INVESTMENT STRATEGIES

Alternative Investments

This is for educational purposes only, always perform your due diligence on your investments and consult your attorney, CPA and advisors.

Your IRA can invest in a myriad of Investments.


INVESTMENT CHOICES

HERE are some of the Investment Options:

  • Wholesale properties
  • Rentals
  • Short Sales
  • Foreclosures
  • Raw Land
  • Deeds of Trust
  • Promissory Notes
  • Gold and Silver
  • FOREX
  • Stocks/ Mutual Funds
  • Private Ventures
  • ATM Machines
  • Mobile Home Notes
  • Hard Money Lending
  • Private Placements
  • Hedge Funds
  • Auto Loans
  • LLC’s
  • Internet Marketing Companies

AND ON and ON and ON…

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Explore more Investment Options below!


Buying Precious Metals for your IRA

Investment Option: Buying Precious Metals in Your IRA

What are Precious Metals?

 


The most common precious metals are:

  • Gold
  • Silver
  • Platinum
  • Palladium

What does “Precious” Mean?


There are 6 attributes that render these metals unique in all of nature:

1. Beauty
2. Utility
3. Rarity
4. Indestructibility
5. Portability
6. Inherent Value

How Can I Benefit by Having Precious Metals in my IRA?


Consider the following…

  • They are tangible/real assets
  • Any government or company does not determine their value.
  • They diversify your portfolio.
  • They hedge against inflation
  • They have intrinsic value

How do I Buy Precious Metals?


The first step is to find a precious metal dealer. You can do some research and due diligence web surfing.

The Steps to Buy

1. Set up a self directed IRA, 401(k), or other retirement plan. As long as it is self directed you can buy gold.
2. You call, or order online through a specific dealer, the exact quantity, value, etc.
3. When you decide on a purchase, the dealer will lock in your price.
4. You pay for your order by check, wire, or online.
5. The dealer will send you the order. This usually takes around 30 days.

Storing Precious Metals


In small amounts, most people prefer to keep the metals at home. Larger amounts may require a storage facility.

(The physical appearance of your precious metals does not affect the value so scratches & dents will not affect resale value)

Summary of Benefits


Precious metals are real tangible assets and an excellent way to diversify your portfolio.
US minted coins are the one exception to the ‘collectables’ restriction in your retirement plan.
There is a history of gold, and the value of gold that spans thousands of years!

How Do I Get Started


First & Foremost – Due your Due Diligence!

Look at current and historical pricing and use some common sense on if now is a good time to buy precious metals. They have become very popular driving prices up.

BUYING REAL ESTATE NOTES

Investment Option: BUYING REAL ESTATE NOTES

 

THE BASICS OF BUYING REAL ESTATE BACKED NOTES:
KEYS TO A SUCCESSFUL NOTE PURCHASE

Why Buy Real Estate Notes?


  • Notes typically earn 10% – 15% interest rate (when you factor in the discount)
  • Investment is secured by real estate without the hassle of “owning” real estate
  • IRA returns are tax free

What Are Real Estate Notes?


Promissory notes backed by real estate by a recorded mortgage or deed of trust.
The seller of the property holds the note and assumes the role of a traditional bank receiving principal & interest payments until the note is paid.

Why Are Notes Created?


1. It facilitates the transfer of a property when banks are unwilling to make loans.
2. When speed is requited to close a transaction and traditional funding channels would take too long.
3. The seller wishes to defer his capital gains taxes from the sale of the property over time.
4. The seller may be interested in using the income as a retirement vehicle.

What Makes a Successful Note Purchase?

Buy Partials: Keep your investment to property value ratio should be at or below 50%

Evaluate the down payment at the time of the sale. What is the buyer’s commitment level to the property?

Get a lenders title commitment and policy to ensure that you are in a first position and have first right to the property in default

Do Your Due Diligence!


An informed investor is a smart investor. Some important items of Due Diligence are:

  • Check the credit of the payer
  • Appraise the property
  • Look at market trends & market values
  • Measure your risk level

Be sure with the recent Dodd-Frank act that you are not violating any of the current legislation. Always have your loans originated by a loan originator and have your attorney review your paperwork. You can have your loans originated by a loan originator for $ 500 – $700. It is well worth the funds to be in compliance.

What Happens if the Property Forecloses?


If the note were to stop paying and default for any reason, you have the entire asset at your disposal to recover the portion that you purchased. You take full assignment of the note.

You can recover your investment, also profit and any additional costs to foreclose.

After all your funds and costs are received, the original note seller is entitled to the rest of the remaining funds.

