Owners of self-directed IRAs can invest in distressed and other commercial real estate to diversify their retirement plans by including this alternative asset

ROSELAND, NJ, July 26, 2024 /24-7PressRelease/ — From suburban office parks to metropolitan office buildings to shopping malls, a lot of distressed commercial property is available on the market today. Jaime Raskulinecz, CEO of Next Generation Trust Company, said that the work-from-home and online shopping trends contributed to the emerging decline of commercial property tenancy pre-COVID and that the trend accelerated greatly during and after the pandemic.

“These factors have left commercial property owners with real estate ripe for investment by other parties—including investors with self-directed IRAs,” said Raskulinecz, whose firm provides account administration and custodial services for self-directed retirement plans.

She added that declining asset valuations and transaction volume have also contributed to the growing pool of distressed commercial properties in the U.S., as have loans that are facing maturity, pointing to a Wall Street Journal report that over $2.2 trillion in commercial mortgages is scheduled to mature by the end of 2027.

State of the U.S. commercial property market
In a recent blog article on her firm’s website, Raskulinecz cited compelling statistics regarding the state of commercial real estate in the U.S. today. Among them:

• Offices comprised 41% of the distressed sector’s value in 2023.
• By the end of 2023, the market value of distressed commercial properties was nearly $86B.
• The pool of potentially distressed properties was $234.6B at the end of 2023 with the multifamily market representing $67.3B and offices $54.7B.
• A CoStar report cited increasing delinquency rates among office building owners, from .57% in January 2023 to 6.28% in January 2024—the longest period of increasing delinquency rates since 2019.

“This all sounds dire for commercial property owners, but the current environment lays the foundation for savvy investors interested in commercial real estate, an alternative asset allowed in a self-directed IRA,” said Raskulinecz. “Real estate provides a long-term investment with returns derived through asset appreciation and the potential rental income from investment properties.”

In a recent Forbes Finance Council article, Raskulinecz shared information about investing in various types of commercial real estate using a self-directed IRA. The asset class includes office buildings, multifamily properties, warehouses and industrial properties, self-storage facilities, strip malls and shopping centers, and hotels.

“As with all self-directed investments, the income and expenses related to the assets flow through the account to avoid self-dealing, which will create a prohibited transaction and cause the account to lose its tax-advantaged status,” explained Raskulinecz. Next Generation executes the transactions and has custody of the assets on behalf of its clients.

A full explanation of how real estate investments are conducted in a self-directed IRA is available in the blog article and on the Next Generation website. To learn more about self-direction as a retirement wealth-building strategy, visit www.NextGenerationTrust.com.

About Next Generation
Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

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