Stepping Outside the Real Estate “Box” with Self Directed Retirement Accounts

By Laurie Bachelder

Investors tired of watching their retirement accounts ride the Wall St. rollercoaster are searching for other ways to create wealth in their retirement accounts. If you turn to most business or financial publications or websites you will find many articles about investing in real estate with a Self Directed Retirement Account (‘SDRA’). The majority of articles written about investing with a SDRA pertain to real estate as a popular choice for an alternative investment, and why wouldn’t it be.

Real estate offers several advantages. For one, most people understand real estate. Many investors own a home and understand how real estate performs; they understand that real estate typically appreciates in value . With real estate it is unlikely, not impossible, that the value of a given property will decline to zero and the investor will lose their entire principal. Compare this to stock investments. It is very possible to lose your entire investment in an individual stock if you are not in charge of the company, or if the company’s assets are highly leveraged

Real estate investors like the fact that there is a physical asset they can see and touch, and in some cases exercise some control over. This can help curb any uneasy feelings when the market is volatile.

But what if an investor is not interested in investing their SDRA in real estate? Or maybe an investor already holds a portion of their portfolio in real estate and understands they need to further diversify their holdings. After all isn’t diversification one of the founding strategies for risk management of a successful portfolio?

True Diversification

SDRAs allow investors to truly diversify their portfolios and to invest in an almost endless range of investments, with a few exceptions per the Internal Revenue Code. SDRAs allow people to invest in their core competency. If they understand stocks, then they can invest in the securities market. If they understand real estate, then they can use that knowledge to invest in real estate. If they understand farm animals, show horses, domain names, the restaurant business, construction, and so on then they can take that knowledge and passion to invest in those assets.

The bottom line is – SDRAs allow people to pursue the investments that they know and understand. As long are the rules and regulations are adhered to their imagination and passion become the only limitations.

What is your passion? What are you knowledgeable about? What do you think will grow your retirement account wealth? These are the questions one has to ask themselves. These are the questions that many investors have already answered and have been enjoying rewarding returns within their SDRAs.

Turning Passion info Profit

Investor Joe, a businessman with a background in business development and business analytics, has always had a passion for horses. Joe also understands the potential that dressage horses offer for a healthy return on investment. His experience arms him with the knowledge that there is a difference in value between what a horse is worth in Europe and what it would be worth in the United States.

Joe’s Business Plan states: A well trained horse in Europe may sell for $40,000, but that same horse may bring forth a value of $80,000 in the United States. The difference in value is the profit margin for this asset.

Coupling his knowledge and passion with his savvy business sense, Joe was able to put together the right people with the right synergies to incorporate his passion into an investment for his SDRA. He already had a working relationship with a horse stable and he had in-depth knowledge on buying, training and selling horses. Joe also has a close working relationship with trainer, vet and a transportation company. Joe coordinated a new venture to import, train and sell dressage horses using his SDRA as the investment vehicle for this new venture.

Don’t have a passion or understanding for dressage horses? Maybe you have an understanding of the process of excavating and how to make money from raw land and dirt.

Investor Ike makes his living in excavation. Ike knows that when excavating land there are many aspects that can bring income other than just getting paid to clear the land. The trees that are cleared can be cut and sold as lumber or firewood, the dirt that is removed can be sold as fill and once the land is cleared it can be divided up and sold to developers.

Ike, armed with this knowledge and an SDRA, uses the SDRA to purchase 50 acres of wooded land in a highly sought after area for residential development. Per the IRC rules and regulations, Ike will not personally perform any of the excavation work on the land that is owned by his SDRA, but he will contract the work for the clearing of the trees and removing of the dirt. He will also decide where to sell the wood and fill. The profits from the sale will flow back into the SDRA and will continue to grow tax deferred or tax free. The same goes for the profits from the sale of the land that will be sub-divided once cleared.

Diversification for Everyone

Even if do not have a passion, hobby or specialized knowledge that you think can be profitable, that doesn’t mean an SDRA won’t work for you. If you are creative, it is possible to come up with some interesting strategies that could turn a profit.

For example, Investor Dan, an experienced businessman, lives in New York City and read an article about the sale of covered bus stop stations to minimize the maintenance costs from the transportation agencies hands. As Dan was reading this article it struck him that this could be a good investment, not because they would appreciate and he could “flip” the stations as in real estate, but because of the cash flow opportunities. Each of the covered bus stop stations in the city provides an opportunity to sell advertising space on them. This would provide a monthly cash flow back into the SDRA and also create a viable cash flow report when the time comes to sell any of the stations. The profit from the sale would also flow back into the SDRA and continue to grow tax-deferred.

No matter what your passion or knowledgebase happens to be, there is bound to be something that you can invest in to generate wealth for your retirement. Structured properly, alternative investments can benefit an investor’s SDRA just as easily as a stock or bond.