Exit Strategies


There are Four Exit Strategies:

1. Payoff: Payoff re-finances or sells property
2. Foreclosure
3. Payout: the note pays until debt is satisfied
4. Sale: There is a market to sell the note but it will be discounted

Summary of Benefits

Notes can be bought in small or large amounts, depending on your comfort level.
You do not have the hassle of owning and maintaining a property.
Your investment is secured by real estate.
Notes are an excellent way to diversify your portfolio!

Buying Real Estate in Your Retirement Plan

Investment Option – Buying Real Estate in Your Retirement Plan

 

Why Buy Real Estate in your IRA?


Real Estate has always been a popular investment. In today’s real estate market, there are more opportunities to buy properties at excellent prices.

Benefits of Real Estate


Unlike stocks or bonds, the land that real estate sits on is tangible.
Real estate can be passed down through generations and made use of by family members in the future.

The real estate market has slower incline and decline in regards to value. Where you can lose 80% of your stock value in one day, this is highly unlikely in real estate.

Buying Real Estate in Your IRA. How it Works…


There are two ways of transacting real estate in your retirement plan:

1. Set up a self directed IRA account. The custodian directs the transaction. If you do not yet have a self directed IRA this process can take about 30 days and may not be ready for a quick close.

2. Set up a self directed IRA and an LLC within your IRA. With this set up you will have checkbook control and can close immediately and with minimal custodian transaction fees.

What is the Process?


Purchasing real estate with your IRA is not that much different from buying your own home.

  • Complete your due diligence
  • Do your market research
  • Complete the inspections

Make sure that your IRA has enough funds to sustain the property. (Remember that you cannot co-mingle your personal funds in the transaction)

The Steps to Purchase


1. Make an offer in the name of your IRA. (Your IRA Administrator FBO Your Name, IRA)
2. Buy Direction Letter that provides information about the property and where to send the funds. Also send the purchase agreement or contract that you have read and approved.
3. IRA administrator sends instructions to escrow agent.
4. Closing documents are sent to your IRA administrator for signature after you have read and approved them.
5. Your administrator wires the money from your IRA for the closing, along with the necessary documents.

Accounting


Your IRA is responsible for all property-related expenses, including taxes, insurance, dues, maintenance, and utilities. All income is also deposited into your IRA.

You cannot co-mingle your personal funds with the real estate after you have purchased it solely in your retirement plan.

Shortage of Funds – Option One


If your IRA does not have enough cash to pay for the real estate, you have several options:

You can partner with people, other IRAs, even yourself, or your spouse’s IRA. The key to partnering is that all income and expenses are split proportionately according to the percentages listed on the deed.

Shortage of Funds – Option Two


Your IRA can borrow money through a non-recourse loan. You & your personal assets are not involved. Since the loan is to your IRA it is based on positive cash flow of the property. Most non-recourse loans require a minimum off 35% down payment. The IRA is responsible for mortgage payments. If you use a loan, the debt-financing portion only is subject to unrelated business income tax.

Different Real Estate Options


Your purchase is not restricted to houses.

You can consider:

1. Raw land
2. Commercial properties
3. Mobile Home Parks
4. Shopping Plazas
Apartment buildings

By partnering your IRA with a group in an LLC you can open your horizons to different real estate deals.

Summary of Benefits


People are buying investment properties to diversify their portfolio and to have a fixed or ‘real’ asset.

With the vast amount of discounted real estate currently on the market, there is enough opportunity for all investors to take advantage of it.

The tools and resources to research property values and historical values are readily available to you online and at www.myIRApartner.com

Next Steps


1. Set up your self directed retirement plan with an LLC.
2. Find real estate in a price and comfort level to you.
3. Do your research and due diligence. Evaluate each and every deal with care.

YOU are in control of your investment as soon as you take ACTION!

I DON’T HAVE ENOUGH MONEY TO BUY A HOUSE

 

How To Take a Loan out in your IRA


There are lenders that will lend to your IRA through what is called a non-recourse Loan

A non-recourse loan is the only type of loan allowed for a retirement plan. According to rules and regulations, you as the account holder, or your IRA account or any business like a checkbook control LLC cannot be held liable for the loan repayment.

Cash reserves required


The lender is also going to require the IRA or business entity must have enough cash flow and/or reserves to make the loan payments, maintenance, insurance, dues and taxes. About 10-20% of the loan amount should remain in reserve to cover all expenses.

You as the account holder cannot personally guarantee the loan

IRC. 4975 says that it is prohibited to extend credit to your IRA.
So what bank is going to lend my retirement account money to buy a house?

Typically a lender would require you to personally guarantee the loan in the event of default the lender would have recourse. However, in the case of an IRA obtaining a loan, the rules and regulations do allow for this. Because there is no one guaranteeing the loan, there are few lenders who offer true non-recourse loan programs for a Self Directed IRA. The lenders generally require a minimum down payment of 40-50%. This ensures that, in the case of default, the property can be sold and the loan paid in full.

