|
||
| Email not displaying correctly? View it in your browser. |
In the Issue:
Upcoming WebinarSelf-Directed IRA LLC – The Ultimate Wealth Building Tool Did you know?You can invest in foreign real estate with a self-directed IRA. Featured Provider
REIA Washington State is a non-profit Real Estate Investors Association of Professional Real Estate Investors of all level of experience manages completely by volunteers—your fellow investors. Shirley Henderson is our spotlight business alliance this month because of her commitment to real estate education, providing resources and networking opportunities to give Real Estate Investors all of the tools needed to make ethical, sound real estate investment decisions. She is the president of Washington State REIA. Shirley can reached at 206-286-9300 or by email at sj.henderson@earthlink.net. For more information on REIA please visit http://reiawa.com. Ask the ExpertHave a self-directed IRA question you need answer? Ask our expert! Submit your question(s) to and it will be answered within the next two business days. Question: My CPA doesn’t think I can invest IRA funds in real estate – why is this? Answer: The answer is most certainly yes. It’s not a question of whether it’s legal or not, but rather how you structure your transaction to maintain you do not run afoul of the rules and regulations. Very few tax professionals specialize in this area of law and even less know the option exists. The Internal Revenue Code only excludes life insurance and collectibles as inappropriate investments for purchase inside an IRA. There are certain limitations on how you manage your investment once its in your IRA and those specifications are found at Internal Revenue Code section 4975. QuicklinksContact a Guidant Financial Representative at 888.472.4455! |
Self-Directed IRA Success StoryClient: Ron Kuhlman It’s been a good return. I bought the house for under $150,000, have been receiving $1500 a month for rent, and I’ve been setting aside $250 in escrow. So it’s working out to be about a 15 percent return on my investment, which is secured by real estate. Recent Survey ResultsGuidant recently surveyed over 800 people about what investments they are most interested in. 65% of the respondents stated investments properties as their primary interest but rental properties followed with 59% interest rate (*respondents could select more than one option.)
Self-Directed IRAs Take Advantage of Credit WoesFederal Reserve Chairman Ben Bernanke attributes much of today’s housing slump to the recent rise in mortgage rates. Rising numbers of mortgage defaults and mounting foreclosures are key factors that have forced many lenders to increase their rates, cancel promised loans, and even go out of business. Many would-be home buyers have discovered that credit is increasingly hard to come by. The housing slump is not bad news for all, however. A growing number of investors are taking advantage of the ailing lending market to expand their own investment portfolio through private lending. By providing cash leverage at better credit rates or through less-stringent loan qualification requirements, private individuals are filling the gap created by skittish mortgage companies. Once the domain of the wealthy elite, private lending has been discovered by those with a moderate amount of funds in their IRAs and 401(k)s. Thanks to the Employee Retirement Income Security Act of 1974 (ERISA), retirement account holders can “self-direct” their funds into a wide variety of investments, including personal loans. These self-directed accounts enable investors to diversify their portfolio into potentially more secure and lucrative areas outside the volatile stock market. Brian Curcio of Chandler, Ariz., discovered the benefits of self-directed IRAs by establishing a retirement account through Guidant Financial Group (Bellevue, Wash.), a leading provider of self-directed IRA services. “I am currently investing my self-directed IRA in private lending,” he says. “I have been able to complete three deals in just four months with a return of about 12 percent.” David Nilssen, Guidant’s president and CEO, reports that he’s seeing “a tremendous increase” in private lending. “These people are finding self-directed retirement accounts with checkbook control particularly beneficial, since such structures allow on-the-spot lending of IRA funds to borrowers. With the flexibility they provide, investors can take immediate advantage of market trends, such as the one we are currently experiencing.” Some private lenders work directly with borrowers, while others work through mortgage brokers or real estate companies eager to move properties. According to Nilssen, many private lenders looking for investment opportunities check out websites like prosper.com, an online community of lenders and borrowers that works similarly to eBay. Despite current economic ills, private lending offers the promise of excellent investment returns today and the potential for even more profitable opportunities in the future. Says Curcio, “I plan on continuing with this type of investing for the next few years and then, hopefully, I will have enough money in my self-directed IRA to buy my own real estate property without leverage.” The Strange and Wonderful Pacific Northwest Real Estate MarketWhile other markets decline, The Seattle/Portland area climbs, creating a boon for investors and puzzlement for the “experts” There is an interesting phenomenon that I have tracked the past 25 years in real estate in the Seattle area. If you look at all the major cities on the West Coast that have thriving airports, railroads and harbors beginning with San Diego at the south, then moving north through Los Angeles, San Francisco, Portland/Seattle, Vancouver B.C. and Anchorage, guess where the consistently lowest housing prices have been in spite of continuous annual appreciation? If you said Portland/Seattle, you would be right. From the early 80s when interest rates were 19-20%, to today when rates are around 6-6.25% for 30-year fixed conventional loans, the Seattle area in particular has appreciated beyond belief. Yet it appears that it has not yet peaked. Certainly there have been market ups and downs over the past 25 years, but the underlying trend has been a steady climb in the Pacific Northwest. While major West Coast cities (especially in California) have experienced downward price swings, home costs are still, for the most part, higher than those in the Seattle/Portland area. The area continues to puzzle the “experts.” No doubt a stable economy and workforce have been a factor. Add to that a number of blue-chip corporations (i.e., Boeing, Microsoft, UPS, Nintendo), all of which have been doing well. Throw in California residents, lured to one of the most livable areas in the country, who bring hordes of cash from the sales of their homes. What this all means for the consumer is nothing but positive. The Seattle/Portland area is still the best buy in real estate on the West Coast and has been for 25 to 35 years. That 3-bedroom/1-bath rambler that sold in the Sandpoint area of Seattle in 1973 for $19,000 is worth $450-500,000 in today’s market. True, appreciation has slowed, but it has not retreated. July and August were slow months, and the market has changed somewhat. It is a definite buyers’ market with plenty of inventory, but it is still a good real estate market. The bubble has not yet burst in Seattle and, with the latest ½ point Fed incentive, there is every reason to believe that the next two months will sustain another flurry of activity before we reach Thanksgiving and look to the holidays. *Allan J. Kuipers is an Associate Broker with Windermere Real Estate/Oak Tree, Inc., in Seattle. You can contact him at: 206-850-2724; akuipers@windermere.com; www.allankuipers.com. |
| If you no longer wish to receive this newsletter, please reply to the email and type “Unsubscribe” in the subject line. Mailing Address: 13122 NE 120th St #100 Bellevue, WA, 98005 Copyright © 2007. Guidant Financial Group, Inc. All rights reserved. |
|
I had a friend who was in need of some financial assistance. His home was about to be foreclosed by the bank, and he and his family were about to be thrown out of their house. I knew that this guy was a quality guy and he would get back on his feet. So, using Guidant’s [Auriga program], I acquired their house and set up a lease [option-to-buy] arrangement: when he gets his credit repaired, he would buy the house back; I would extend a portion of his rent payments and hold them so I could provide him with a portion of his down payment.