real estate reble - by Kerry Taylor

COMMUNICATION

December 9th 2006 19:57

HEY THERE

I HAVE BEEN TOLD THAT THIS FOR OF COMMUNICATION IS THE NEWEST WAY TO STAY IN TOUCH WITH MY TARGET MARKET. BUT I HAVE MY DOUBTS. I FEAR THAT I AM GOING TO MISS THEM ALL TOGETHER BEING THAT ANYONE IN THE WORLD CAN HAVE THIS POP UP ON THEIR SCREEN IN THE RESULTS OF A SEARCH. MY MAIN COMCERN IS TO REACH PEOPLE IN THE DEMOGRAPHIC WHERE I LIVE TO HELP THEM BUY OR SELL A HOUSE OR EVEN PURCHASE AN INVESTMENT PROPERTY. I HAVE ONLY BEEN IN THE BUSINESS A FEW YEARS AND I KNOW THAT THE TIMES ARE CHANGING BUT IS THIS THE BEST NEW WAY TO PROMOTE MYSELF TO THE PEOPLE WHO I WANT TO REACH? ANY COMMENTS OR SUGGESTIONS WOULD BE HELPFUL SEEING AS I AM SO NEW TO THIS COMPUTER SAVY WORLD WE LIVE IN NOW. THANK YOU KERRY

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GOOD INVESTING INFORMATION

December 7th 2006 19:33

Your text goes hereYour text goes hereE-mail | Print | Comments | Request Reprints | E-Mail Newsletters | My Yahoo! | RSS

I FOUND THIS TO BE REALLY GOOD READING I HOPE THAT I HAVE NOT BROKEN ANY COPYRIGHT LAWS. ANYWAY IF YOU LIKE THIS ARTICLE THANK FORBES NOT ME!

Adviser Soapbox
Retiring With Real Estate
Hubert Bromma, The Entrust Group 07.20.06, 2:15 PM ET

Homes are staying on the market longer, sellers are reducing their prices, and the exuberance that marked the real estate industry for the past five years is now long gone amid talk of an over-inflated housing "bubble." But all that nervousness is symptomatic of the kind of short-term, get-rich-quick kind of thinking that has become part of the national zeitgeist rather than sound, thoughtful retirement planning.

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While many people continue to concentrate their retirement portfolios in big mutual funds like Fidelity Magellan (FMAGX) or Contrafund (FCNTX), or stocks like Cisco Systems (nasdaq: CSCO - news - people ), IBM (nyse: IBM - news - people ) or Johnson & Johnson (nyse: JNJ - news - people ), proper portfolio diversification demands the inclusion of hard assets like real estate, which have a long history of providing solid returns.

The use of self-directed IRAs and 401(k)s for investing in real estate and mortgages has been well established for more than 25 years. It has been a great investment-diversification tactic for two very simple reasons: Real estate generally appreciates over time, and if bought properly, positive cash flows can be realized right from the start.

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Many real estate professionals invest in real estate through their IRAs and retirement plans, because they understand all the idiosyncrasies of the market. For example, different parts of the country, even micro-markets, fluctuate when it comes to real estate investment opportunities. But those fluctuations do not occur wildly from one day to the next like other markets. There are certain cycles that take into account changes in interest rates and inventory, as well as political, social and environmental factors.

In a softening market, a person interested in investing in real estate may consider maintaining a cash position and buying the property on its way down, making it a good deal for a buy-and-hold strategy. In such an instance, the property is held until the market goes back up. Granted, this may take some time, but the investment should generate a positive cash flow or break even over the time the investor holds the property. The investor then sells it for a significant profit. History has proven that real estate is one of the most consistent and enduring investments, so short-term price gyrations do not outweigh the benefits of the asset allocation.

If you employ this strategy through a Roth IRA, I think you have the best tax and investment deal around for an investor. The real estate is bought at a low-cost basis and later, maybe years later, sold at a respectable profit with no tax to pay.

