Real Estate Investing Coaching - Brian Gibbons

Real Estate Investors - Need Private Funds? If you can find the motivated sellers.....

If you as a real estate investor need Private Funds for new first mortgages, look at this article below.

You may or may not know, I train Real Estate Investors to get Private Money Marketing.

The steps to getting millions in loans are:

• Learn IRAs and Self Directed IRAs
• Learn CDs
• Learn how to get lists of people that have IRAs and CDs
• Set up a Seminar Free to All from those qualified lists
• See them 1 on 1 and offer 10% with security of being a Private 1st Mortgage Lender no riskier than 80% LTV.
• Do the paperwork and have the right clauses and CYAs.
• Close at an attorney's office.

That's it!

And keep in good communication with your private lender.

And GET THEIR FRIENDS AND RELATIVES as referrals!

For more info on getting your private lenders for all your deals, email me at team@REISkills.com

Ask for MENTORING FOR PRIVATE MONEY!

All the best in 2009,

Brian Gibbons, REI Coach

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Real Estate Resurrection Begins
Hugh Bromma, Entrust Group 01.08.09, 3:45 PM ET

Sales of new and existing homes continue to decline in the U.S., as assets of all stripes are re-priced lower and consumers become more risk averse. But the news in real estate is not all bad, and in some of the hardest-hit areas, like California, Florida and Nevada, sales in some areas have been rising in recent months.

While the national real estate figures show the country continues to be mired in a downturn that started more than two years ago, there are increasingly pockets of hope out there. It's true that much of the recent uptick in real estate activity reflects distressed sales, such as foreclosures. But the fact is that drastically lower home prices and more attractive mortgage rates--rates are down almost a full percentage point on a 30-year loan--are creating more buying interest, especially in the areas that have been hurt the most.

In fact, October existing-home sales surged more than 37% in the West, primarily because of the rise in sales in California and Nevada. And in Florida, existing-home sales jumped 15%, the second straight month of rising sales in the Sunshine State. Meanwhile, mortgage applications more than doubled during the week of Thanksgiving because of the rapid decline in rates.

Adding to the budding sense of optimism are reports that the U.S. Treasury will look to take mortgage rates all the way down to 4.5%, which would provide a huge boost to would-be home buyers across the country. Of course, real estate, even more than politics, is all about understanding the local area, which is precisely where astute investors are finding extraordinary opportunities.

Experienced real estate investors who have been able to keep some powder dry and understand their local markets are now able to buy properties for 50 cents on the dollar, or even less than just a year ago. In many cases, these are the kind of prices that represent once-in-a-lifetime opportunities, where the downside is now very limited and the upside is incredibly compelling.

One of the keys to finding a great real estate investment is understanding the importance of cash flow. We recently had a client utilize his self-directed IRA to purchase a brand new property just outside of Los Angeles. The property, a three-bedroom, two-bath single family home, was purchased for about $150,000, half what the exact same home would have cost a year earlier.

The purchaser had about $60,000 in the IRA and put down about 30% of the purchase price, making his monthly mortgage payment approximately $1,100 per month. In this area, similar properties rent for at least $1,400, so the property should have no problem showing positive cash flow right from the start. In addition, if there is a pick-up in the real estate market, the purchaser should be able to sell it outright for a handsome profit.

This is the kind of activity we are seeing more of in what were the hardest-hit areas. The key, of course, is having available cash--if you're buying real estate in a self-directed retirement account, you will need to put down 30% of the purchase price--and understanding the unique dynamics of the market you are buying in.

As a large administrator of self-directed IRAs, we've witnessed thousands of investors use their self-directed retirement plans to buy properties and realize excellent returns by selling them at a later date or renting them and allowing them to cash flow, as discussed earlier.

If you do decide to explore some of the more downtrodden areas, do your due diligence and understand the market in which you plan to invest. How is the local job market there? How has the area done in previous economic downturns? There's no substitute for knowing your market and doing your homework.

Hubert Bromma is CEO of the Entrust Group and author of How to Invest in Real Estate with Your IRA & 401(k) and Pay Little or No Taxes, published by McGraw-Hill.

