Financial Information

IRA Real Estate Investing - What Does “Self-Directed” Mean?

Sep 18, 2008 Real Estate

You may be wondering what all the confusing language surrounding IRA Real Estate Investing really means. Perhaps you have heard the term “self-directed” applied to IRAs used to invest in real estate, but the question is, “What does self-directed really mean, and why is it the best IRA for real estate investing?”

For the purposes of this article, I’m going to assume you know a little bit about real estate, but next to nothing about IRAs. Let’s assume you have a job, and you have a retirement account through your job, called a 401K retirement account. If you’re like most employees, you contribute to your 401K out of each paycheck, and the money you contribute (up to certain government mandated maximums) is tax deferred. Your employer may or may not match a portion of your contributions. Simple enough.

An IRA is also known as an individual retirement account, individual because instead of being related to your workplace, you can open an IRA for yourself, and deposit directly to it on your own. If you like, you can open an IRA in addition to your existing 401K, and you can contribute up to a yearly maximum (also mandated by the IRS).

You can also move the funds from an existing employer sponsored 401K into an IRA. This is called an IRA roll-over, and there are very specific rules for how these must be handled. I’m just giving you the basics in this article… good so far.

The problem is, neither the IRA or the 401K as they commonly exist can be used for investing in income property. Only the custodian of the account (normally a bank or financial institution) can designate what investments are purchased with these funds, leaving you on the outside looking in, with almost no control over where your own money is invested. About all you can do is state what percentages of your money you want to go into which funds the account is invested in. Not nearly good enough for my money.

There is a specific type of IRA however, called a self-directed IRA, which allows you to designate exactly which investments your IRA moneys are invested in. If you consider yourself to be an expert in residential income property, and you know you can generate a certain rate of return consistently, wouldn’t it be a good idea to be able to invest those tax deferred dollars in your 401K or IRA in something you know something about, rather than relying on some faceless fund manager in an office in some distant city? Of course it would!

It’s simple and easy to open your very own self-directed IRA. Just find a custodian who specializes in these accounts, and they will guide you through the process, and help you abide by all the government rules. Then, your tax-deferred account will grow the way you want it to.

You can even let a company with a Socially Conscious Real Estate Investing program help you set up your self-directed IRA, including all the forms AND whatever fees there may be. They will even take care of all the details of buying and selling the property within the IRA, as well as all of the property management.

Source: Finance

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Help Stop Foreclosure In Current Real Estate Market

Sep 15, 2008 Real Estate

As real estate markets continue to decline around the country, many homeowners are wondering what they can do to protect themselves and the investment they have made in their home. There are actually many different steps you can take to help stop foreclosure and make sure you stay ahead of the softening real estate market.

One of the first steps that should be taken is to check with either your city or county property tax office to research your current tax assessment. This will tell you what the county or city states your home is actually worth. You should then compare this rate to what your home is currently worth based on current market conditions. It is not uncommon for homeowners in several states, such as in California, to discover that they are paying more money in property taxes than they should be based on the value of their home in the current market.

In some states, homeowners are actually paying up to 40% more than they should be. If you are not sure of your home?s current value in the existing market, it is also a good idea to have your home appraised to determine its current value. Taking both of these steps will give you a realistic idea of the value of your home in the current market and ensure that you are not paying more money in taxes than you should be.

If you do have an adjustable rate mortgage it is certainly worth it to consider refinancing your mortgage to a fixed rate mortgage. Before you actually refinance; however, there are several steps which you should take first. Begin by inspecting your existing mortgage documents to determine whether you will be penalized for paying off the existing loan early. While you will be taking on a new loan, your existing loan will be paid off when you refinance it and this could subject you to penalties is such a clause exists in your mortgage documents.

In some cases, you may discover that you actually owe more on your home than it is worth. This is actually quite common now among homeowners who took out exotic mortgage loans a few years ago when prices were rising rapidly and the market was red hot. Today; however, this can cause quite a bit of dismay among homeowners who are facing large mortgage payments on homes that have dropped rapidly in value. While it is anticipated that the market will begin to stabilize sometime next year, you will need to give some careful thought to whether it would be in your best financial interest to simply walk away from such a situation and try to start fresh.

Additionally, you need to consider how long you plan to remain in the home and balance out that time in comparison to the amount of closing costs you will need to pay when you refinance your home. While a number of mortgage companies advertise ?no cost? refinance loans you should be aware that such loans rarely, if ever, exist. The costs for refinancing your loan are typically financed in with the loan under this type of arrangement. This means that instead of paying the costs for the loan up front you will be paying interest on them throughout the duration of the loan. In addition, it is important to research any mortgage company you consider to ensure there have been no complaints filed against them before you refinance your mortgage.

If you plan to remain in your home, it is also a good idea to check your homeowner?s insurance policy to be certain that it is up to date. This can prove to be critical in the event you suffer any type of loss on your home in the future. If you live in an area that is susceptible to hurricane or storm damage it is especially important to make sure that your policy accurately reflects your home in its current state.

Source: Money

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Investing in Dallas Real Estate

Sep 3, 2008 Real Estate

So you say you are ready to take the plunge and start investing in real estate. If you are a home buyer then you should think about investing in the Dallas real estate market. Why? Dallas is quickly becoming one of the hottest and fastest growing cities in America. The Dallas market is a very good place to start investing

Investing in prime Dallas real estate could make you a quick profit right away. Dallas real estate is becoming more valuable by the day. Investing in some historical downtown Dallas real estate or some of the nicer homes along the edge of the city will probably bring a big payoff to you on a later day when other buyers and real estate developers are jumping on Dallas real estate and buying up all the property they can afford.

You might be a first time investor. If you are buying some Dallas real estate for the first time then you should take some helpful tips from one of the qualified Dallas real estate agents before attempting to buy a property. Qualified Dallas real estate agents will help you determine what areas of the city are the most popular and what properties are on the edge of becoming in the “in” part of city.

Buying some Dallas real estate in an up and coming neighborhood, even rental property, can be a nice way to make some money in the Dallas real estate market. Buying real estate is one of the safest investments that you can make because property almost always will grow in value instead of decline in value and Dallas real estate is practically a sure thing when it comes to property value. It’s very hard not to make money when you invest in Dallas real estate.

Another alternative is investing in rental properties. Demand for rental homes is growing by the day. Why? There is a great demand for quality rental properties in the most popular areas of the city. There are new businesses springing up that attract a large amount of workers from other cities. Also, there are other companies moving their operations to Dallas which results in a city that is getting over run with new employees of these companies who are looking for good Dallas rental homes. These new workers are used to having certain amenities and they will pay for top dollar for these amenities especially if they are coming from larger cities where the cost of living is higher like LA or Miami.

So if you are a buyer looking to buy real estate to turn it into a quality rental property, Dallas is the place for you. Buy a fixer upper then add some extra interior amenities then charge a bulky rent. There is an excellent chance that you’ll be able to rent that Dallas home to one of the employees of the new businesses in town that is used to paying a hefty rent elsewhere. This person will probably think that the apartment or condo or house is an excellent value even though you are making some major profits. That’s a winning situation for you and the renter. If you want to invest in a Dallas real estate property you should think about investing in quality rental properties.

Source: Sell/Buy Home

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