Real Estate

Crowd Investors

December 14, 2012

In the 1978 movie “Midnight Express”, the sympathetic protagonist Billy, a US citizen, is caught trying to smuggle several kilos of heroin out of Turkey, and is sentenced to four years in a prison under horrific conditions. His hope for extradition seemingly dashed, he is resigned to living out his life in the mundane routine monotony of the incarcerated. His sentence is extended due to an aborted escape attempt and is later transferred to the prison ward for the criminally insane.

For a brief one hour each day, he is afforded the opportunity to exercise in the yard with his fellow prisoners. In a pivotal scene, instead of plodding along clockwise in formation with the crowd, something prompts him to move in the opposite direction, facing the crowd. This unorthodox move is met with raised voices and fists, the group insisting that he return to the slow, methodical clockwise shuffle. His singular intransigence in breaking from the crowd marks a metaphorical turning point, leading to his eventual escape from his sadistic jail-keepers.

This may be an apt metaphor for investors who choose to self-direct their retirement. When real estate prices decline and buyers are timid, our clients start to step in and seize the opportunity to secure cash flows unheard of several years ago. When banks no longer have the appetite to lend to investors, self-directed IRA holders emerge, meeting the need through private loans, securing great returns for their retirement plan.

Yet even within investment classes, the herd mentality of crowd investors is alive and well. For example, in 2011, investors flocked to gold in record numbers, including those using IRAs, pushing the spot price well over $1900 per ounce. Many of those buyers were looking to find a safe haven to protect against uncertain economic times and the Spector of looming inflation.

Since then, prices have retreated below $1700, with new investors turning their attention back to other markets. It seems like crowd investors have moved on, yet have the fundamental reasons changed? If gold was attractive at $1900, why is it less alluring when it costs less?

Now to be sure, I am not an investment advisor, nor would I ever pretend to be. Yet I can’t help but think that the majority of investors, and yes, those that advise those investors, are guilty of group-think. Why else would someone embrace the concept of owning a CD that yields 1.3% when so many other options exist that may provide better returns within their own risk tolerance?

For those of you self-directing your IRA, congratulations, you are moving away from crowd investors. For the rest of you, think about your choices, your outcomes, and come join us – just not so many of you that it becomes a crowd.

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando, Florida. He can be contacted at 407-367-3472 or gmather@nuviewira.com.

Are you listening to Warren Buffet’s advice regarding the real estate market?

In a recent interview with CNBC, when asked if a young individual investor should buy stocks or his first single-family home, Warren Buffett recommended buying a single-family home with a 30-year mortgage. In fact, “if the young individual investor is a handy type, he could buy a couple of them at distressed prices and find renters,” said Buffett.

Warren Buffett is a man known for his tremendous success in investing in assets he believes are undervalued, so with the US real estate market at record lows, why not heed Buffett’s advice and invest in real estate? Because of the absence of big institutional investors in the US residential real estate market, it is less competitive that even the stock market!

A great way to invest in real estate without having to pay huge upfront costs, is to self-direct your IRA into real estate. There are several ways that an IRA can participate in a real estate transaction. The self-directed IRA owner has the choice to direct the IRA to purchase the entire property within the IRA, to purchase an undivided interest alongside other investors, or to purchase a property with leverage utilizing a non-recourse loan.

If you are an experienced real estate investor, and you know you can earn an attractive return by buying raw land or fixing up rental properties, and the income you earn by doing so would normally be taxed at your ordinary income tax bracket, then you may see a tax benefit from owning real estate in your self-directed IRA. With a self-directed IRA behind the investment, the gains go back into the retirement fund either tax-free or tax-deferred, depending on your IRA.

If you agree with Warren Buffett that the real estate market is currently undervalued and you’d like to take advantage of this investment opportunity with a real estate IRA, our Florida self-directed IRA administrators are here to assist you with your self-directed real estate transaction. Reduce your dependence on the stock market, and use your knowledge and experience to drive your IRA growth. Give us a call today at 407-367-3472 to get started self-directing your investments!

Required Minimum Distributions – You Can’t Afford to Miss This Deadline!