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Exotic I.R.A.’s: Leaving Stocks and Bonds Behind - BRIAN HARRIS makes a 30 percent annual return on his Roth individual retirement account, but his money is not invested in a soaring biotechnology stock or a hot currency fund.

       

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October 20, 2007

Your Money

 

By DALIA FAHMY

   

Instead, Mr. Harris, a music teacher from Tucson, owns about 25 marimbas, xylophones and timpani. Using the money in his retirement account, Mr. Harris buys the instruments for less than $1,000 each. He then rents them to his students for up to $60 a month. The rental income flows straight back into the I.R.A.

“It’s a good way for me to have income without paying tax on it,” said Mr. Harris, 38, who played with the Tucson Symphony Orchestra for 12 years before turning to full-time teaching seven years ago.

 

Real estate IRAs with checkbook control gain clout -Setup helps consumers save on annual fees, acquisition costs

	Wednesday, February 20, 2008 By Tom Kelly Inman News

Individual retirement accounts that feature self-directed real estate purchases have become more understood in recent years, and consumers now a have speedier avenue to time-sensitive investments.

Many providers of self-directed real estate IRAs now can set up a limited liability company (LLC) that allows consumers to write their own checks for property investments -- including foreclosures and recreational properties -- without waiting for a custodian to process paperwork or courier documents.

"The costs for setting up an IRA with checkbook control can be considerably more than a standard IRA, but the IRA holder doesn't pay additional transactional, special asset-based or holding fees," said David Nilssen, president and CEO of Bellevue, Wash.-based Guidant Financial Group.

To Thine Own Self - Want more investment options? With a self-directed IRA, you decide where your money goes.

                        

                                                                                    

                        
                        

                               

By Farnoosh Torabi    |   Entrepreneur Magazine - November 2007

   

    URL: http://www.entrepreneur.com/magazine/entrepreneur/2007/november/185588.html    

                             

Interested in a retirement-friendly, tax-deferred way to invest in, say, reality TV? How 'bout a beach house in Malibu or a burger franchise in Eastern Europe? Self-directed IRAs can help. Unlike traditional IRAs that limit investors to stocks, mutual funds and bonds, this alternative account allows for a broader, more creative range of assets, including real estate, private equity, foreign companies and even racehorses.

More IRA investors are taking control of their retirement funds

From the Los Angeles Times
Banking on it
More IRA investors are taking control of their retirement funds -- and chasing their real estate dreams.
By Ann Brenoff
Times Staff Writer

June 24, 2007

IF your retirement garden — specifically your individual retirement account or IRA — hasn't been growing fast enough to meet your future retirement needs, you might want to join a club of contrarians: those who have decided to take matters into their own hands. Literally.

Self-directed IRAs are billed as "putting the 'I' back in IRA." They let individuals determine what, when and where to invest their retirement money. And they are catching on — in no small part thanks to the stock market's volatility and the real estate market's recent riches.

Real estate has always been permitted in IRAs, but few people know about this option. Financial institutions — mutual funds, stock brokerages, banks — are typically where IRAs are held. But investments in other things, most notably real estate, are fully permissible under the Employee Retirement Income Security Act of 1974. It prohibits retirement plans from investing in just two types of investments — life insurance contracts and collectibles. Everything else is fair game.

But ERISA or no, the other thing standing in your way may be your employer. If your IRA is held in a company plan through your job, the plan's guidelines may specify what type of investments can be made — and real estate is rarely among them. If this is the case, establishing a self-directed IRA isn't an option until you and your employer part ways. Once you leave, no matter the reason, you can roll over the funds in your IRA and 401(k) to a self-directed IRA.

It is estimated that only about 4% of America's retirement funds are held in nontraditional accounts, including IRAs invested in real estate. But the trend, experts agree, is toward more money being funneled into these little-known, little-used, self-directed IRAs.

Although investors use self-directed IRAs for a variety of investments, among nontraditional accounts, real estate is by far the most popular.

It certainly was the motivation for Anthony Moreno, 56, of Oceanside, Calif., to establish his self-directed IRA.