A word of caution though, alternative investing through SDRA’s typically requires additional knowledge of the rules, regulations and guidelines set forth by the IRC. It is not the same as sitting at your computer and purchasing common stock, wherein all the rules, regulations and guidelines are more straightforward. The best chance of succeeding in the world of alternative investing is to work with professionals that are knowledgeable, specialize in the industry and take the extra steps in making sure that the investment through the SDRA is in compliance with the guidelines.

Disclosures: The examples used in this article have resemblance to actual investments, but specifics have been withheld to maintain the privacy of the client and their investment portfolio. This article is for educational purposes only. There is risk associated with all investments, both traditional and alternative investments. Not all investments are for all investors, and appropriate portfolio planning, whether traditional or alternative is required prior to making any investments. Classification of risk for an investment is based on many factors, some of which is inherent in the investment and some of it is based on the portfolio and plan of the investor. Please seek professional advice prior to planning any investment whether traditional or alternative. Nothing in this article implies, either explicitly or implicitly, that NUA or the authors of this article is soliciting investors for any specific type of investment, nor is NUA or the authors providing any form of investment advice through this article. Not all information contained within this article may be applicable to all readers, and NUA shall not be held responsible or liable for any use of the information with or without seeking knowledgeable professional advice.

About The Author About NUA Advisors, LLC (NUA): an independent Registered Investment Advisory firm is bridging the gap between traditional and non-traditional investing. NUA is unique in that they have an extensive understanding of the regulatory and financial considerations involved in an SDRA. NUA is comprised of experienced and knowledgeable professionals who provide diversification strategies that go beyond traditional markets. If a client has identified an alternative investment, NUA’s risk management team can provide the fundamental analysis of the investment, as well as assist with properly structuring the transaction to avoid the common pitfalls of alternative investments within a SDRA. Interested clients that have not yet identified an alternative investment to diversify their portfolio may utilize NUA’s alternative investment platform. The platform identifies, evaluates and monitors alternative investment options for SDRAs. NUA appropriately introduces clients to strategies designed to provide true diversification that are non-correlated. For more information you can visit http://www.nuaadvisors.com; or Contact NUA Advisors, LLC at: info@nuaadvisors.com

So What is Equity Buildup?

Building wealth. A simple statement. Everyone wants to “build their wealth”, or just simply “get rich”. One of the most widely recognized paths to this wealth building has historically been through Real Estate Investment. I use the word “path” deliberately as the road to real estate riches is not normally one of “overnight success”.  It has long been, and continues to be, one of the surest paths to wealth. It can be a sure path if you do your homework, and it does involve study, planning, research, some degree of risk, and most of all, a plan of action.  Nothing happens without taking action.  So, how does the term equity buildup apply here?  Equity is the difference between what is owed on a property (the mortgage or the loan) and the actual market value of that property, or what it will sell for. It’s the cash you take away from the closing table after you’ve sold the property. Before you cash out it is equity.

Now that we have defined equity, we can talk about equity buildup. One of the most powerful tools in acquiring wealth through real estate investment is equity buildup. How does it grow?  It can happen naturally, or it can be forced.  When it happens naturally, it is generally over a longer period of time, and is the result of natural appreciation. Buy a property, hold it for a long time, let the rental income cover the mortgage, taxes and insurance, and then sell it for more than you paid for it. Many people have use this method as a means of building a secure retirement portfolio.

The second method, or forced appreciation, occurs as a result of specific actions on the part of the investor, and can happen using several different methods. You can buy right (right meaning low) and have instant equity, you can buy something in need of repair and improve it – thereby creating instant equity, or you can build it from scratch and sell it, also creating instant equity.  Any of these last three ways are generally used to develop fast real estate cash. By far the quickest of these is to simply buy a property in good shape, from an extremely motivated seller, and then re-sell it as soon as you can for a short term profit.

Buying a property to fix up or “rehab” as it is usually known in the business, is the second quickest.  Buying a piece of land, building a house, and then selling it would come in third.  Any of these three can usually be accomplished in less than a year.  Buying low and immediately re-selling could be anywhere from a day to a few months. It all depends on your methods of marketing.  One other way which does not involve equity buildup- but can produce quick cash, is called “assignment of contract”.  Contract for a property, add on a small profit, and sell the contract to a buyer who wants to do any of the above. That’s a whole separate subject, and will be covered in another article.

I’ve purposely left out any quotes of profit numbers here, as they can range anywhere form a thousand to five thousand or more for a simple assignment, to that much up to even six figures on any of the other methods. It all centers around your market, your research, your savvy, and your exit strategies.

If you’d like to learn more about these, and other helpful strategies, visit my website, as shown below.

