05 Sep 2017

5 Great Ways to Invest Your IRA in Real Estate… and Legally Grow Your Cash Flow and Wealth in the Fastest Way Possible!

5 Great Ways to Invest Your IRA in Real Estate… and Legally Grow Your Cash Flow and Wealth  in the Fastest Way Possible!

Let’s start off with a quick definition of what an IRA is…

Individual retirement accounts (IRA) are regulated savings accounts intended to serve as a source of income for retirement. They’re managed by the account holder via an approved custodian or administrator, or by a professional investment firm that acts as fiduciary for the account.

The funds in an IRA are typically held by a financial institution (like Fidelity, Vanguard, Charles Schwab, Merrill Edge, etc.), which has the right to invest them in traditional investments such as mutual funds, stocks, and bonds – within their own basket of investment options.

So what’s a Self-Directed IRA (SDIRA)… and how does it different from a regular IRA?

Technically, a self-directed IRA is not any different than any other IRA (or 401k); however, what makes a self-directed IRA unique is the wider range of available investment options.

Most IRA custodians only allow approved stocks, bonds, mutual funds and CDs. A self-directed IRA custodian also allows those types of investments, but in addition, the account holder can also invest in a greater range of assets, including things like real estate, private loans, notes, private placements, tax lien certificates, and much more.

Since our main focus is on creating more passive income with good ole’ real estate, let’s dive into…

5 Specific Ways to Invest Your IRA in Real Estate

1. Distressed Properties

I know many experienced investors who buy distressed properties well below their after-repair value, fix them up, and then rent them out for cash flow. Not a bad way to build up your passive income… as long as you have the time, patience, passion, and business savvy to run a rehab business – like a true business.

It’s not for everyone though. Especially if you’re a busy professional, hands-off investor, or someone who simply doesn’t have the time or inclination to learn the ins and outs of a rehab operation.

2. Turnkey Rental Property

Turnkey rentals are typically single-family homes that are fully-renovated, in like-new condition, with qualified tenants already in place, as well as professional, local property management to oversee your investment. It’s “turnkey” and ready to go. You just have to buy it…. and immediately start receiving your passive cash flow.

As most of you know, one of the things our company makes available are ‘turnkey rental properties’ in prime Midwest markets. We’re wrapping up our latest one this week, so I’ll be sending you the details shortly.

Here’s a quick snap I took of it yesterday:M

You’re gonna love the numbers on this one!


3. Private Lending

With this option, you’re basically the bank. You lend out funds to other investors and they pay you interest on that money. Interest rates can vary from as low as 5% to as high as 15%.

There can be some up front legal costs to make sure all of the paper work is in order but once you find a good borrower, this can be a steady and reliable source of passive income.

This is also another investment option that our company makes available to our clients.

Here are some of the main reasons why many investors prefer Private Lending (being the bank) versus owning actual ‘brick and mortar’ real estate (although I personally think you should be doing both!):

#1)Secured Asset – Your loan is backed by real estate.

#2) No Tenants or Toilets – Remember, you’re the bank, not the landlord… so you don’t have to worry about things like fixing a leaky faucet, replacing a water heater, collecting rent, or potentially evicting a tenant.

#3) No Costs – The borrower pays for all costs.

#4) You Choose the term of Your Loan Based on Your Financial Goals – You can do a short term loan (6 months – 2 years), intermediate term (2-5 years), or a longer-term loan (5-30 years) if you like the idea of locking in returns… and not having to worry about finding a new investment all the time.

#5) You Don’t Have to Collect – Funds can be direct-deposited right into your bank account.

#6) Your Earnings Can Be Tax-Deferred or Tax-Free – How? By utilizing a self-directed IRA (or 401k). This is the ultimate super highway to growing your cash flow and wealth as fast as possible!

Anyway, if you like the idea of “being the bank” and earning safe and secure double-digit returns, without the hassles of being a landlord… keep an eye out for our latest Private Lending Opportunity coming out within the next few days.