December 7, 2012

Don’t let the little issue of RMDs or required minimum distributions get lost in the blur of the holiday season. The IRS makes it painfully clear that they are envious of those of you that are over the age of 70.5 and have an IRA or other retirement plans. Interestingly, the Roth IRA holders are spared the indignity of the government telling them how to manage their finances, but more about that later.

If you hold a non-Roth IRA and had your 70th birthday before July 1 of 2012, you must take a minimum distribution from your plan. In other words, make what was tax deferred, now taxable. How much must you take out? It is based on an IRS provided table that calculates your estimated life expectancy. How much is it? Well, if you turned 70.5 this year, you will be forced to take a distribution of a little over 3.6% of your holding. My mother, age 92, is required to take out 9.8%. For those of you yearning to know more, consult IRS publication 590 for the rules and tables.

All non-Roth IRAs are added together to calculate the RMD, and distributions can be made out of any of the held IRAs to meet the distribution requirements.

IRA holders that are in or near their RMD years should plan for sufficient liquidity in their plans to permit the easy withdrawal of funds as required. This withdrawal can take place anytime during the calendar year – but if not done by December 31st, a penalty of 50% of the undistributed amount will accrue to the IRA holder.

Those that have contributed or converted to a Roth IRA are not forced to take any distribution during their lifetime, as all taxes have already been paid.

So, two end-of year reminders: If you are nearing or over seventy years of age and have pre-tax IRAs, get prepared, and take the distributions as required. If you wish to convert to a Roth this year, you must do so before December 31st. Talk to your tax professional before the end of the year so you make all the best moves.

As always, all the best in your investments,

Glen

Riding the Foreclosure Wave with your Real Estate IRA

November 5, 2012

According to a recent article published by CNBC entitled “Buy Foreclosures With Your IRA”, many investors are beginning to take advantage of the downturn in the market by investing in foreclosures through their self-directed IRA. The article notes that Cincinnati resident Rich Pregel, an investor with experience in the real estate industry, decided to invest his money in a commercial foreclosure through his self-directed real estate IRA. Pregel is now generating almost $80,000 a year after expenses on an initial investment of $140,000 by renting out his commercial property. Pregel bought the property for a good price, put some money into it to get it up to rentable specs, and now says it’s like a no brainer. Since his IRA owns the property, all expenses that go into the property must come from his IRA account and the rental income received goes back directly into his self-directed Roth IRA tax-free.

Last month, Florida overtook Illinois as the state with the highest foreclosure rate in the country, according to RealtyTrac, a company that publishes the largest database of US foreclosure, auction, and bank-owned homes. Also according to RealtyTrac, one in every 318 housing units in Florida received a foreclosure filing last month, compared to one in every 730 homes nationally.

While this does not bode well for Florida homeowners’ credit scores, it does offer a potentially profitable investment opportunity for those looking to grow their retirement funds and diversify their portfolio. Many of these distressed and foreclosed properties in Florida can be purchased for a steal, and with the power of a self-directed IRA behind the investment, the gains go back into the retirement fund either tax-free or tax-deferred, depending on your IRA.

To take advantage of the foreclosure wave and invest in foreclosures with your IRA, it must be a self-directed IRA. To do this, you need the assistance of a qualified and experienced self-directed IRA custodian to facilitate your self-directed investments. Give our Florida self-directed IRA administrators a call today at 407-367-3472 to learn more about self-direction and Florida real estate IRAs!

How to Take Advantage of a Self-Directed IRA with Just $5,000

October 29, 2012

There is a common misconception out there regarding self-directed IRAs that you have to already have a lot of money in your IRA to get started with self-direction. Here’s an example of an investor who started out with just a 5,000 contribution to her self-directed Roth IRA.

This particular investor had some friends in the real estate business who specialized in buying and selling Real Estate Contracts. Her friends helped her find an individual who was looking to get some cash by selling his Real Estate Contract for a small piece of property in the Appalachian Mountains. The contract was originally sold to him for $23,000 and he had invested a significant amount of equity in the property and paid down the contract considerably. In fact, if he were to continue making payments, he would have the property paid off in roughly two and a half years.

Therefore, the investor decided upon what she would like to offer the seller for his Real Estate Contract, and after some negotiation, agreed upon a price that would earn her 10% on her money over the next 2.5 years. A check was sent to the seller through her self-directed IRA, completing the entire transaction in less than a week!