Michael Perry has been a successful Real Estate Developer and Investor for over 30 years. He has purchased and/or built properties in New York, Hawaii, and Florida. He has authored a Real Estate Book for first time homebuyers, (Buying A House-The First Time Homebuyer’s Guide- – available through AMAZON.COM and major bookstores), and has owned and operated numerous small businesses. He presently resides in Central Florida. Go To http://www.FreeRealEstateInfoandDeals.com

Why Selling on Lease Options is Glorified Landlording by Tim Randle

I might upset some folks with this one, but that’s okay as I think it’s important to get some of my experiences into the light of day. If you fully believe the hype that you won’t have any landlording responsibilities by selling on a lease option, go ahead and stop here. Or perhaps you should read on as this article is specifically written for you. Let’s review one of the common misconceptions that is thrown around by folks touting the wonders of selling properties on a lease option: You won’t have any repairs or maintenance. True, you can certainly have your documents state that the tenant/buyer (TBer) is responsible for repairs. In fact, I’ve seen numerous variations of this ranging from the TBer is responsible for all repairs to only those repairs falling within a certain price range. Some investors ask the seller to be responsible for repairs up to a certain amount and ask the TBer to be responsible for those over that amount. Insurance will theoretically cover major damages so that’s not an issue. And I know from several experiences that insurance will and does cover many repair expenses less than $10,000. So far, knock on wood, I haven’t had to test going above that amount. So, what happens when your TBer moves in, sends you back your move-in condition form and two days later the A/C, heater, or whatever goes out? You’re either ponying up some money or you have one upset TBer. Yes, I know it’s wise to have them sign off on an inspection or an inspection waiver prior to move in, and if you’re not doing that, I recommend it. However, do you think that’s going to matter if the TBer just gave you the majority of their life savings and they’re looking at a large repair bill? Yes, you can use some of their funds to purchase a home warranty and I also frequently do that. If the expense happens to be one that is actually covered under the policy on such a short time frame and not classified as a pre-existing condition, then you’re fine and the TBer can just pay the deductible. Wait a minute, didn’t you shell out a few hundred for the warranty? True, it came from the TBer’s funds, but that option consideration was supposed to be yours to keep, right? Other recommendations on addressing the issue include asking the seller to be responsible for repairs for a certain time period and then passing that “guarantee” on to the TBer. Again, it may be one of those “sounds good in theory” type arguments. The few times I’ve gone that route I’ve not had to test it, but I wouldn’t be surprised if the seller is a bit upset if I had to call to ask for money after the fact. And what happens if your repair period from the seller is only 30 or 60 days and it takes you longer than that to find a decent TBer. Oops. What I’ve found is that typicallly the TBer will agree, sometimes reluctantly, to cover half the expense. I present that solution in such a way that it does appear as if I’m breaking “company policy”, but since “I want them to be happy in their new home”, I’m willing to bend the rules some. It is definitely smart to push the TBer to get an inspection done prior to move-in as this not only comforts them, it protects you. Make sure you get a copy of it and have the TBer sign off on it. To be clear, I only make this offer for repairs that occur in the first 30 days. After that, they’re on their own or insurance will take care of it. Let’s not forget the TBer who doesn’t call to let you know that something needs repair. You may have done such a convincing job explaining that it was their responsibility that the TBer chooses not to call. Since they don’t have the money to fix the water leak in the upstairs tub, they just let it continue. Now, we’ve got some mold issues and much more serious repair numbers. It’s critical in my opinion that the TBer call you if they have a significant repair, even if they’re able to pick up the tab. I want to know what’s going on in my properties. So, to summarize, I think there are some important steps to take when you sell your properties on a lease option. Take what you feel is important and incorporate it into your business if you haven’t already done so. 1. Push the TBer to get an inspection done. If they don’t have the $200 or so to do this, ensure they sign off on an inspection waiver. It’s more difficult for them to come back to you demanding their option consideration and rent back due to needed repairs if they made this choice on paper and signed it. 2. Consider using part of the TBer’s funds to purchase a home warranty. Not only does it comfort their concern of potential repairs, it increases the likelihood that needed repairs will get done. It’s cheap insurance in my opinion. 3. Set up your standard operating procedure regarding repairs. Like all issues regarding properties with which you stay involved, it’s important to promote and maintain consistent, documented procedures. In other words, don’t have different repair policies for different properties or TBers. Choose the repair responsibility method or methods you think will work best and stick with them. 4. Another item not mentioned that is also company policy is that the TBer must have and maintain renter’s insurance. Policies can be purchased for very little funds and it protects their personal property. Typically, these policies will also have a liability component that provides an initial layer of protection before they get to your policy. This way, if some accident happens, like the tub leak above, that damages their property, they won’t be coming to you first for replacement. Selling on lease options can be a profitable technique if done wisely. Just don’t go into it believing it doesn’t take any work and that the landlording headaches are completely removed. They aren’t.

Written by Tim Randle

Tim Randle bought his first investment property in 1994 and he is a full-time investor in Round Rock, Texas. He licenses his web site, www.QuickOffers.com, to other real estate investors who need a turnkey web site to use in their own investing business. He also owns and operates www.REIClub.com, an online resource for creative real estate investors.