4. Own Some Commercial Real Estate

Many of our clients like the idea of going big… and having an interest in a multi-million dollar commercial project like an apartment complex or retail shopping center.

My team and I really like the idea as well… which is why we also make available larger projects to our clients, as a group.

In fact, this is probably our main focus and expertise, as our operations partner is one of the top repositioning specialists in the Midwest, and someone who’s acquired over $50 million in commercial real estate.

Anyway, if you also like the idea of going big, receiving true ‘mailbox money’, and owning some commercial real estate that pays a hefty annual ROI – for as little as a $50k investment – then keep your eyes peeled for a couple of amazing deals coming your way soon!


5. Real Estate Investment Trusts (REITs)

A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate.

REITs allow anyone to invest in portfolios of large-scale properties the same way they invest in other industries – through the purchase of stock.

In the same way shareholders benefit by owning stocks in other corporations, the stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy or finance property.

The structure is modeled after mutual funds, so if you’re looking for easy transactions both in an out, REIT’s provide that.

The challenge? The returns aren’t that much better than your average mutual fund as well!

So there you have it, 5 great ways to invest your IRA in real estate… and grow your wealth tax-free or tax deferred.

Different strokes, for different folks.

15 Aug 2017

4 Compelling Reasons Why Investing in Apartments is a Smart Move

4 Compelling Reasons Why Investing in Apartments is a Smart Move

Compelling Reasons Why Investing in Apartments is a Smart Move

A couple of people asked me last week if they should invest in apartments.

My gut reaction is to always say “YES”, but you know what? That's not the right answer for everyone.

So I say… only if it fits your investment style, risk tolerance, and helps you achieve your overall financial goals.

It definitely can be one of the most powerful and profitable investments you can make, but only you can make the determination if it’s the right type of investment for you.

To help, here’s are 4 reasons why investing in apartments may be a very smart move for you…


1) Easier Management

I once had over 100 single-family homes to oversee and manage – all spread out across a whole city.

So what do you think is easier to manage? 100 homes? Or a 100-unit apartment building … all sitting under one roof ?

Trust me. Having 100 units in one very concentrated area is 10 times easier to manage than 100 homes dotted all over the map!

One manager or one small team can manage that entire 100 unit building. Overseeing 100 home may require a mini-army.

That’s what you call ‘economies of scale’.


2) Easier to Raise Market Value Compared to a Single-Family House

What’s great about real estate is that you can typically “force appreciation”, by doing doings like fixing it up, sprucing up the landscaping, adding appliances, etc.

With a single-family home, you can do things like make repairs and throw on a coat of paint to give it more curb appeal, and you can also do an extensive rehab to add more square footage or make the property more functional; however, you can only do this to force appreciation on that ONE property only.

Nothing wrong with that. My team and I are as active as ever in rehabbing and improving homes to force appreciation.


But sometimes, we just like to go a little faster. And go bigger.

What’s great about apartments is that you have simply have more options for increasing the property’s value…

Just like a home, you can make repairs, upgrade the appliances, and give the place much more curb appeal.


But you can also quickly increase an apartments value by doing things like:
  • Add a laundry room to create an additional income stream.
  • Hire a more effective property management team.
  • Implement a marketing plan that fills your vacancies quickly and consistently keeps your units filled.
  • Raise rents as you make capital improvements.
  • Take advantage of tax benefits made available by your City, County or State (typically made more available on larger properties).
  • Implement policies and guidelines that improve your collection rate.
  • Add amenities like a swimming pool, playground, mini-gym, business center, or community meeting room – which enable you to raise rents.
  • Offer referral fees to existing tenants.
  • Reduce operating expenses.

On that last point, listen to this: I just met with a colleague today who specializes in reducing expenses on apartment and commercial complexes.

On just one example we talked about, he thinks he can reduce operating expenses by up to $50,000 - $100,000 per year.

