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Make a Positive Impact in Your Community with Social Investing

Learn how you make an economic impact to a local community when you invest in real estate.

Posted on December 22, 2023 by Sarah Shellam

Social Investing

Imagine a world where you can make money, help your community, and have fun at the same time. Sounds too good to be true, right? Well, it’s not. One of the best ways to make a positive impact in your community in multiple ways is social investing, which can be done by investing in real estate with a self-directed retirement account.

As we know, real estate investing with a self-directed IRA can help you create wealth, provide tax benefits, and generate income, but did you know that there is also a very important social aspect of self-directing your investment dollars that can help your community? As an investor, we have so many choices when it comes to investing in a real estate asset. How active or passive do I want to be? What neighborhood do I want to buy property in? Who should I hire to help me fix it up? How can I grow my account while also making the best deal for all involved? These are all important questions to consider, but what you might not realize is that the answers to these questions actually have more of an impact than you can see from the surface.

Contribute to Economic Development with Social Investing

One of the ways you can make money and also make a positive impact on your community is by buying rental properties. When you buy a property in your neighborhood, you are not only improving your own financial situation, but also contributing to the economic development of the area. You can use your money to renovate, rent, or sell your property, and create more opportunities for other people in your community. Investing in real estate is not only a smart financial decision, but also a way to show your love and care for your community. You do more than just help grow your own wealth.

Additionally, when you hire local contractors, you create job opportunities for others. You’re creating opportunities for people who help you maintain and manage your properties, such as cleaners, landscapers, plumbers, electricians, general contractors, and more by giving them a way to generate income for not only yourself, but them as well. When you buy, renovate, or manage a property, you are hiring local contractors, workers, and other industry professionals who depend on your business in your area. You are also generating rental income that can be spent or invested in the local area, creating more economic opportunities for employment and entrepreneurship. This helps support local businesses and create a healthy community.

Preserve the Character and Culture of Your Community

Social investing also allows you the ability to improve the quality of life for yourself and others by making your community more attractive, safe, and vibrant. This helps to preserve the character and culture of your community, as well as its environment and natural resources. By purchasing real estate investments in your community, you are contributing to the improvement of the infrastructure and public services that make your area more livable and attractive. And what does that do? It creates an enjoyable living environment that fosters social interaction and community spirit.

You are also supporting causes and organizations that matter to you and your community, such as charities, nonprofits, or local events. With your SDIRA investment, you are paying property taxes that fund schools, roads, parks, libraries, and other amenities that benefit everyone. This attracts more customers and visitors to your area, who will spend money at local shops, restaurants, and entertainment venues. This boosts the revenue and growth of local businesses, as well as their ability to hire more staff and expand their offerings. You are making a difference in the lives of people around you, as well as your own.

By investing in a home in your area with your self-directed IRA, you are not only making it more comfortable and enjoyable for yourself, but you are also enhancing its curb appeal and functionality. When you do this, you improve the appearance and functionality of your property, which adds value to the neighborhood and encourages other owners to do the same. This can have a positive impact on the neighborhood, as it can inspire other homeowners to follow your example and upgrade their properties as well. A well-maintained and attractive neighborhood can increase the value of all the homes in the area and create a sense of pride and community among the residents.

Let’s look at an example. Say you want to use your money to purchase a fix and flip property, one that is all beat up and run down. If you are active, you might say to yourself, “I can use my SDIRA money to fix up the property. I’ll use a local contractor that is in my neighborhood. I know that he uses local materials, too, because of the business relationship I have with him already.” This is the perfect example of an investment being done in a way that helps make a difference in your local community.

Create the American Dream for Others by Lending

Maybe you prefer not to be active. You don’t want to have much involvement in the deal, like having to locate a contractor to fix up the property or spending time finding a renter or buyer, but you don’t mind using your IRA money to be passive. As an investor, you have many options when it comes to financing. You can either use bank money to fix it up, or you can use private money that you lend to a local real estate investor that then goes and follows the same model. It might sound silly, but you are helping create the American Dream for many when this strategy takes place – all while earning above average returns that you can use to build wealth for retirement in your self-directed IRA.

For some, this is one of the most important benefits of being able to self-direct. Instead of casting a wide net over a large variety of investments – some that might not align with you – social investing in your local community helps you reduce the possibility of investing in something that doesn’t align with your moral compass, political beliefs, and so on.

Investing money in your community by investing in real estate is a win-win situation for both you and your community. Achieve financial success while also making a positive social impact. Enjoy the benefits of owning a property while also giving back to your community. You can be proud of being an investor who cares about more than just profits.

Interested in learning more about using self-directed accounts to invest in real estate and other alternative assets that can impact your own community? Schedule a 1-on-1 consultation with an IRA Specialist today. 

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