Little-Known Use For Your IRA

Diversification is key to investing. So say the gurus of Wall Street who handle our 401ks and IRAs. Of course, their idea of diversification means giving them all your retirement money, letting them allocate it among the financial products they handle. Given the performance of Wall Street lately, going that route seems more a suicide mission than sound retirement planning. Is this what you really want to do?

With the collapse of the sub-prime market, the spread of the disorder to big financial houses like Bear Stearns and as far as the hitherto untouchable Asian markets, it’s getting harder to figure out how to prepare ourselves for retirement or even how to protect what we’ve got.

If you can’t trust [and you clearly can't]the Big Boys of Wall Street, who can you trust with your money?

Who do you trust to take care of your physical health? Doctors? Hospitals? HMOs? You’ve known the answer to that for quite sometime now. You take care of your own health. You take care of your own family because no one else is going to.

This is America, built on self-reliance. Who better to take care of your money than you?

Luckily, you do have a little-known option to allow you to invest your own retirement money. Did you know you can put some or all of your retirement funds into a self-directed IRA ? If you do that, then you can invest in whatever you want, even real estate. Create your own diversification. That’s right. The IRS allows you to put your non-taxed retirement funds into IRAs which you then invest as you please. The profits are non-taxable, too, as long as they stay in the IRA. Just as in any professionally-managed IRA, you can’t remove the profits without paying taxes and penalties.

Of course, there are a few rules to follow, but companies offering the self-directed option will be happy to explain them to you, though not to offer any investing advice. Where you invest is up to you.

If you have looked longingly at the medley of short sales and foreclosures in your neighborhood or nearby, wishing you were able to invest, take heart. Now, you can! Use your self-directed IRA to invest in residential or multi-family properties, even commercial properties or land. You may not be aware of it, but tracts of land in Los Angeles County are for sale at reasonable prices. Buy in small or large increments at today’s low prices with your retirement funds and collect on the accumulated equity 5 or 10 years down the road. You can do that, too.

For further information regarding your own particular situation, give me a call at 626-641-0346. I will be glad to help you to the best of my ability.

It’s a Great Time To Invest!

Every action has an equal and opposite reaction. We all learned that in science class. It’s true not only in nature, but also in real estate. Times are tough for sellers who formerly ruled supreme. We all know it’s a buyer’s market. But, have we figured out yet that it’s also an investor’s market?

 

Think about this if you have been considering the money-making possibilities of real estate.

 

The selection today is phenomenal. It’s the best time for buyers in any price in years. Just last year and certainly in 2006, the inventory even in vast L.A. County was minute. Today, homes are languishing on the market for months, despite price cut after price cut. Oh, happy day!

 

Back in the sellers’ market, buyers inevitably got involved in bidding wars. Every “good” listing immediately had multiple offers. Sellers had the pick of the crop. Very often, the “winning” offer was above list price. The trick then for buyers was how high above list to go in order to beat out the other offers. Good for the sellers, bad for the buyers. Today, no bidding wars.

 

Now if you make any offer, especially on property which has been on the market for awhile, as most have, sellers carefully consider your offer,  even if it’s far from what is desired.  Selling a home has a psychological dimension. If the home has received no offers for a significant time period, sellers lower their expectations.

 

Sellers today are willing to make concessions. Do you have a repair request? Last year or the year before, forget it. In this market, though, sellers are more willing to make repairs or lower the price. Do you want a long or short escrow? Need to sell yours first?

 

Sellers today are making special deals we haven’t seen in years. Looking for seller financing? You may find it. Looking for lease option? That’s more likely, too. How about VA? Sellers will consider any offer these days.

 

Do you hate to rush? Buyers in the sellers’ market had to make instant decisions. No more. Since property is on the market longer, buyers have a chance to think through their choices, always a good idea when making a major decision.

 

As mentioned last month, now jumbo loans and FHA loans are available up to a loan amount of $729,000. This is a huge benefit for buyers. Yes, the crazy loans of the past are history, but teachers, police officers and first-time buyers, buyers in specially designated areas will get special deals. Many new home builders are offering special financing.

 

And last, but very important—few investors are out there today. If you want to invest, you have far less competition than in previous years. The selection is great.  Sellers’ motivation is great. The only missing element is available money. You may have more than you suspect. Check out the next post for an unheralded way to invest in real estate.