That’s huge… up to $100k per year.

How huge is that? In the area we’re investing, reducing operating expenses by $100k increases the market value of just one apartment complex…. by $800k - $1 Million Dollars!

That’s the type of ‘forced appreciation’ potential you’re talking about with apartments and commercial properties.


3) There Can Be Great Tax Benefits That Come with Investing in Apartments

Apartment owners are more likely to receive tax breaks from the government, especially when focused on providing clean, safe, and affordable housing to residents of the city.

Examples might be getting a tax credit from the City for offering energy-efficient windows, or getting a tax incentive from the Federal Government by offering low income housing.

On top of that, you can write off loan points and interest, and you also get to claim depreciation expense – which can be huge.

Ex. One of our buildings last year had a Net Profit of over $60,000.

How much in taxes did we have to pay on that?

$0.


The depreciation expense we got to claim… zero’d out our net profit!

Bottom line: The tax benefits can be massive. Just make sure you get a highly competent CPA to help you get as many deductions and tax incentives as possible.


4) Multi-Family Properties Hold Their Value

Once the property is rehabbed and stabilized, and you’ve made it attractive to tenants, you now have an asset that’s spinning off a healthy and consistent cash flow.

And that is highly attractive to many investors.

To maintain (or even increase) value, just make sure you’re doing things to retain the property’s value over the long haul.

Things like keeping up the grounds, maintaining great curb appeal, being diligent with maintenance and repairs, monitoring expenses, and always looking for ways to increase value and the overall experience of your tenants.

Your most important hire? Your Property Manager.

But every single hire is important. So from your PM, to your groundskeepers, to your tradespeople, to your bookkeeper, and everyone on down the line, the best advice I can give is to…

“Hire slow… fire fast!”

It’s priceless advice that an early mentor of mine gave me, so I encourage you to adopt it wholeheartedly as well.

You’re looking for a mindset. A strong work ethic. And pride.

Selection is everything… so take your time on this my friend.

Anyway, those are just some of the reasons why I think Apartment investing is one of the smartest moves you can make.

If you can think of any others, I’m all ears…

07 Jul 2017

This is the Ultimate Secret of How to Create, Build, and Exponentially Grow Your Wealth

This is the Ultimate Secret of How to Create, Build, and Exponentially Grow Your Wealth

My friend Don is one of the savviest investors I know.

He invests in all kinds of real estate (from single family homes to $40+ million dollar commercial office buildings) to trading the stock market as well as various other investments and business interests that all seem to do pretty well.

He’s got alot going on.

But can you guess what he says is his #1 FAVORITE way to invest?

It’s being a “Private Mortgage Lender”

Surprising?

It shouldn’t be.


Just think about it: No tenants, toilets, repairs, or landlord-hassles to deal with, but yet you still earn whopping double-digit returns in a safe, secure, and hassle-free way!

You know what else he likes?

The fact that 100% of his money is working for him.

Here's what I mean...

My business partner spoke with a client recently who bought a rental property several years ago that's paying them $1,300 a month in rent. They paid $180,000 for the property.

Today, that same property is now worth $450,000, but they're still collecting the same $1,300 a month in rent.

So even though the market value went up by $270,000, they're not earning any more on that increase.

That's what you call "dead equity". Their overall 'return on equity' has actually decreased.


You don't have that kind of problem as a Private Mortgage Lender.

Consider this: If they had that same $450k earning 10%, for example, as a Private Mortgage Lender, they would be earning:

$450,000 x 10% = $45,000 a year ... or $3,750 per month!

Hmmm ... a simple, little money-movement strategy... and you raise your monthly income by almost $2,500!

Can you see why this is Don's #1 favorite way to invest?

And why it's a favored investment of the rich?

100% of your money is in play... and every single dollar is WORKING HARD.

This is the ultimate secret of how to create, build, and exponentially grow your wealth!

Ready to start investing like the rich?