Tim’s informative articles on real estate investing have been published in Creative Real Estate Magazine as well as the Mr. Landlord Newsletter and his counsel is frequently sought by investors around the country.

You can visit Tim online at http://www.REIClub.com

Should You Refinance Your Home to Buy Investment Property?

Would-be investors often ask whether or not it’s a good strategy to refinance their home in order to purchase investment property. The answer is a definite: maybe, but it depends upon a variety of factors. Understand your options to make money in real estate. By Jeanette Joy Fisher in response to readers’ questions Whenever you take on an investment property by borrowing the money to get it, you’re assuming a risk that the cost of borrowing that money will outpace the property’s income, which can cause severe negative consequences over time. Sometimes it makes more sense to take out a home equity line of credit rather than to refinance the first mortgage. This money can be used over and over without paying new loan costs. In other words, the investor can purchase one house, sell it, pay the money back and then have immediate access when another bargain property comes along, without paying more loan fees. So investigate both options before you make any decision to borrow, and make sure you’re comfortable with the risks that are inherent in any investment opportunity, because things can and do go wrong–and when they do, your home may be in jeopardy. Since you can claim the interest on your principal residence on your taxes, you many realize some tax benefits to refinancing, especially if you’re planning to use the money to pay off other debts that aren’t deductible. Check out IRS Publication 936, “Home Mortgage Interest Deduction,” before you make any decision. It discusses how to approach the interest involved with owning and financing your home. Refinancing of your home is a serious step, and shouldn’t be taken lightly. If you’re like most Americans, your home is the single largest asset you own. Make certain that you know all the ins and outs involved with the purchase of the investment property you’re considering before you commit to a refinance. If, after long and careful consideration, you determine that the investment is sound and won’t adversely affect your home and family (always think in terms of the absolute worst case scenario; that way, even if the sky falls, you know that you’ll be able to survive financially), you can begin talking seriously with your lender about the advantages and disadvantages of refinancing or a home equity loan. Investors tend to be an optimist lot, but never let a rosy-looking profit potential blind you to the possible pitfalls if thing go awry. A little caution at the beginning of the process can save lots of both financial and emotional heartache and frustration later on. If you feel insecure about risking your home, look into 100 percent financing options for investment properties. With good credit, you open the way to buying property without jeopardizing your home. The best way for you to get started investing in real estate is to do your research first. Understand your local market trends, your local employment outlook, and your capabilities. When you know how to make a wise investment, you can make money and secure your future. Copyright © 2006 Jeanette J. Fisher

Many people feel overwhelmed by the C-Corp, thinking that a corporation must be more tedious to maintain than an LLC.  In the end a C Corporation will outlast the LLC.  Some business owners don’t want to file a “resolution” for the corporation, to say nothing of the minutes of meetings.

 

The truth is, even if you have an LLC you should be doing this.  A copy of the Resolution you can use for your business with is available at www.xxx.com.

 

I have found a program called www.managemyminutes.com, which is really easy and allows you to fill in information required for documentation.  It even has prompts, and walks you through the process so you can keep your records.  Then as soon as you enter the required information it can print out minutes and resolutions.  You print them and add them to your corporate file, and you’re done.

 

For a mere $199.00, having this company do it for you is a no brainer. People who do this through an attorney usually pay them from $500 to $3,000 dollars.  It even provides standard contract templates that you can use. And you can set it up so it emails you reminders – at the end of the year, for example, saying you need to do your statement.  It will notify you when it is due.

 

It seems that many people are also afraid of C-corps because they think they need to be a big company to call their business a corporation.  In reality, in most states you only need one person to have a C-corporation; while some others do require at least two.

 

The other benefit to an Entrepreneur is how it enhances your benefits.  A C-corporation can cover up to 100% of certain expenses, and give you a tax write off.

 

For example, God forbid, if you get cancer; because your business is set up as an LLC, you are going to be responsible for 20% of the bill.

 

There are a number of things that the C Corporation can do that the LLC cannot.

 

 

 

 

 

 

 

 

 

 

Dustin Mathews- best-selling author of How to Get Rich Working For FREE, and co-author of Secrets of The Real Estate Millionaires, is the nations most celebrated small business and entrepreneurial financing expert.  Claim your very own copy of the video e-Course, “How to Get The Money You Need to Launch or Expand Your Business without Going to The Bank!” at http://www.BusinessCreditVideos.com

“Buy low, sell high” is quite possibly the oldest of axioms in investing in the stock market. While on the surface it seems like a simple rule, the fact still is that some people make money on the stock market and others don’t. The issue is that there are certain intricacies in these four words that some people don’t understand. And so, the rich remain rich, and the poor remain poor.

What’s really going on?

