Should Investors Avoid Real Estate IRAs?

MarketWatch released an article on May 21, 2009 that suggested most investors should avoid self-directed IRAs. In “Why Most Investors Should Avoid Self-directed IRAs,“ Robert Powell details three main reasons:

• It is unclear who is regulating this industry;
• The IRS guidelines are complex; and
• There are very few “experts.”

While we appreciate his perspective, we do not feel it is as simple as to suggest this type of investing is only for the wealthy. We believe that individuals have the ability to make good wealth-building decisions when provided correct information.

The rules for investing in alternatives investments using retirement funds have been outlined within the Internal Revenue Code - IRC 4975. He is right – they are complex and subject to facts and circumstances. That is why you need to work with a company (not just an individual) that really understands how these rules apply to the assets you are interested in investing in. There is no space between us on this one.

But then he is also correct that there are very few experts in the field. Unfortunately, there are a lot of self-proclaimed self-directed IRA experts using social media and paid advertising to assert their position as a leader, but don’t be mislead. Do your due-diligence and involve your tax professional and investment advisor to find a firm you feel is most qualified to help you properly facilitate self-directed IRA transactions. Please consider that just because you saw them on Twitter, read a blog post about them or they have written a book does not make them an expert. Here are a couple of things to consider:

• How long have they been around?
• How many clients do they have? (If they have 2 – run!)
• How big is their company? (Size does not necessarily mean better…but it’s indication of their potential experience and strength)
• What value do they provide? (Do not shop purely based on price! If you accidentally run afoul of the rules for self-directed IRA investing, your entire IRA could be distributed. If you have a $100,000 self-directed IRA – you could be forced to take that as income, plus penalties, and pay 40-50% to the government. Saving a few hundred bucks to work with a discount provider is not a good strategy. )
• Are they registered with the Better Business Bureau and what does their history provide?
• Have they been honored, recognized or endorsed by other reputable organizations?

We have always asserted that self-directed IRAs allow people to invest in what they know and understand. It would be difficult to argue that the stock market was safer to invest in than real estate (if you know what you're doing)…especially after this year. Even spirited money man Jim Cramer recently said that real estate is a better investment than stocks today.

Self-directed IRAs allow you to decide that investments you feel are most prudent for your retirement plan. If you feel the stock market is better – buy stocks! If you like real estate…invest in that. The same goes for tax liens, private mortgages and gold. Self-directed IRAs let you invest in your core competencies and there are safe and effective ways to do it.

If you want to learn more about self-directed IRAs or real estate IRAs – contact us!

An Idiot-Proof IRA

We found an article on The Motley Fool today about how to not be an idiot with your IRA. How could that not catch your eye on Google News? No one wants to be an idiot.

We thought it was worth sharing some other ways to grow your IRA accounts. Here are a few of the Fool’s tips:

1. Don't overpay. Watch those management fees - especially in mutual funds. They can add up and over time cost you a small fortune.

2. Avoid overdosing on accounts. Pay attention to where your IRA money is and try to minimize the number of accounts that sit out there collecting fees.

3. Keep your hand out of the cookie jar. Avoid accessing your retirement funds early and getting hammered with early distribution penalties.

4. Don't “dis” dividends. Invest in companies that pay dividends. If you can live without them, reinvest the dividend money back into your account and watch your shares grow, over time of course.

I think a better choice for #5 might have been, “A fool’s advice could pay dividends”. I suppose they have only used the fool cliché only a few hundred times before.

What did they miss? How about DIVERSIFICATION! Guidant Financial Group provides and individual a chance to buy all sorts of investments inside their IRA. In addition to stocks, bonds and mutual funds, our clients can buy real estate, tax liens, private stock and mortgages and even small business. The opportunity is near limitless!

If you are not satisfied with how your retirement plan has performed – call us. Let us help you discover a new world of opportunity.

Gold Investing with an IRA?

As is the case with most investments these days, Gold is feeling the pressure. Generally considered a solid investment, especially in turbulent times, Gold has experienced some ups, and downs, and ups again recently….phew!

In an article from March 10, Bloomberg cites deflationary pressures as the reason for a two day drop in prices to $912.97 an ounce, or a 2.9% drop during the period. This was immediately following a 3.6% increase just a few days prior. Amidst fluctuation, gold has risen 25% in the last 4 months.

What a difference a few days makes!
In an article from today's Bloomberg, gold has rebounded and experts say "BUY"! Another expert calls gold "As good as it gets". Gold is up to $952 per ounce today. From the Bloomberg article, Peter McGuire, managing director at Commodity Warrants Australia Ltd. says, “[Gold has] got the potential to test $980, $990 this week,” and that “The major driver is where the U.S. dollar trades this week and we see further downside on that one.” Read the entire article HERE.

How other metals are trading:
Among other precious metals for immediate delivery, silver added 0.5 percent to $13.82 an ounce, platinum lost 1.1 percent to $1,102.50 an ounce, and palladium slid 0.4 percent to $206.25 an ounce as of 1:27 p.m. in Singapore.

What does this have to do with Guidant?
The primary investments our clients make are in real estate, tax liens, franchises, small businesses and private loans. Recently we have seen a spike in the interest being shown in precious metals – namely Gold and Silver. These and other precious metals headline the limitless other alternative investments that our clients use because they are an interesting investment in any market. With the Guidant self-directed IRA, you are able to purchase Gold and other precious metals with your retirement funds as a long-term investment without paying taxes or penalties. To learn more about a Gold IRA or to find out if you can invest in something non-traditional which you do not see mentioned on our site, contact a Guidant today!