You may not think that 10% on $5,000 is very much money, but what if you have 10 investments like this or you start buying bigger contracts? The possibilities are endless with a self-directed IRA. Whether you are looking to issue notes or mortgages, invest in tax liens, or purchase real estate, the choice is yours with a Florida self-directed IRA from NuView. Call us at 407-367-3472 to get started!

Retirement Obsession Disorder

October 17, 2012

There are certain phenomena that can only be explained through experience. Once such event is what happens when you achieve the age of fifty.

When I was thirty, my viewpoint of those meeting the mid-century milestone was a bit jaded. It seemed that the “older” generation’s musical tastes included artists such as Johnny Mathis, Andy Williams and perhaps the more wild confessed to owning an Elvis record or two. This graying set drove large, boat-like cars, the men wore their pants a bit higher and tended to schedule their dinner out earlier. They never could effectively communicate with us younger types and seemed overly concerned with their investments. Certainly I would never become like them.

Then I turned fifty.

Everything changed – perhaps not all at once, but certainly in rapid fashion. Let’s see. My musical tastes tend to be reunion tours of geriatric groups such as the Eagles, Bruce Springsteen, and even an occasional Broadway musical. I now drive a Cadillac, though I would like to point out that it isn’t the size of my Father’s car. While the waistline of my pants hasn’t risen too much, I must confess, I have become more obsessed than ever with funding my retirement.

The equation is quite simple. If I want to retire at age 65, I now have 15 years to take what I have managed to save so far, contribute more to it, and invest it wisely enough to live out my years in blissful retirement. This may be easy to understand, yet hard to execute, especially if the gains are subject to taxation. It becomes even more difficult when traditional, relatively “safe” investments are providing sub-standard yields.

Retirement obsession disorder (ROD) has hit me hard. One cure that I have found to this malady is self-direction of my retirement plan – and partnering with smart people that can help guide me to the best combination of risk/reward to accomplish my objectives. Through a self-directed IRA, I am able to reinvest my returns, without the tax toll gate that diminish the gains of those who choose to use after-tax money for those same investments. Rental real estate, private lending, and new business start-ups are all part of my IRA investments, along with a few Wall Street funds.

As the principal of NuView IRA, a self-directed IRA administrator in Florida, I share the perspective of thousands of clients investing hundreds of millions of dollars with the objective of improving their retirement outcomes. If you suffer from ROD, seize control of your retirement funds and start self-directing your IRA. Stay involved, save slavishly and invest in things you know and understand. If you are over fifty, best of luck avoiding those pesky AARP applications. If you are younger, listen to your elders and start your retirement early, much earlier than I did.

All the best in your investments,

Glen

Former Hockey Coach Purchases Ice Rink through His IRA

October 11, 2012

A former men’s hockey coach at the University of Virginia recently decided to use his self-directed IRA to purchase real estate in the form of an ice-skating rink that was on the verge of closing. He got together with six other investors and contributed $300,000 from his own IRA in order to save the ice skating rink in Virginia where he had previously coached. In addition, the former coach also purchased several real estate properties in Florida and a mortgage on a medical building by self-directing his IRA.

With financial stress from the economy and unknowns in the stock market, it’s no surprise that people, like this former hockey coach, are looking for alternative ways to earn more money for retirement. Self-directed IRAs are a great option for this, as they allow IRA owners the ability to invest in what they know and understand. IRA owners can pursue a wide variety of investments including real estate, private placements, mortgages, tax liens, etc.

If you work in or know the real estate industry, you can self-direct your IRA into real estate. If you know the mortgage field, you can use your IRA as a lender. If you know a company looking to raise capital, you can invest in a note with that company. There are so many investment possibilities that most financial advisors are unaware!

If you’ve got experience or knowledge in a specific field, take the example of the former University of Virginia hockey coach and invest in what you know and understand. With a self-directed IRA from NuView, you can do just this, while taking advantage of the tax-advantaged growth of your retirement plan. Give our Florida IRA administrators a call at 407-367-3472 to learn more about the many ways you can invest in your retirement!