LENDER REQUIREMENTS


You will need to be prepared to provide the following information to a mortgage lender in order to get initial feedback on the property:

  • Type of property
  • Purchase price
  • Address
  • IRA liquid balance
  • Has the property sold in the last 3 years? If so how much?
  • Square footage
  • Approximate rental income that the property can generate
  • Taxes, insurance and HOA dues
  • A Picture and listing of the property

Some Things to Consider


Below are some of the current guidelines you may find as you search for non-recourse lenders. Each lender is different and they change their guidelines from time to time. Ultimately each property is considered on a case to case basis

  • Down payment – 40 to 50% for residential properties
  • Rates: Vary
  • Reserves: 10-20% of the loan amount
  • Typically 2 points at closing
  • Typically $ 50,000 minimum loan amount
  • Timeframe: Approx 6 weeks
  • Property Type – No Fixer Uppers and No Raw Land
  • Appraisal of property and Analysis of rental income.

ONE VERY IMPORTANT YOU WILL BE SUBJECT TO UBIT TAX
UBIT – Unrelated Business Income Tax.

Please see our section on UBIT tax to understand the implications, and also seek the council of your Accountant.

Alternative Real Estate

Investment Option: Alternative Real Estate
Short Sales, Foreclosures, Bank Owned Properties

 

THE BASICS


There is Great Opportunity!

What Is The Opportunity?


Capitalize on the real estate down market with potential tax-free returns.

You CAN invest your IRA, 401(k), and other retirement plans in Short Sales, Foreclosures & Bank Owned Properties when your retirement plan is self-directed.

How Does this Benefit You?


There are a high number of real estate deals that do not require a large capital output.

There are many reputable companies that pool funds and invest in large deals with many homes, mitigating the risk for all investors.

BUT…you need to do your homework and due diligence, or invest with a company that has a track record for success.

Going it Alone


Are there higher profits to be made if you find a deal, do all the work, and flip the deal yourself?

Maybe…

But you have also just multiplied your risk factor exponentially because you do not really know what you are doing.

The Alternatives


With each of these opportunities, there are companies that can provide you with deals that match your risk tolerance & comfort level.

How it Works – Investing in a Short Sale


There are a few different options in using your IRA monies to invest in a short sale:

1. Short term lending to a short sale company in need to funding to quickly close a deal.

This can garner returns of a few percent in one month!

The challenge is finding the deals and engaging a reputable short sale company to lend to.

Short Sale


2. Investing in a short sale as a rental property.

This follows the same rules & procedures as investing in any real estate deal within your self directed IRA.

An LLC in your IRA is recommended for this to ensure quick access to funds for closing.

Investing in Foreclosures


Foreclosure auctions have become very popular.

The amount of research, inspections, and due diligence that should go into each property you are considering bidding on is enormous.

It’s most popular to find a company that buys a block of foreclosures and pools money to mitigate risk on investing in one deal.

Investing in Bank Owned Properties


These are the properties that go up for auction in a foreclosure sale, are not bid on, and go back to the bank.

Many of these properties need some fix up work

If you are purchasing one in an IRA make sure you have the necessary funds in your IRA to take on the project, or find a partner or partners.

Investing in Wholesale Properties


Wholesale properties are properties that an investor has purchased from a homeowner, Hud or MLS at a deep discount. They are generally below market value. Their goal is to leave enough money so that someone who wants to fix and flip the property has enough spread in the deal to make money too.

Many of these properties need some fix up work. These properties are generally purchased for cash, as is without an inspection. They are usually sold quite quickly almost like buying at the foreclosure auction.

You may find some great prices with wholesale properties but be sure to do your due diligence prior to making any purchases in your IRA.

There is an Ebook to you can enter in your name and email address for more information on this topic.

Benefits of These Alternatives


The real estate is a buyers market and there is still a great deal of inventory, even an overflow that can be considered a ‘great buy’.

If you love real estate but already own investment properties, this is a way to diversify your real estate portfolio

With a self-directed retirement plan and an LLC with checkbook access to your funds, you can close quickly on deals and potentially have access to better ones because of it.

The real estate is a buyers market and there is still a great deal of inventory, even an overflow that can be considered a ‘great buy’.

If you love real estate but already own investment properties, this is a way to diversify your real estate portfolio

With a self-directed retirement plan and an LLC with checkbook access to your funds, you can close quickly on deals and potentially have access to better ones because of it.

Where Do I Go From Here?


Do not let lack of knowledge scare you from the potential options available to you!

www.MyIRAPartner.com


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