SELF-DIRECTED REAL ESTATE DEALS

Transcription

1 SELF-DIRECTED REAL ESTATE DEALS 1

2 THE SELF DIRECTED IRA Using an investment tool called a Self-Directed IRA, you can move beyond stocks, bonds, and mutual funds and create a portfolio that truly works for you. 2

3 FINANCIAL SECURITY 5% The US Social Security Administration defines Financial Security as: $3k per month at the age of 65 APPROXIMATELY ONLY 5% OF AMERICANS ACHIEVE THIS, AND ARE ABLE TO TRULY RETIRE. 3

4 ADVANTAGES OF REAL ESTATE WITHIN YOUR IRA No Capital gains - Profits are taxfree or taxdeferred Positive cash flow is tax-free or tax-deferred No time limit for holding property IRA can borrow money (leveraging your investment) Rapidly compounding ROI (due to taxsheltered status)

5 FUNDING STRUCTURES 1 Property OUTRIGHT may be purchased 100% free and clear using funds directly from your IRA. 5

6 FUNDING STRUCTURES 2 PARTNERING An IRA owner may choose to partner their IRA with their own personal funds or another person, entity or IRA; even with disqualified persons. The IRA owns a percentage of the property. 6

7 FUNDING STRUCTURES 3 AKA Debt Financing LEVERAGING An IRA may take on a loan (mortgage/deed of trust) Must be a non-recourse loan Typically for income producing properties with 35 to 45% down Leveraged portion of the investment may be subject to UBIT (Unrelated Business Income Tax) 7

8 INVESTMENT OPTIONS Subject To s Farm Land REITS Raw Land Mortgages Foreign Real Estate Seller- Carrybacks Deeds of Trust Wholesaling 8

9 BUYING YOUR FIRST PROPERTY Ensure Correct Title of Your IRA Investment Request Funds to Purchase IRA Investment Your Administrator Remits Funds and Retains Records Maintain Your IRA Investment Sell Your IRA Investment

10 IRA TITLING Remember you and your IRA are two separate entities, and as such, the property needs to be titled in the name of the IRA. Titling is the name, or title, that is used to reference your IRA. It is important to reflect your IRA as purchaser on investment documents, rather than your personal name. 10

11 IRA TITLING For example, if your IRA is with iplan Group and your name is John Smith, then the buyer in the contract would read: iplan Group, Agent For Custodian, FBO John Smith IRA 11

12 THE POWER OF COMPOUNDING INTEREST 12

13 THE PRIVATE IRA BANK CONCEPT 13

14 THE PRIVATE IRA BANK CONCEPT By working with a Self-Directed IRA lender, you may tap into hidden wealth by creating an individualized loan; you work with the lender directly to determine the terms of the loan, interest rate, security etc. 14

15 THE FOUR PARTS OF A MORTGAGE INTEREST RATE COLLATERAL TERM LOAN AMOUNT 15

16 EXAMPLE (insert name) (insert location) 55 & 53 Years old 10 Years from retirement $350K in Retirement accounts Inexperienced in managing investments DO NOT want an active role 16

17 EXAMPLE Current Principal $350,000 Annual Addition $13,000 Years to Grow 10 Interest Rate 9% $1,026,085 FOR RETIREMENT! 17

18 EXAMPLE $1,026,085 at Retirement 9% = $92,347 Annually $7,695 a month income (without even touching the principal) 18

19 EXAMPLE They became THE BANK 6-18 Month Mortgages = Trust Deeds Mortgage = Trust Deed Loan Amount Term Interest Rate Collateral 19

20 STEP ONE Establish Credibility, Learn to Self-Direct First Hand Move an old IRA or 401(k) into a Self- Directed Account Complete your first deal Get potential investors excited by showing them the highlights of your deal. 20

21 STEP TWO Find an Investor or investment Partner Friends Associates Business acquaintances Relatives not related through lineal descent Real estate investor meetings & networking 21

22 STEP THREE Negotiate a Deal Find an investment property Present the deal to potential investors Offer an attractive rate of return and explain how the investment is secured (first lien position) Highlight taxdeferred or taxfree growth using IRA Point out reduction in ROI when using money outside of an IRA 22

23 STEP FOUR Get Your Deal Funded Instruct your investor to establish a Self-Directed IRA with iplan Group iplan Group works with your investor to move their existing IRA funds into their new IRA Determine the terms of the loan and create a Promissory Note & Mortgage/Deed of Trust Submit Promissory Note Investment Authorization Form along with a copy of the note documents to iplan Group iplan Group funds your loan from the Self-Directed IRA 23

24 SELF-DIRECTED IRA BASICS 24

25 ACCOUNT OPTIONS TAX-DEFERRED TAX-FREE Traditional IRA Roth SEP IRA CESA SIMPLE IRA HSA Individual 401(k) Individual 401(k) 25

26 FUNDING OPTIONS Transfer Direct Rollover Distribution Rollover Conversion Contribution Regular Contribution QUADRO Inherited Account 26

27 PROHIBITED INVESTMENTS The IRS does not review or approve investments. The IRS does not advise people on how to invest in their IRAs. IRS Publication 3125 COLLECTIBLES Artwork Rugs Antiques Metals Gems Coins Alcoholic Beverages and certain other tangible personal property Life insurance Subchapter S-Corporations Stamps 27

28 PROHIBITED TRANSACTIONS Generally, a prohibited transaction is any improper use of your IRA account by you, your beneficiary, or any disqualified person, such as: Borrowing money from your IRA Selling property to your IRA Receiving unreasonable compensation for managing it Using it as security for a loan Buying property for personal use (present or future) 28

29 DISQUALIFIED INDIVIDUALS The IRA holder and his or her spouse The IRA holder s lineal descendants, ascendants and their spouses Fiduciaries (Investment advisers and managers) Any corporation, partnership, trust, or estate in which the IRA holder has a 50 percent or greater interest Anyone providing services to the IRA, such as the trustee or custodian 29

30 THANK YOU FOR ATTENDING OUR PRESENTATION Matthew Tillack iplan Group Sales Manager ext Schedule a Free IRA Strategy Session: 30