Moreno retired in July 2005 after working more than 24 years as a nuclear computer technician at San Onofre Nuclear Generating Station. When he left Southern California Edison's employment, he initially left his pension and 401(k) with the company — primarily because he didn't know what else to do with it, he said. But concerns about a low rate of return and a lifelong desire to own international real estate led him to research self-directed IRAs with the idea of putting his money into real estate. Opening one simply made sense for him, he said.

Now Moreno is in escrow on a pristine 68-acre private island 300 yards off of Roatán Island in the Caribbean Honduras. It was listed at $850,000, and he plans to develop a day resort on it, ferrying cruise-ship passengers by private speedboat to his island. Carnival Cruise Line is building a $50-million terminal at Roatán Island that will be able to accommodate two mega-ships and 7,000 passengers a day, and Moreno plans to tap into this burgeoning tourist market.

Moreno's self-directed IRA was set up by Guidant Financial Group, which specializes in facilitating real estate investments using an IRA.

"I don't see it as gambling," Moreno said of investing his retirement funds in this venture, although he acknowledges that "conventional thinking would probably view this as very risky for someone of my age" and that "there are many 'safer' investments which I could have chosen." But, he added, none of those other investments had "the potential for making my dreams come true."

"I don't know of anybody who ever realized a dream by allowing their fears to prevent them from giving it their best shot. Regardless of the outcome, I will never regret going for my dream. If I hadn't tried, I would have always wondered: What might have been?"

As romantic as the idea of buying your own island sounds, many caution that real estate purchases made through self-directed IRAs aren't the answer to everyone's investment goals. Experts, such as Jeff Nabler of the IRA Assn. of America, strongly urge people to consult a professional advisor before moving their money into one.

For one thing, the tax laws concerning self-directed IRAs are complicated — and likely beyond a layman's interpretation. Mistakes can be costly; early withdrawal penalties may be imposed if funds are misused.

The Internal Revenue Code 4975 defines what are prohibited transactions for IRAs, said David Nilssen, chief executive of Guidant Financial Group, a Washington-based company that he says is rolling over about 200 accounts each month. Basically, any investment the IRA participates in must be for the exclusive benefit of the IRA, Nilssen said.

For instance, you can't use your IRA to buy a home for your mother to rent because there might be a conflict of interest to act in the best interest of the IRA (eviction) should Mom fail to make the rent payments.

For the same "exclusive-benefit" reason, self-directed IRAs cannot be used to purchase a principal residence or a vacation home. They can be used to buy income property, such as land or an apartment building. The title to the property would be held by a custodian, who acts as a trustee for the account and does not offer investment advice but functions essentially as a conduit for your wishes as they relate to buying and selling. The custodian would collect rent checks, pay the mortgage and taxes and handle the other financial aspects of your ownership — for a fee.

The fees vary, and investors are advised to check them carefully and do some price-comparison shopping before moving IRA money from a traditional fund to a self-directed one.

In the last seven years, Guidant's Nilssen said, the self-directed IRA industry has "exploded." Before 2000, "investors couldn't justify leaving the stock market because it was performing too well," Nilssen said. "The industry has more than doubled since that time."

Self-directed IRAs can produce great returns, Nilssen said, but he too cautioned that there are specific guidelines an investor must adhere to. "This is why we recommend that people not try to structure these investments themselves without the help of a qualified professional."

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ann.brenoff@latimes.com

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IRAs and real estate investing

Where to find more information online:

•  Internal Revenue Service: http://www.irs.gov/retirement/article/0id11141300.html <252>•  Guidant Financial Group: http://www.guidantfinancial.com <252>•  Pensco Trust Co.: http://www.penscotrust.com/

•  IRA Resource Associates Inc.: iraresource.com/<252>•  SelfDirectedIRA.org: http://www.selfdirectedira.org/

•  Bankrate.com: http://www.bankrate.com/brm/news/sav/20010213a.asp and http://www.bankrate.com/brm/news/ira/20070417_real_estate_self-directed_IRA_a1.asp <252>

The good and bad about "Checkbook Control" with a Self-directed IRA

When you go shopping for a Hummer, do you expect the salesman to emphasize the fact that it only gets eight miles to the gallon? Of course not. Similarly, if you are approached by someone who gets paid if you contract with them to create a Limited Liability Company (LLC), do you expect them to talk about the less attractive features? Well, I think you know the answer. Sure there are benefits to using an LLC to faciliate IRA investments and Hummers to climb mountainous terrain. But what if you don't need to climb mountains in suburbia? Is the Hummer going to be cumbersome to parallel park? You see we I'm going with this analogy?

