Real Estate Investor Network

If you are tired of seeing your IRA or 401k get ravaged by the roller coaster of the stock market and refuse to invest your money in the low returns offered by the savings and CD market rates, now may be the time to invest part of your IRA, Roth IRA or 401k money into the real estate market and still maintain your tax shelter.

Many people don't realize that they can use their IRA, Roth IRA, or 401k to invest in real estate or mortgages. A self directed IRA can invest for short term profit with REO's, Rehabs, fix and flips with the profits rolling back into the IRA or for long term single family, multi-family and commercial property rentals with the rental income rolling back into the IRA.

There are a few changes that need to be made to your IRA accounts to allow them to invest in real estate or mortgages. You need to open either a self-directed IRA, Roth IRA or 401k. To do this you need to find an independent administrator to serve as a trustee or custodian.

There are different types of fee structures that independent administrators charge. The 3 types are:

• Fee based - each action or duty the administrator charges a flat fee, ei: to make weekly payments for your account they might charge $10 per payment.
• Asset based - the administrator might charge .5% to 1.5% of the total asset value annually.
• Hybrid-based - the administrator charges a fee per action or duty plus an annual percentage of the total asset value annually. The Hybrid annual charge is usually less then what an asset based administrator might charge ie: .25% to .75%.

Finding the right administrator can save you a lot of money. Also, it really is based on their experience, because fee amount isn't an indicator of ability or experience. Just because an administrator charges more doesn't mean that he is more qualified or offers better service than a less expensive administrator.

Hiring a cheap fee based administrator who doesn't fully understand the process and/or doesn't have much experience in self directed accounts isn't a good alternative.

But there are very good experienced administrators that don't cost an arm and leg.

Some administrators don't provide investment advice. Therefore if you're not a do-it-yourself researcher type you may need to find an administrator that does provide investment advice.

Usually people who are attracted to self directed investments are do-it-yourself researchers. More...

What is interesting is tens of thousands of people trusted the stock market gurus to make their decisions, then found that the gurus either didn't know much or in some cases were self serving, encouraging people to invest in investments that offered the guru more profit from earned commissions.

It is difficult to truly understand the strength of a company listed on the stock exchange. If the company isn't local for you to inspect their facility or if you question whether their accounting practices are sound.

That's why the do-it-yourself types are really appreciating the benefits of the self directed investments.

So how do self directed IRA returns compare? That depends on what you invest in. Review some of the actual case examples on this site to better understand recent success stories.

The difference between investing in the stock market and investing in real estate is different. With a rehab fix and flip real estate transaction the following are accomplished:

• Property is selected
• Property is inspected and appraised with a BPO
• Property is purchased
• Property is repaired
• Property is marketed, usually on MLS
• Property is sold
• Investor receives his/her portion of the profits
• Profits are temporarily held in another eligable investment until next property is purchased.

Sample Scenario:

• Property is appraised at $300k
• Property purchased for $150k [paid cash]
• Property is repaired, cost: $20k
• Carrying costs: $20k
• Property is sold for $280k
• Net profit: $90k
• Return on Investment, ROI: 60%

If you need help finding a good administrator email or submit your inquiry. We can send you contact info for a selection of administrators that you can interview to determine which is the best fit for your investments.

Deciding whether investing in real estate is a good fit for your self directed IRA may take some research, but if you are a do-it-yourself type researcher, you may find it very interesting, exciting and profitable.

Contact us today and we can share with you more information to help you better understand how the self directed investments can work for you.