowed to compound over time, a retirement portfolio has the potential to generate long-term tax deferred growth.

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Strategic approaches to retirement

Many investors would agree that successful retirement planning requires a holistic strategy – one that seeks both income and appreciation. To accommodate this approach, each of the following REITs offer a different objective.

RealtyMogul Income REIT: Diversified

The Income REIT is a public, non-traded REIT that is focused on providing monthly income to investors through debt and equity investments in a diversified pool of commercial real estate property types including multifamily, retail, office, and industrial.

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RealtyMogul Apartment Growth REIT: MULTIFAMILY

The Apartment Growth REIT is a public, non-traded REIT that is focused on providing investors with the opportunity for capital appreciation by investing in value-add multifamily apartment buildings with both preferred and joint-venture equity.

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Get Started Quickly

Step 1:
Create your account

Complete your RealtyMogul.com account, and share your investing goals with us. The process is quick and simple.

Step 2:
Select your investment

Next, select the Income REIT or the Apartment Growth REIT for your investment. Under “ownership information” select “retirement”.

Step 3:
Invest in minutes

The Member Relations team will coordinate with you and your chosen SDIRA custodian to either process your investment into the Income REIT or the Apartment Growth REIT directly from your existing SDIRA or assist you with transferring funds to a new SDIRA custodian and then with completing the investment.

Step 4:
Track your investments

Once your investment is place, you have full visibility into its performance in the RealtyMogul dashboard. Track your total current invested value and distributions.

Frequently Asked Questions about Retirement Investing

How do I get started?

Begin the process to set up an SDIRA account by clicking “Invest” on the Income Reit or Apartment Growth REIT page. You then select “Retirement” and choose to either open a new SDIRA with our preferred custodian, Equity Trust, or use an existing SDIRA.

Can I automatically reinvest my distributions?

Yes. If you elect to participate in our distribution reinvestment plan (DRIP), any distributions are automatically reinvested, giving you the potential to realize a compounded return.

Will the distributions I receive be taxable as ordinary income?

REIT distributions may be treated as ordinary income, capital gains, and/or return of capital for tax purposes, each of which may be taxed at a different rate for different investors. As each investor’s tax considerations are different, it is recommended that you consult with your tax advisor. You should review the section of the offering circular entitled “U.S. Federal Income Tax Considerations,” including for a discussion of the special rules applicable to distributions in repurchase of shares and liquidating distributions.

Can I invest in RealtyMogul REIT offerings using an SDIRA (Self-Directed IRA) or other type of retirement account?

Yes. We accept retirement funds into our REIT offerings so you can use your Self-Directed IRA (“SDIRA”) to make investments.

What is a self-directed Individual Retirement Account (SDIRA)?

A self-directed Individual Retirement Account is a retirement account that may provide investors with certain tax benefits for retirement savings. Self-Directed IRAs are held by a trustee or custodian that permits investment in a broader set of assets than is permitted by most IRA custodians, such as real estate.

How can I fund my Individual Retirement Account prior to making my investment in a RealtyMogul offering?

You can fund your IRA account in three different ways:

Transfer retirement funds from your current custodian
Rollover funds from a 401(k) or another qualified plan
Make a contribution within the annual limits defined by the IRS

What types of accounts are eligible for transfer into a self-directed IRA?

You can transfer funds from a 401(k), 403(b), 457 or other qualified retirement plans into a self-directed IRA.

What is a custodian and which custodians may I use?

A custodian is defined as a bank, federally insured credit union, savings and loan association, or an entity approved by the IRS to act as a trustee or custodian. RealtyMogul works with a variety of custodians, including our preferred custodian, Equity Trust.

Can RealtyMogul support required minimum distributions?

As REIT offerings are illiquid securities, there is no guarantee that there will be annual distributions in an amount that would cover your required minimum distributions. Therefore, you will need to look to your other retirement fund investments to meet your required minimums. Not all retirement accounts require minimum distributions so please check with your tax adviser to determine if this is a requirement for you

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Leveraging Commercial Real Estate For Retirement

Strategies for Diversification and Passive Income