Imagine this situation. Some problem happens which causes a particular commodity to drop in price per share. Think of the S&L crisis from a few years back. Because of the subprime loans, real estate prices inflated because the market got saturated with bidders. When inflation goes on for too long, the bubble is bound to burst. When it all came down, every news medium had horror stories of people losing their homes-people you would never expect. The prices in real estate plunged, everyone became afraid of banks and their stocks fell. There’s a saying that if Bill Gates catches a cold, the shares of Microsoft will fall. In other words, if a problem happens with a commodity, the prices of related commodities will drop.

Certain people, uneducated in the school of investing can only see the problems of the commodity and miss out entirely on the fact that its prices are at a low point. They miss the opportunity to “buy low, sell high” because the fear over the problems clouds their judgment. They can only see the problem and not the opportunity.

Other people know the game. When stock prices on a commodity are low, they buy, regardless of problems with the commodity. They may not even pay attention to whatever scandal led to the price drop. These opportunistic types are the ones that make money off the market.

Naturally, once the problem with the commodity goes away, the prices will rise again; maybe even shoot through the roof. Guess who’s at the advantage in this case? That’s right, the savvy investor who bought low now gets to sell high.

The other group reads in the newspaper about a certain commodity (real estate, stocks, gold, whatever you can think of) is on the rise. They probably also see in these headlines that people are getting rich beyond their wildest beliefs by “selling the farm” and buying everything they can get their hands on.

This is how it plays out.

When the prices are high, the less affluent players buy from the wealthier share holders. Eventually, the inflated bubble bursts, and the prices drop. The inexperienced buyers panic and sell-right back to the wealthy players, who will buy it just because the prices are low. They really don’t care to have the commodity; they just hold on to it until the less savvy come along when the esteem (and prices) rise again. And so, the dance goes on.

Raymond Aaron, New York Times Top Ten Bestselling Author, “Double Your Income Doing What You Love” Claim your http://www.GIFTfromRAYMOND.com to double your income. It’s free. Join Raymond Aaron on Twitter @RaymondAaron. Join “Raymond Aaron Double Your Income” Facebook Fan Page at http://www.FacebookRaymond.com.

Tax Liens and Tax Deeds - 

Some Basics for Your Success

By: Darius M. Barazandeh, Attorney at Law / M.B.A.

We have all heard the stories and heard the claims about tax foreclosure sales. You know the stories where someone purchases a house or property for $1,000 dollars with a true market value of $50,000. They then turn around and sell it for a huge profit. In fact everywhere I turn someone is talking about the wonderful purchase opportunities that tax sales and tax liens can hold. Before I started investing in tax sales my first question was, “If this is such a great investment technique, why is it that I have not heard about it? There has to be a catch, something that no one was telling me about this technique.” The truth is that you can gain a very favorable return by purchasing tax lien certificates and tax deeds, but as with everything you need to learn from other people’s knowledge, use common sense, do your research, and stay positive!

The General Tax Sale Process

Almost all states allow for a tax sale foreclosure process that allows common citizens, just like us, to purchase tax sale properties. Here’s how it happens:

If an owner of real property does not pay their taxes the county or the taxing entity will file a lawsuit to collect the unpaid taxes, and if such taxes are not paid, the property will be sold at a public tax auction to the highest bidder.

The certificate or tax deed will be sold at a public auction and the opening bid will typically be made up of the amount of back taxes owed. This amount will usually be made up of:

• Delinquent Property Taxes
• Interest Charges
• Penalty Fees
• Legal Costs
• Administrative Charges and Fees

When a tax certificate or a tax deed is sold, the purchaser acquires the rights held by the county or taxing unit. Tax sales may be held annually, semi-annually, quarterly, or monthly. There are no restrictions for bidding in these sales (i.e., you do not have to be a real estate agent, professional investor, etc.); however you usually must be able to pay the bid amount within a short period of time.

For a specified period of time the delinquent owner has the right to buy back or “redeem” the property. This is called the right of redemption. In many cases this redemption period may be as short as 6 months or in states such as South Dakota and Wyoming, as long as 4 years. If the delinquent owner does not redeem the property during the specified time, then the successful bidder is entitled to the property regardless of the purchase price. Let me say that again: the successful bidder would be the owner of the property even if it was bought for $1,500 and it has a market value of $150,000!

That sounds great, but what happens if the delinquent owner decides to exercise their right of redemption? Do I lose my deal and all the money I spend at the action? No not at all! In that case they (the delinquent property owner) must pay you an interest penalty charge on top of what you originally paid for the property. This interest charge could be from 10% to 25% (for redemptions occurring during the first year) or up to 50% (for redemptions occurring during the second year). What this means is that you will get back the money you originally invested plus the interest charge while the delinquent owner will get their property back.

So in most cases either you purchase real property for pennies on the dollar or gain a high rate of return on the money you used to purchase the property!

Here is list of the returns paid out at redemption for various states. Remember redemption refers to the statutory or legal right for the original owner to buy back the property.