LLCs can serve as a valuable vehicle for certain IRA investment scenarios. First, if there are multiple investors going into a single deal, the LLC can facilitate the acquisition and disposition of assets by allowing a single member (e.g., managing member) to sign all documents for the other members. If you have multiple investors going in on an undivided property as co-tenants, then all need to sign at the closing. Another attribute of an LLC or 'C' corporation structure is that both provide an element of asset protection by virtue of the fact that creditors can't pierce the "corporate veil" in most cases. In simple terms, the most you can lose as an investor is your stake in the LLC; not your personal assets or any remaining assets in your IRA(s). On the other hand, you can accomplish the same thing by dividing up your IRA into multiple IRAs and using each IRA for each separate investment, if you think there is a significant liability risk that isn't covered by your insurance.

The attribute that is touted most frequently by promotors of the use of LLCs for IRA investing is "checkbook control"; that is, the ability of the managing member (which may be the IRA owner if the IRA owner's IRA is the only member or 'C' corporation stockholder) to write checks directly to fund investment purchases, without having to go through the IRA custodian. While it is very true that this is possible, it is also a cause for concern amongst custodians, IRA regulators and professionals who serve customers who have employed the "Checkbook Control" approach. Why? because many of them feel that there is significant risk of the IRA owner(s) creating a prohibited transaction through the "checkbook control" mechanism. To demonstrate the reason for this concern, I can think of no better example other than that coming during a recent presentation I gave on this topic to a group of IRA real estate investors in Texas. I had spent about 15 minutes discussing prohibited transactions and "checkbook control" scenarios (involving LLCs) that would create prohibited transactions, and, in summing up, asked the audience if their were any questions. Hands went up, and one gentlemen asked whether the IRS regulations that govern prohibited transactions for IRAs also applied for LLCs that had IRAs as investors!!! I said, to the audience, "I think that comment made my point to all of you as to why some of us are concerned!" Most smiled back, acknowledging the basis of my argument. Of course, it is understandable that the gentleman isn't as focused as I am as the CEO of a major IRA custodian. That's the point. When you remove the experienced custodian from the process, you create an exposure that can result in the invalidation of the IRA and possible penalties.

So if you are considering "Checkbook control" make sure you can drive the car. If you not ready for a Ferrari, then consider sticking with your custodian (not as sexy, but maybe more like a Volvo than a Ferrari-it might be more likely to get you where you're going safely). Some other considerations of investing through a legal entity like an LLC or 'C' corporation are the costs for forming them (up to $5,000 or more), the potential need to have a professional prepare a K-1 once a year; file state franchise taxes or federal taxes; keep books and records; conduct meetings; and pay professional fees associated with technical questions that most custodians will answer for free. Finally, recent events have indicated that it is very likely that the IRS or related regulators may start taking a closer look at IRA investors who use this approach to fund IRA investments. In short, consider all aspects of your next car, before get behind the wheel.

To learn how you can take control of your IRA, please email us.

# - Tom Anderson - 1/30/07; 11:57:17 AM - Comment [7] 

"Checkbook Control" and LLCs - Pensco

            

"Checkbook Control" and LLCs

By Tom Anderson, PENSCO Trust CEO and Founder:
       
Often I get questions from people asking about the term "checkbook control" in relation to self-directed IRAs. Since there is a lot of discussion on the Internet about "check book control" and there are companies advocating this type of arrangement, I want to shed some light on the topic. Below is one example of this type of question:
       
Q: I recently attended a PENSCO Trust seminar, which was very educational. I am convinced that I need to start my own self-directed IRA. I am a bit confused about what a custodian does and what is involved with having "checkbook control." I hear this term in reference to self-directed IRAs but I am not clear why I would want this or what is involved. From the seminar it seems like there is more responsibility for me to have my own "checkbook." Would you please explain it to me in layman’s terms?