10 investment tips for you!

When surfing the web this week, we ran across a list from the site where many men go for all sort of information - AskMen.com. In part 3 of a series of investing articles, AskMen.com enlightens us with their top 10 tips on investing. Some are similar to the reason Guidant is in business, starting with diversification. There is nothing better than diversifying and putting some your IRA/401k money into something that you can count on, perhaps slightly more than the NASDAQ. Their list is after our own hearts:

1. Diversify
2. Do Your Homework
3. Set Goals & Limits
4. Don't Gamble With Money You Can't Afford To Lose
5. Don't Be Greedy
6. Invest For The Long-Term
7. Avoid Acting On Impulse
8. Go For Value
9. Tax Planning Is Important
10. Get Professional Help

Read entire article HERE.

Now that you are ready to start diversifying your investments, check out some self directed IRA investment options on our website. You can use a self-directed IRA to purchase real estate, loan, tax liens and more. Also, if you want to buy a business, you can invest your 401(k) into a small business or franchise with the Guidant 401(k) plan. The options are truly limitless.

Foreclosure Auctions- perfect for a real estate IRA

Nuwire Investor published a "how to" article by Bryan Davis call, How To Buy Real Estate at Foreclosure Auctions. Given the rise in foreclosures, we thought we'd point it out as a potential area of opportunity.

Many individuals come to Guidant because our self-directed IRA LLC allows account holders to gain checkbook control over their retirement funds...making foreclosures a possibility. Last we knew, IOU's weren't acceptable forms of payment at a foreclosure auction.

Real Estate IRA investing

Self-directed IRA investors often call Guidant in hopes of gaining insight into where our clients are investing their retirement dollars. While we cannot discuss the particulars of client transactions or recommend any specific investments, we can share we have seen a rising interest (again) in domestic real estate – primarily rental properties.

Recently, we have heard many that see opportunity because of tighter credit markets. It is harder to get qualified for loans than just six months ago and because there are fewer buyers, more inventory sitting on the market. More inventory means that sellers are more likely to negotiate – making this a buyers (or investors!) market. Today, many investors feel they can buy real estate at lower prices and charge a premium to rent the same place.

You may consider diversifying some of your retirement assets in to different markets and different assets. The beauty of self-directed IRAs is that you get to make that choice.

The Best Real Estate Markets For 2009

Forbes magazine recently published its top 10 Real Estate Markets. Investors may want to take notice of some of these markets—near or far—as many of them provide opportunities for substantial returns. The top 10 are:

1. Washington D.C.
2. London
3. New York City
4. Tokyo
5. Shanghai
6. San Francisco
7. Los Angeles
8. Paris
9. Houston
10. Singapore

Washington D.C. ranks number one because burgeoning government programs are expected to draw large numbers of workers to the city and surrounding areas, creating higher demand for all types of residential real estate and a boom in service industries.

New York's density was widely believed to guard the metropolis from major downturns in residential property sales, but some neighborhoods have seen a three-quarter drop in sales activity, according to the article. This drop could bring bargains in the near future as the local market recovers from the financial crisis that has stricken Wall Street.

Like most California cities, San Francisco and Los Angeles have seen significant drops in housing prices. The former is also on the verge of a major commercial property glut, which could present bargains for long-term investors, while L.A. is seeing more sales activity in recent months, hinting that the market may be at least nearing its bottom.

Lastly among American cities, Houston is one of only a handful that saw prices rise overall from 2006 to 2009, and this growth is expected to continue because of the city's low business costs, which could attract corporate relocations and thus new residents.

As fears continue to rise concerning the fate of the stock market, more and more IRA holders are considering self-directed IRAs over traditional investments. These real estate markets may provide the right opportunities for investors to weather recent downturns and see returns much larger than they might have expected even in the boom years.

Read the article, which focuses on the D.C. property market, on the Forbes website here.

Mortgage Rates Still Low: Good News For Everyone?

Fixed-rates for mortgages are the lowest that they have been in several decades, according to an article on MSNBC.com. No one can be certain of how long these low rates will last, how much further they might fall and how much they will rise after reaching the bottom. It's also not a given that aspiring homeowners will actually be able to get financing, especially if they have less-than-perfect credit scores.

One thing is slightly clearer: These rates are more incentive for homebuyers to take advantage of the low prices already being offered in this buyers' market. This could raise demand significantly, and as demand rises and inventory diminishes, home values will also be on the rise.

For property investors, these low rates are good news for the longterm. It will still be a while before most markets—especially truly glutted markets—see prices rebound very much, and financing is well out of reach for anyone who has experienced foreclosure. Many people still need to rent at present, which guarantees that many investment properties will generate cashflow. Individuals who are considering investing in property can find great deals on homes and may see prices appreciating sooner than later if these lower mortgage rates do compel more people to gradually start buying.

Even with these low-rates, investors who have sufficient retirement funds to buy property may want to consider using a self-directed IRA as a debt-free means of financing. After all, no interest is still better than low-interest if the property is to be an investment. There are housing markets that seem to already be at bottom, and today's low mortgage rates may give these markets the final push toward appreciating home values in the coming year.