Private Lending with a Self-Directed IRA

September 25, 2012

Over the last year, our industry has seen a growing number of retirement investors looking to use self-directed IRAs to engage in private lending transactions in order to improve their retirement fund potential. This is because a self directed IRA gives you the option to loan money, similar to a bank. You choose the borrower, amount, interest rate, length of term, payment frequency, and amount.

IRAs can issue both secured and unsecured loans. Secured loans are backed by collateral to ensure repayment of the loan amount plus interest. Unsecured loans are typically offered at higher rates than secured loans and have lower borrowing amounts because they are associated with higher risk and not backed by collateral.

Many investors choose to loan money through their IRA to individuals looking to purchase a home. When loaning IRA funds for a mortgage, you have the opportunity to secure the loan with that piece of property. This means that if the mortgage defaults, your IRA takes possession of that property and you can decide to sell it or lease it out, providing you with additional funds within your IRA.

One major advantage of private lending with a self-directed IRA is that all gains generated by the investment are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70.5). However, with a self-directed Roth IRA, all gains are tax-free.

Private lending offers the opportunity for excellent investment returns today and the potential for even more profitable opportunities in the future. With NuView IRA, you have the opportunity to self-direct your IRA in notes, real estate, mortgages, private companies, and many other investment options that most financial advisors are unaware. Give NuView a call today at (407) 367-3472 or visit them at staging-wwwnuviewtrustcom.kinsta.cloud to find out all the options available to you.

Giving Our Clients Access (Online and Human)

September 21, 2012

My name is Radha Persaud and I am a founding member of NuView IRA, a Florida self-directed IRA administration company. It’s flattering to be known as a founder I must say. As I came on board, Entrust Administration Services was getting ready to change its name to NuView IRA. With the change, came many welcomed improvements and many challenges along the way, but I am so thankful that I am part of a cohesive team that always rallies together.

One of our biggest challenges during the name change was the switch to a different platform for online access. The system was new, very different and some our clients had a difficult time adapting to the new system online. I can understand their frustrations, as many of our clients had been with us since we first opened our doors in 2003 and were used to the old online platform. Our President and management team heard their frustrations and wanted to make the change a more positive experience. To that end, they elevated my title to include “the queen of on-line access”. They wanted to ensure our clients had a live person to connect with for help with online access, rather than be transferred to a call center.

So, if you are having difficulties with our new system, or just simply want to talk with someone, I’m here for you. From log-ons to password updates, or historical statements, your account history is either a click or a phone call away. Just call 407-367-3472!

I’ll be standing by……

Radha (on-line queen)

Women vs. Men – The Retirement Savings Battle

Did you know that 60% of working Americans have less than $25,000 put aside for retirement? Moreover, 30% of Americans have less than $1,000 saved for retirement!

Among the individuals who do save money for their retirement, men tend to have more in their retirement funds than women. According to a recent study by The Vanguard Group, Inc., the median retirement savings for men was $33,547, which is 56% more than the $21,499 accumulated by women.

There are several speculations about why men tend to accumulate more for retirement than women, with some people thinking that women may not fully understand the value of saving for retirement. However, statistics show that women do understand the value of retirement and even tend to contribute more (in terms of percentage of income) to their retirement accounts than men. The following are three myths regarding how women invest and the realties behind these misconceptions:

Myth – Women are less likely to take advantage of workplace retirement programs. The reality is that when women have access to workplace retirement plans, they often have higher participation rates than men.
Myth – Women contribute less to retirement plans. Statistics actually show that in general, meaning at every income level, women tend to contribute more to their retirement plans than men.
Myth – Women are more risk-averse. This is a common misconception, but the reality is that there is little difference between the sexes in exposure to stocks.

Therefore, as the above realities hold true, the real reason that men have more in their retirement accounts than women all comes back to earnings. Men are more likely to work in higher-paying jobs, more likely to work full- time, and less likely to have gaps in their employment (for example: to care for children or elderly parents).

Saving consistently and investing wisely is a simple formula for success, but challenging to put into practice. With NuView IRA, you have the opportunity to self-direct your IRA in real estate, notes, mortgages, private companies, and other ways that most financial advisors are unaware. Give NuView a call today at (407) 367-3472 or visit them at staging-wwwnuviewtrustcom.kinsta.cloud to find out all the options available to you.