 

A. Here is how I respond to these questions: First, there is a lot of talk about "checkbook control" in cyberspace. In fact, we have information on our web site (www.penscotrust.com) that details the responsibilities of a custodian and a blog entry that discusses "checkbook control." (click here for Tom’s blog)

To recap these discussions, I'd like to use the most common example of achieving "checkbook control", which is by investing through an LLC. An LLC is a Limited Liability Company. When you run a company, there are certain responsibilities, which vary by state. In most cases, the general responsibilities are to pay an annual tax, file K-1 reports (a CPA should be hired to do this), keep books and records, bank accounts etc., particularly when your IRA is the sole member. That's because there is the potential for a prohibited transaction if you don't do things correctly, which can invalidate your IRA, resulting in taxes and, if you are under age 59 1/2, potential penalties. This is one likely reason why the tax laws require that IRA assets be held by an approved IRA custodian or trustee (e.g. to help protect the consumer).

LLCs can serve as a valuable vehicle for certain IRA investment scenarios. First, if there are multiple investors going into a single deal, the LLC can facilitate the acquisition and disposition of assets by allowing a single member (e.g., managing member) to sign all documents for the other members. If you have multiple investors going in on an undivided property as co-tenants, then all need to sign at the closing. Another attribute of an LLC or 'C' corporation structure is that both provide an element of asset protection by virtue of the fact that creditors can't pierce the "corporate veil," in most cases. This means that your exposure as an investor is your stake in the LLC, not your personal assets or any remaining assets in your IRA(s). On the other hand, you could accomplish the same thing by dividing up your IRA into multiple IRAs and using a separate IRA for each investment.

The attribute that is touted most frequently by promoters of the use of LLCs for IRA investing is "checkbook control"; that is, the ability of the managing member (which may be the IRA owner if the IRA owner's IRA is the only member or 'C' corporation stockholder) to write checks directly to fund investment purchases, without having to go through the IRA custodian. While it is very true that this is possible, it is also a cause for concern amongst custodians, IRA regulators and professionals who serve customers who have employed the "checkbook control" approach. Why? Because many of them feel that there is significant risk of the IRA owner(s) creating a prohibited transaction or that IRA assets will not be properly tracked through the "checkbook control" mechanism.

I believe "checkbook control" tends to be oversold by companies who are not custodians and whose only business is to establish LLCs for people, charging fees ranging from $2,000 (plus annual maintenance fees) to $10,000. There is even a company that I understand charges clients $2,000 on top of custodian fees and the LLC fees to handle the "checkbook". To me, that’s sort of like having a teenager pay his parents to drive him around on a date. Because of all the opportunities for investors with self-directed IRAs, many companies are trying to get in on the industry. Therefore, be sure to keep their costs in mind, when you make a decision to form an LLC (actual costs may vary):

• Legal fees for formation and ongoing support (generally $2,000-$10,000)
• Annual state franchise taxes, if applicable ($200-$1,000)
• K-1 preparation for multi-member LLCs ($1,000-$3,000)
• Maintenance of bank account(s), and books and records (N/A)

Those who advocate "checkbook control" will say that you are free from the custodian and, therefore, you can do whatever you want. Well, at PENSCO Trust, that isn’t quite true. You can do anything legal with us, and unless you want to do something illegal with an LLC, there is no advantage other than the reduction of transaction fees. For example, we charge $100 per real estate purchase and sale. Thus, unless you are buying and selling 20 times a year, you will not save any money with the LLC structure (and that’s just considering the cost to establish it). In addition, we keep all the records, and you can contact us when you have any questions about potential prohibited transactions for no additional charge. Furthermore, even if you don’t ask us about a prohibited transaction, if you ask us to do something that we believe may be a prohibited transaction, we will let you know.

Our staff is constantly being trained in the details of self-directed IRAs and we share our knowledge at no additional cost as part of our service. We have thousands of clients that have used LLCs as a vehicle and thousands that haven’t. In conclusion, unless you are involving a lot of investors together on a deal, doing dozens of transactions per year, want to learn all the intricacies of prohibited transactions, need some unusual level of asset protection, and are willing to be responsible for all the administration of a legitimate company, there is probably no need for an LLC.