More and more members of the Millennial Generation in the United States, those between the ages of 18 and 34, are now looking to buy a home.  In a recent survey by Mayflower, the moving company, almost two-thirds of young Americans are now looking to buy a home, a huge increase from a short time ago.Retirement Investing  One of the best ways to profit from this increase in a desire to buy a home by this age cohort is through financing private mortgages that are held in a retirement account.

A private mortgage is one provided by an individual or group of investors.   There are two ways to participate in being a private mortgage lender according to Jerry Cohen, President of EquityBuild, a premier private mortgage investment firm:  “There are two methods for getting started in private mortgages: Mortgage Pools and Direct Lending.  Mortgage pools are like the mutual funds of private mortgages. Each investor's money is pooled with the other investors participating in the pool and the money is used for private lending.

Cohen, who was just awarded the prestigious “Moving America Forward” honor for the success of EquityBuild and EquityBuild Finance, its financial arm, furthered that, “Direct lending is typically reserved for seasoned real estate professionals due to the level of expertise that is needed to identify undervalued properties...”

Due to tighter lending requirements as a result of abuses that caused the housing crash leading to The Great Recession, many of the Millennial Generation will not be able to obtain a loan for a home from a traditional lender such as a bank, credit union, or mortgage brokers.  According to an article in USA Today by Julie Schmit, 64% of the Millennial Generation is inclined to buy a home now.  That is a huge increase in recent years as reported by Schmit’s USA Today piece, “Economy helps more people pack up and move.”

This allows for private mortgage providers to step in and lend to these first time buyers.  By doing this, private mortgage lenders can develop a loyal base of borrowers.   As one who utilized a private mortgage lender for three separate transactions, it was obviously a pleasant and positive experience.  The fact it was repeated twice is all the proof needed to prove that point.

Holding the mortgages to these first time buyers in a retirement account will provide a number of advantages.  The funds placed in retirement accounts such as a 401(k) or individual retirement account (IRA) are tax deductible.  There are huge tax savings from that alone.

Generating even more tax benefits is the gains are tax free, too.  Both the income and the profit from sales of these the mortgages will be tax free.  As these mortgages are likely to be paid off early as the first time Millennial Generation buyer sell to move up to a bigger home, the loans will be paid off before the end of the term.  Any profits from that will be tax free, too.  Private mortgages in retirement accounts are an excellent way to gain from the increasing goal of ownership in the United States for the members of the Millennial Generation.