SELECTED STATE	REDEMPTION RATE
Alabama	12% per annum
Arizona	16% per annum
Florida	18% per annum
Georgia	20% first year 40% second year
Iowa	24% per annum
Kentucky	12% per annum
Mississippi	18% per annum
Nebraska	14% per annum
North Dakota	12% per annum
West Virginia	12% per annum
Texas	25% first year 50% second year

Let’s look at an example so you can clearly understand how the redemption return works:

George attends a tax foreclosure sale and he is the successful bidder. He files the deed with the County Clerk or Recorder’s Office. Four months after the deed is recorded the delinquent property owner “redeems” the property. George receives his initial investment back plus 25%!

Here you can see that George was the successful bidder on the tax sale property and he received a tax deed at the auction (more on the difference between deed states and certificate states in a later article). Also note that since the original owner redeemed the property she must pay George the original amount invested plus the state mandated penalty return.

 

What Happens If the Owner Does Not Redeem?

If the property owner does not redeem you will typically get title to the property. That’s right title! Remember what I said above: If the delinquent owner does not redeem the property during the specified time period then as the successful bidder, you would be entitled to the property regardless of the purchase price. Let me say that again: you would be the owner of the property even if you bought the property for $1,500 and it has a market value of $150,000!

 

Alright…But What Kind of Deals Are Out There?

Tax auctions can allow you to buy some pretty substantial real estate for pennies on the dollar. Let me show you some examples from my state of Texas that went to sale last year:

 

Tax Sale Listings from Harris County:

Precinct Number	Case Style	Judgment Date	Adjudged Value	Estimated Minimum Bid
1	HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL VS. LOUIS ZINGELMANN, ET AL	06-JUN-2001	$3,000.00	$3,000.00
7	HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL VS. ROBERT P NORMAN, ET AL	26-JUL-2001	$31,000.00	$9,053.98
4	CYPRESS-FAIRBANKS I.S.D. VS. 8916 TAUB ROAD INC	16-MAY-2001	$76,230.00	$19,127.75
5	HARRIS COUNTY VS. HOMECRAFT LAND DEVELOPMENT INC	22-JUL-1998	$96,400.00	$32,332.24
6	HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL VS. G L PARR, ET AL	07-JUN-2001	$12,500.00	$6,334.85
5	CITY OF HOUSTON, ET AL VS. TUDOR PROPERTIES INC.	25-JUL-2000	$173,090.00	$8,415.61
6	HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL VS. DELORES SALAZAR	16-JUL-2001	$8,800.00	$5,974.58
7	HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL VS. HERMAN WHITE	01-AUG-2001	$26,000.00	$13,269.40

Can you figure out why I shaded some of these property listings? These would obviously be the best deals to investigate and start researching immediately.

 

Word Of Advice

The shaded deals look great, right? Yes, they sure do but you MUST realize that tax sale listings can be fairly complicated to understand and read correctly. I have run across situations where the significance of one just number before a dash or hyphen can make or break the WHOLE deal! So I want to warn you that nothing comes without its hard work and proper knowledge. For every good deal that you find there are 100 that stink! The best route for the new and experienced investor is to keep learning, asking and researching new opportunities. Always invest in your education and find the right mentors.

 

Don’t Ever Stop Learning and Never Give Up

No matter what happens you should never give up on learning or give in to the dark riders of failure and fear. Did you know that fear motivates more human action than any other emotion combined? Sadly fear stops many people from trying to learn new things. And you know I don’t blame them! Sometimes it’s really hard to keep learning and growing when you always seem to get knocked down.

I got knocked down a bunch of times then decided that I just had to find a way to make things work. I started to change my mental attitude and think only positive thoughts, see myself doing the things I was destined to do, and completely fulfilling my purpose in life. I decided to go forward regardless of the cost, regardless of the fear and learn new ways to earn income and new ways to help others.

I realized that the more I learned about investing the safer my financial future would become and the more I would be able to enrich the lives of others. I thank everyone for reading my article and being interested in tax sales. Proper information is important so always ask the right questions and find real mentors who have a passion to help.

Don’t forget that this is just information. The real wealth is inside us all. It comes from the power of our minds. So let’s open our eyes to all the new things in front of us, let’s open our hearts to the person we were born to become and towards bright prosperous lives of abundance. Applied faith and knowledge are always your first two steps!

To Learn How to Get Started Today in Texas: Texas Houses for Pennies™

To Learn How to Get Started Today in: Alabama, Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, New Jersey, Oklahoma, Rhode Island, South Dakota, and West Virginia: Please Click Here

 

You can also email me if you have any questions: taxenterprises@yahoo.com

Tax Deferral as an Investment Strategy

By Don Burham

Deferring taxes on your income is an investment strategy in which income taxes are paid at a later date for money invested now. The benefit of tax deferral is that it provides more money for you to invest now.

