Self-directed Ira Investing: How to Protect Your Retirement
For millions of Americans who are fortunate enough to have retirement funds in some type of IRA account, self-directed IRA investing is becoming more appealing. Why? Consider the following.
Banks are failing, credit is tightening, the housing market is the worst it’s been in decades and even Wall Street firms are broke. What does this mean for the average worker with years of their retirement savings tied up in a regular IRA?
Self-Directed IRA Investing: The Perfect Way to Invest Your Retirement Savings
What it means is that retirement accounts, which are traditionally invested in the stock market, are plunging fast. Many accounts have lost as much as half of their value in this economic crisis - with no end in sight.
Man investors are seeking safer havens for their retirement savings, and self-directed IRA investing is one way to get it. More and more workers are shifting their retirement funds to hard, tangible assets in lieu of investing in the volatility that is the stock market these days.
Self-directed IRA investing allows investors to funnel their retirement funds into real estate and other alternative assets. Most self-directed vehicles offered by large investment firms are limited. They don’t offer the flexibility to invest in anything other than stocks, mutual funds and bonds — the very financial instruments that are rapidly losing value now.
Real estate - in any market - is a tangible investment. Its value doesn’t “disappear” on the whim of a stock market high or low. Real estate is an investment you can see, touch and feel. It stands the test of time. And, a recession is the perfect time to capitalize on it. If you buy low now, when good economic times return, your investment can have doubled, tripled or quadrupled in value. What better way to grow - and protect - your hard-earned retirement dollars?
Timeshare Ownership - Find Relief In Financially Troubled Times
With the global economy in crisis, timeshare developers are facing a credit crunch that reduces the number of timeshare buyers. With a reduction in overall sales, timeshare companies must tap another source of revenue for some relief to these tough financial times. Timeshare owners have already started receiving notices of abnormally large special assessment fees.
In many cases, owners sign contracts that allow their home resorts to charge them special assessment fees when warranted. The size of the fees are determined by the resorts and can be rather arbitrary. Some owners are unaware of these policies.
Reports of $500 to $3,000 special assessment fees being doled out have recently surfaced. These outrageous amounts are hitting owner pocketbooks at the same time personal incomes are stagnant or falling, and as retirement funds drop like rocks thrown into a pond. The financial blow has opened some eyes as to the fragility and milk-them-for-everything mentality of the timeshare industry.
Even with the bad economy, why are the special assessments so large? In good times, developers can leverage the upfront fees that owners pay or finance to get new commercial loans to build more timeshares. As timeshare sales drop, there may be no income to pay the interest and principal on the loans. The maintenance fees are not enough to cover everything.
But owners should not think about NOT paying those timeshare bills. Through decades of legal precedence, timeshare companies can and do impose stiff penalties for non-compliance. These include high interest rates on principal owed, collecting debt through employers, and placing liens on assets like homes, bank accounts, etc.
What can timeshare owners do to fight back? There is not much relief if they plan to keep their timeshares. The number of owners that try to resell or rent their timeshares spikes up tremendously during economic crisis. Many charities will not accept timeshare deeds as donations knowing the accompanying liabilities.
Big Profits In Commercial Real Estate
Real estate is often known as the safest investment available. Because,real estate investing
executed with correct evaluation of the property (and its true value), can result in good earnings. This is one reason how come a few people engage in real estate investing as their regular job. The dialogue of real property are broadly centered toward residential real estate; commercial real estate seems to be not as popular. All the same, commercial real estate also is a good alternative for investing in property.
Commercial real estate includes many various forms of properties. Most folks associate commercial realty with only office buildings, parks or manufacturers/ industrialized units. Even so, that’s not entirely all of commercial real estate. There’s more to commercial real estate. Health care centers, retail structures and storage warehouse are all good examples of commercial real estate. Even residential properties like apartments (or any property that comprises of more than 4 residential dwelling units) are considered commercial real estate. As a matter of fact, such commercial real estate is much sought after.
So, is commercial real estate really profitable? Well, if it were not Lucrative I wouldn’t of have been writing about commercial real estate at all. So, commercial real estate is productive for sure. The only matter with commercial real property is that acknowledging the opportunity is a little difficult as equated to residential real estate. But commercial real property profits can be real huge (in fact, much bigger than you would anticipate by residential real estate of the same proportion). You could take up commercial real estate for either reselling after appreciation or for letting out to, say retailers.
The commercial real estate development is as a matter of fact handled as the 1st sign for emergence of residential real estate. Once you acknowledge of the possibility of significant commercial growth in the area (either due to tax breaks or whatever), you had better begin assessing the potential for appreciation in the prices of commercial real estate and then go for it promptly (equally soon as you find a good deal). And you must really work towards getting a good deal.
If you find that commercial real estate, e.g. land, is available in large chunks which are too costly for you to purchase, you could look at forming a small investor group (with your friends) and purchase it collectively (and split the profits later). In some cases e.g. when a retail boom is expected in a region, you may determine it profitable to purchase a property that you can change into a warehouse for the intent of renting to small businesses.
So commercial real estate exhibits a whole plethora of investing chances, you just need to seize it.
Investor Banned From Offering Property For Rent
Do you realize that you might be prevented from renting your investment home? Prohibiting property owners from leasing their properties is a trend that is growing increasingly popular with some developers and many Homeowners’ Associations (HOA).
It’s rare that you can buy a new home in a development that does have a HOA. As a homeowner you are bound by the HOA restrictions found in the Covenants, Conditions and Restrictions (CC&Rs).
The CC&Rs regulate your use of your property, restricting everything from the color of the house, window coverings, holiday decorations, sports courts, pets, to landscaping and etc.
One of the most recent restrictions that builders are including in their CC&Rs is a restriction that prohibits the homeowner from leasing their property. Builders have a provision in their sales contracts stating that the home will be a primary or secondary residence and that the purchaser will occupy the home. The owner is strictly prohibited from renting the home.
Why this trend? The idea is to limit the number of rentals in a subdivision because lenders believe that a high number of rentals in a community affects the value of the property and can erode the security of their loans.
Existing HOAs like the idea of no rentals and there seems to be a growing movement to amend their CC&Rs to add the “no leasing” provision.
Investors Beware!
The new homebuyer should be made aware of the no leasing restriction when they buy. But what about the investor who buys a home a few years later? If the investor fails to read and understand the CC&Rs he or she may end up owning a property that they cannot rent.
You can’t count on the home seller alerting you to the restriction. They may be the third or fourth owner of the home and not even be aware of the restriction.
Oh sure, you could buy the home, rent it and hope you are not discovered violating the CC&Rs.
However, anyone who has ever dealt with a HOA soon discovers that there are always a few other homeowners with an eagle eye out for the slightest infraction of the CC&Rs. They delight in notifying the HOA management company,,, and the management company is bound to investigate and enforce the rules. For you the investor is no appeal… and there is no recourse.
This is a strong reminder that every investor should have a clause in every purchase contract that says the purchase agreement is contingent upon you receiving, reading and approving a copy of the CC&Rs.
This is a potential ulcer-creating situation that no investor can afford to ignore.