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IWP!, flagship product is Chicago's premiere real estate Investment
magazine. Entitled Invest With Passion!, it is the tool for investors and professionals in the
Mid-West. The publication seeks to grow it's market share by providing
powerful information designed to build the reader both as an investor and a
person.
Since it's release in January of 2006, the magazine has been well received and
continues to gain momentum and support. The education, information, and
networking opportunities for the real estate investor has been long neglected.
No More!
The time is now and the momentum is building.
It's Happening!
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TURN YOUR NEST EGG INTO A GOLDEN EGG
How to diversify your IRA/401K retirement
money
By Paul Winiarz
So you cannot pick the
best performing stocks in today's fluctuating market and once again you're
hearing about a major stock correction. Maybe you have come across a great
real estate investment opportunity but your checkbook is a little short.
Are you thinking about retiring in the Sunbelt but keep seeing real estate
prices climbing and wonder what they will be 20 to 30 years from now? Or,
are you considering purchasing a small office building but don't know
where to turn for financing?
Well, here's some good
news for you - you can change your financial destiny by self-directing
your retirement funds into non-traditional investment options. Sound too
good to be true? It's not. You simply must know the rules of taking
management control of your IRA, 401k, SEP, Pensions and Roth accounts.
Through new IRS regulations, you can open a Self Directed IRA/401k, sell
some of your stock, convert to cash and use that money to purchase
investment real estate without penalizing your IRA/401k.
What are the advantages?
· You can
diversify your retirement fund with tangible assets - like real
estate.
· You have more efficient use of
your money as you can leverage your IRA for bigger gains - thus, enhancing
the upside potential while protecting against stock market risks.
· All net
proceeds go back to the IRA.
· Your IRA is protected as the
investment property is the security for the loan. Security instruments
allow no recourse against the individual account holders or balances of
IRA funds.
Let's examine how this
works. Say you buy a $100,000 property using $25,000 of your Self Directed
IRA. A year later the property increases only 5% in value. That is a
$5,000 increase on your $25,000 investment, or a 20% gain. Using your Self
Directed IRA, you can purchase investments such as: condos/townhouses,
single family homes, 2-4 units, multi-family (5+ units), mixed use,
office, or commercial properties. The only restriction on using Self
Directed IRA funds is that the purchase must be an investment and cannot
be used for your personal use.
When you buy/sell or
leverage up your investment parcels, you do not have to deal with 1031
rollovers. Since 20% (national average) of all 1031s fail and there are
high costs associated with reverse 1031s, a Self Directed program is a
viable option. Let's say your Self Directed IRA is a Roth, when it comes
time to retire and sell off your properties, the profit is TAX FREE as
long as certain requirements are met. Taxes are deferred with a
Traditional IRA until IRA distribution occurs and at that time they are
taxed at your current income tax rate. Just a note of caution: when using
mortgage money along with your IRA/401k money, there are the Unrelated
Business Income Tax “UBIT” and Unrelated Debt Financed Income “UDFI”
taxes. However, it's always been my opinion that you “shouldn't worry
about the pennies when you are making dollars.”
So how do you get
started? First, you need to set up your Self Directed IRA. There are
various companies that will act as your administrator and lead you through
the IRS rules and paperwork. Using these companies alleviates your CPA
from having to learn and become proficient in new IRS rulings. If you have
a complex investment involving several investors and a mixture of IRA/401k
accounts and cash, they can handle everything from the initial paperwork
to the appropriate forms necessary at tax time.
Investment properties in
all 50 states qualify once a self directed account has been established.
Loans can close in as little as 30 days. There is no limit to the number
of properties that can be held in your account. By putting together a
group of investors with mixed sources of investment dollars, larger
properties with better cash flow, triple net leases, etc. can be
purchased. When property is sold, the money is placed back into your Self
Directed Account and can be moved back into your stock portfolio for
stock/bond/mutual fund investments until the next piece of real estate is
selected to buy.
With income, capital
appreciation, total control, leverage, and location you know best, what
better way to diversify and grow your nest egg?
*********************************************************
Paul Winiarz is a
Mortgage Planner and licensed loan originator with ELB Mortgage Brokers,
Inc. Northbrook, Illinois. Paul specializes in working with investors, is
also a real estate investor and can be reached via e-mail at pwiniarz@att.net
or via cellular at 847-921-7535.
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