For example, you are able to deduct $1000 from your taxable income this year and invest it into an interest bearing account, and in return, this deduction allows you to pay approximately $200 less in income taxes for the current year. You now have $200 more than if you had not invested the $1000. If you add the $200 you deferred in taxes to the $1000 you have already invested, you now have $1200 growing in your investment.

Another type of tax deferral used by investors is the deferment of taxes paid on interest earned. The dollars invested have already been taxed, but any interest earned is tax free.

Investment Vehicles

Tax deferred accounts shelter your money from taxes until you begin making withdrawals in the later part of your life, when you’re likely to be in a lower tax bracket. The type of investment vehicles best for you depends on your situation.

One available plan is the 401 (k). This vehicle is available only through employers who offer the plan. It allows you to make tax-deductible contributions that grow tax deferred until you withdraw them. Depending on your particular plan, your 401(k) plan may come with a bonus. Some employers match your contributions. You could make 25%-100% on your money instantly if your employer offers matching funds.

A 401 (k) allows you to contribute much more per year than many of the other retirement plans. You can contribute up to $9,500 to your 401 (k) per year and your employer can contribute up to $30,000 per year. You can also have your bonuses issued as 401 (k) contributions to build your retirement wealth even faster. If you ever leave your employer or wish to have more freedom with your 401 (k) investments, you can always rollover the assets in your account into an IRA.

A 401 (K) may work for a beginner at investing, someone who does not know how to invest in stocks or which are the best stocks to invest in.

Another type of plan offered by an employer is the 403 (b). This plan is for public school and non-profit organization employees and it is tax deductible and tax deferred. You can contribute up to $9,500 of your annual gross income each year to this plan.

With 403 (b) plans, beware of a few cautions. Your contributions are generally invested in a tax-sheltered annuity, which may have heavy sales charges and low guaranteed rates.

Anyone with earned income, and the non-working spouse of anyone with earned income, can open up their own IRA and contribute up to $2000 a year. Your accrued earnings are not taxed until you begin withdrawing money from the account. However, withdrawals cannot be made without penalty before age 59 ½..Even if your contributions do not qualify for a tax deduction, your earnings are still tax deferred.

The type of investments you can make with your IRA dollars depends on the custodian, but you generally have many more investment options with an IRA than you do with any of the employer sponsored investment plans.

The Keough plan is available to individuals who work for an unincorporated business or are self-employed. You can contribute up to 25% of your earned income up to a maximum of $30,000. All contributions are tax deductible and your earnings accrue tax deferred. You can contribute much more per year with a Keough than with an IRA. You can elect to contribute a fixed percentage annually, a different percentage annually, or a fixed amount which you decide on. There are three types of Keough plans available and a lawyer can assist you in setting one up.

A SEP, or a Simplified Employee Plan is easier to set up than a Keough allows you to deduct 15% of your self-employment income, to a maximum of $30,000. As an employee, you can contribute up to $7000 per year to your SEP, and your employer can contribute the rest. SEP plans are only available to companies with 25 or fewer employees, and at least half of those employees must participate in the plan.

All of these investment vehicles fall into one of two categories: qualified plans or non-qualified plans.

The 401 (k) and 403 (b) plans are qualified plans. Qualified plans are employer-sponsored plans that provide good benefits but that are restricted to the types of investment options offered by the employer. As we already mentioned, 403 (b) plans often require you to invest your money in tax sheltered annuities. 401 (k) plans generally offer a broader range of conventional investment options, but still seem very limited when compared to non-qualified plans. You usually get to select from a preset choice of investment options such as fixed interest annuities, money market funds, stock in your company, and other traditional investments.

The second category of retirement plans is nonqualified plans. Nonqualified plans generally allow more freedom as to when, or if, a contribution has to be made, and they also offer more latitude in the type of investments that can be made. All IRAs fall into this category. Generally, investors have more control over their investments in a nonqualified plan than with a qualified one. Usually they are easier to work with, have less regulation, and require less reporting. Often, contributions to these plans can be deducted as a business expense.

Most investments made with the vehicles we have been discussing fall into one of two asset categories: The first is debt and the second is equity. As an investor, you are either an owner or a creditor. Equity owners are entitled to all free cash flows that exceed the debt payment obligations of the underlying economic entity. Creditors receive priority in agreed-upon future interest and principal payments.

When choosing a retirement plan, you want to be certain of the types of investments permitted with your plan. Do not open an account that does not give you the freedom to choose your own investment options, whether they are debt or equity investments.

About The Author Don Burnham is an entrepreneur, author, real estate investor, teacher and speaker. He is CEO of the International Association of Seminar Professionals (IASP) and CEO and co-founder of the Wealth Restoration Institute, LLC, at http://www.weknowthewayback.com

April 2009 Q&A

I’ve been getting a lot of questions lately from students who ask me, “What exactly is the stimulus package?”  “How is it going to affect me?”  “How can I get a copy of it?”  “How can it help me?”