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In another example that might be typical of today's market, let's assume you have a Roth IRA with $300,000 that was converted from a traditional IRA and maybe even rolled over from an old 401(k) plan. You buy a single family income property that has been on the market since a hot market cooled, and where the asking price has come down to $275,000 from $290,000. You offer $250,000 on a contract from your Roth. That offer is accepted and the renter in the property continues to make $1,500 monthly payments, which now goes into your Roth IRA. The cost to your IRA, after closing costs and commissions, is $270,000.

Your Roth now has a cash flow with a net operating income of more than 5% (after taxes and insurance), and you are perfectly positioned to wait for the next upturn in the real estate market, which may be a few years from now. Also, your rental income likely will increase over time. In addition, the property appreciates income-tax free while paying your Roth IRA tax-free dividends. Anytime your Roth IRA sells property or receives income, there is no tax bill, and when you take the cash out after age 59 and a half, there still is no tax!

Foreclosed Property
Foreclosures also present interesting IRA and 401(k) investment opportunities in a softening real estate market. When interest rates increase, adjustable rate mortgages follow suit, causing an uptick in foreclosures. Those home owners who were barely scraping by on 1% to 2% negative amortization loans can find their monthly payments doubling, and lack the ability to make the higher payments. This is an excellent opportunity for the investor with cash to either:

-- Buy the home at a lower market rate because the home owner would rather sell than be forced into foreclosure;

-- Lend the home owner the cash on a second-position basis to alleviate a temporary cash flow problem; or,

-- Buy out the original mortgage and be the lender to the home owner on terms and payments the home owner can afford.

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Leveraged Property
You can also invest in leveraged property through your retirement account. For instance, if your IRA has $40,000 in cash and you're interested in investing in a property selling for $200,000, the IRA can assume the $160,000 mortgage to complete the purchase.

Of course, the loan would have to be nonrecourse, which means the lender must agree to look solely to the property as security for the loan and not the IRA. (Some community banks and savings associations will make this type of loan.) Investment gains can be realized if the IRA sells the property later, say for $300,000, thus paying off the $160,000 loan and leaving a $100,000 profit in the account.

Please keep in mind, however, that the account might have to pay an unrelated business income tax or unrelated debt financing income tax of between 15% and 35% on the income from the financed portion of the property. Even with the tax payment, investing in leverage properties can still be a real advantage for your retirement account. In the aforementioned example, the IRA would owe a tax of about $25,592, leaving an after-tax payout of $74,408--a 186% return on the cash invested.

Partnerships
If a real estate investment opportunity exceeds the available cash in your self-directed IRA or 401(k), there are other solutions. One is simply to partner with others in the investment. Whether they have IRA or 401(k) money or not, you can form a group and buy partial interests in a property, or if you wish, start a partnership or a limited liability corporation to buy that property. Under the right circumstances, all involved in the transaction can lend to third parties, and even to each other, to implement the right real estate deal.

In short, buying real estate, even in a downward-sloping market, can be an excellent investment opportunity through a tax-free or tax-deferred IRA or 401(k). The upside is great, especially when the cost basis is low, and you may never have to pay tax on the gain.

Hubert Bromma is CEO of The Entrust Group and author of How to Invest in Real Estate and Pay Little or No Taxes . His new book, How to Buy Real Estate with Your IRA and 401(k) , will be published by McGraw Hill this fall.

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Posted By: Kerry Taylor - Category: No Category

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welcome to my blog

December 7th 2006 19:07

Hi everyone,
I would just like to introduce myself, my name is Kerry and I am a real estate agent in NJ. I love to work! So shoot me and email if you are going to buy a house, sell a house, or just invest in that rentalk property that you and the spouse have been talking about. I have 3 boys and we are a very friendly family that believe in helping people or just having a good conversation.
I love to meet people and most of all i think that there is a little Martha in me because i really like to entertain.
I am not yet good at this blogging stuff so i will just get to the point I am here on this site for networking opportunities and also just to meet a few good people to call friend!
Thank you for reading my blog and look forward to a few more if I can get good at it! I look forward to meeting everyone!

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December 2006

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