These are all good questions.  The document is huge.  There are actually two stimulus packages – the one that President Bush created right before he left office and then the one that President Obama created right after he came into office.  So there are actually two separate stimulus packages.  What they are designed to do is get the economy going again by getting lenders back in the game of lending money instead of sitting on the funds that the government is giving them.

When people borrow money it stimulates the economy because they buy goods and services which creates jobs and employment.  The economy is in a slump part and parcel because consumers are sitting on their money and they have less money to spend.

Another big part of the second economic stimulus package was designed to get the government spending money on infrastructure – roads, bridges, construction, etc.  That will create more jobs and put more money in the economy for people to go out and spend money or go out and get further into debt.  People will be able to borrow money again.

I’ve had a lot of people ask how in the world can they take advantage of these stimulus packages.  I know these are long documents.  What I’ve done for you is make these documents available online at TheCoachingClub.com.

As you know as a newsletter subscriber you can switch your membership over to TheCoachingClub.com.  You will still receive your newsletter AND you can access all the great information at TheCoachingClub.com.  For example, I’ve uploaded the stimulus package documents for you to read right online or to download.  Granted, its not exciting reading, but it is good information.  You can see the different areas where you can make some money.

For example, there are tax credits for first time home buyers.  You might think that first time home buyers are people who have never owned a home.  Actually that’s not true.   The stimulus document defines a first time home buyer as someone who has not owned a home in the last 3 years from the date of purchase.  So if you were to purchase a home on March 15^th of 2009, as long as you haven’t owned a home since March 15^th of 2006, you qualify for the First Time Home Buyers Credit.  The tax credit is up to 10% of the value of your home purchase!  So if you buy an $80,000 home you will offset your taxable income by $8000!

How can you benefit from this?  When the lenders start lending again and they open up financing because the government has given them the money to do that, people are going to start buying homes again.  It creates a much better marketplace for you to buy, repair, and resell homes!

You can offer homes at better prices or with better repairs or amenities and you can make a big profit.  Be very picky about the homes that you buy.  Make sure they are in desirable areas, and areas that homes will sell quickly.  That is one of the questions that you will want to ask realtors when you are looking at properties.  Ask what the property will be worth when it is fixed up.  If the realtor tells you $250,000 then you ask if they could sell it for you, repaired, at that price.  If they say yes, find out how long it would take.  You want to focus on homes that you can sell upon completed repairs in 3-6 months at a healthy profit.

Having said that, go to TheCoachingClub.com and sign up today.  You will be billed for The Coaching Club but not for your newsletter plus you will have all the great trainings and benefits from The Coaching Club.  You will no longer be billed for your monthly newsletter.  But you will still receive it.

So, log into The Coaching Club and read up on the stimulus packages.  You can find all sorts of great incentives to help you make more money in real estate!

Larry

As a real estate investor who’s come through the market I have learnt the hard way that when the market gets tough the opportunities can become more lucrative but you have to work hard to find them and even harder to make them happen.

Syndicating real estate deals is about the fastest way to make money in a downturn economy because it allows you to spread the risk, minimise your exposure and use other people’s money to make money. Here’s how it works. Essentially you become the focal point. The dealmaker, so to speak, for a syndicate of investors who have put up some money in exchange for a slice of the profits. You have put up no money but you do use your connections, talents and expertise to make the deal happen so if you are to walk away the deal collapses.

This is exactly the way I try to operate when the market is tough. In a tough market good deals are hard to come by and this increases my natural negotiating advantage as without me the deal is null. Those who approach me come to me with money which they are willing to give in order to help them make more money.

What I bring to the table then makes me the lynchpin. I find the deal, approach the players, negotiate the rules and make it all happen. I also walk away with a chunk of the profits for my efforts and share the rest amongst those who contributed to the capital necessary to pull it off.

If this sounds ideal try to balance it against the pressure of dealing with investors who have trusted you with their money and those you need to deal with in order to make the real estate deal happen and you begin to realise that you are in the hot seat.  There is pressure from all sides and you are the only who has to deal with it.

This is where the hard work comes in. You pay attention to every detail, leave nothing to chance, dot all the I’s and cross all the T’s and you know that things could still go wrong. Having said that it’s still a great way to make money doing something you love, it’s exciting, risk-free in terms of not losing you money, it has the potential to make you rich and you develop a reputation that simply brings in more money. So if you think you have what it takes now’s the time to get in and if you need a little help and advice from an expert you might consider one of my popular courses.

David Lindahl, also known as the “Apartment King” has been successfully investing in single-family homes and apartments for the last eight years. He is the author of four popular, money making home study courses “Apartment House Riches”, “How To Estimate And Renovate House For Huge Profits” “Managing For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. He can be reached at dave@real-estate-fortune.com and www.rementor.com.