Parkfest Blogging

It’s no secret…  Investing your self directed IRA  in real estate can be a great diversifying asset for your IRA portfolio. Returns from your IRA real estate investments can help your IRA and retirement funds to weather downturns in paper assets, e.g. mutual funds and the like. But, if you choose to invest your self directed IRA funds in real estate, should you invest in commercial or residential real estate?

Arguments can be made for each. However, the smart way to determine which sector of the real estate market to invest in depends on several factors. As any savvy real estate investor will tell you, it all depends on your end goal.

Things to Consider When Deciding Whether to Invest in Commercial or Residential Real Estate with a Self Directed IRA

Location: Real estate is all about location, location, location. Most think in terms of residential real estate when referring to location. But, it is just as important in commercial real estate as well. For example, if you’re thinking of investing in a strip mall, location will be important because merchants must have sufficient traffic to be able to make sales.

Economy: Commercial real estate is more closely tied to what a given economy is doing that residential real estate is. If you’re going to invest your self directed IRA funds into commercial real estate, assess the local economy of the targeted region with a long-range view. For example, what are its prospects for recovery/downturn in the next three or five years. Then, you can make your investment accordingly.

Length of Investment: Piggybacking on the last point just above, using your self directed IRA funds to invest in real estate should be done with an eye toward the future. The big payoff in real estate is often received when you buy and hold. So, consider how long you’re willing to stick with a certain investment – and what is the likely payoff over that time.

The bottom line is, using your self directed IRA to invest in real estate is a smart move that can increase your retirement nest egg exponentially. However, as with any investment, it takes research and patience.

I would like to use the money in my IRA for the purpose of purchasing real estate, and I’ve been told I can do it with a self-directed IRA LLC account. Is it possible? The answer is, yes it is …

The IRA can contribute all the cash or a portion of its cash into an LLC wholly owned by the IRA. The transfer of your IRA money as initial capitalization of the LLC does not constitute a disqualified transaction or a taxable event!

Since the self directed IRA owns the IRA LLC or IRA Company, the IRA funds can be directed to the IRA Company in exchange for member units or shares of the LLC. After funding, both not only can traditional investments be made, but also alternative investments such as real estate including foreign real estate, discounted notes, gold coins, and bullion may be purchased by the IRA-LLC.

A Key Point to Consider When Buy Real Estate with an IRA Owned LLC

When owning real estate inside an IRA, all expenses must be paid by the funds in the IRA-LLC account. If you pay out-of-pocket for such expenses as contractors, appraisers, plumbers, taxes or landscapers, then you can open your IRA up to penalties, fees, and taxes starting at the beginning of the year in which you made the mistake.

Assets consolidated under the LLC become the sole asset of the account holder’s self-directed IRA. Once your IRA LLC has been funded, your IRA statement from the custodian will simply reflect one asset, i.e., the LLC. If structured properly, your IRA LLC should not pay any transactional, asset or holding fees, and why should you should it? After all, you are truly self directed and you are the one cutting the checks and paying the bills directly with your IRA checkbook.

The management of a self-directed IRA is a skill the investor can learn. Checkbook control of your IRA is something that every savvy investor should consider if they don’t want to be limited to just the run-of-the-mill investments.

In order to set up your IRA LLC feel free to call the IRA LLC Partner at (877) 339-4559. The IRA LLC Partner will guide you step by step. They will help you complete all the appropriate paperwork to manage the IRA transfer as well provide you with the training to guide you and set you on the course to investment success.

I studied the postcard closely, probably for the hundredth time. White stuccoed homes dotted the mountainside, their red tiled roofs gleaming in the afternoon sun. Mountains and hills rose up in indigo shadows in the distance. Beautiful. Idealic. If I peered through my magnifying glass, I could just make out dark dots which I knew to be purple clusters of grapes hanging from vertical rows of green vines.

This was to be my new home. Italy. I had never been there, yet here I was moving across the wide ocean to immerse myself in a culture I hadn’t a clue about and a language I didn’t speak or understand. I wondered for the millionth time if I was out of my mind…plum loco!

Fearing I’d find the answer if I dwelled on it for too long, I took a deliberate step forward. I contacted an international moving company. Then I decided to contact all the international moving companies in the Yellow Pages. This took some time and lots of concentration as I had to keep track of quotes that kept changing as the companies competed for my business. This was okay with me – kept me from thinking about whether or not I had lost my mind.

I checked my shortened list of international moving companies on the Better Business Bureau and finally, I made my selection. I set the date for two short weeks for them to come and pack my possessions into their barrels, crates and tea chests – in case I lost my nerve. I wouldn’t have time to chicken out in two weeks, would I? No…I’d be way too busy!

Turns out I wasn’t that busy. My international moving company agent was absolutely fabulous. She helped me plan my move and informed me of the papers I’d need. When she found out I had inherited an Italian vineyard estate from grandparents I’d never known, she’d gushed about how lucky I was, Italy was the most romantic country ever, and on and on till I was pretty much convinced I was doing the right thing.

My international moving company’s agent’s name is Lorenza. She has relatives in Italy that she visits every year. They live in a city close to my estate. Turns out she’s my age, 26 and single so we made arrangements to meet at my place in Italy in two months. We exchanged emails. Who knew I could actually meet such a great person of interest through an international moving company?

Her description of the mountains, castles, lakes, quaint villages, ocean and most of all, the friendly people, blew away the last remaining doubts that I had like morning mist in a breeze. All that remained was pure, unadulterated excitement!

International Moving

If you’re looking to make a sound investment with your self directed IRA LLC, then investing in real estate is a sound decision. Why? Because as a long-term investment, it means you can afford to wait out the ups and downs of any market for future gains. This is the number one key to real estate success. Some experts estimate that 97% of investors invest in traditional retirement options like stocks, bonds and mutual funds. Only 3% look toward nontraditional investments like real estate.

Real estate has is a time-tested investment that does well, particularly if you’re in it for the long haul. And, there are various investment options under the real estate umbrella to consider.

Several Options to Consider When Trying to Decide How to Invest in Real Estate with Your Self Directed IRA LLC or Checkbook IRA

Real estate can be a diversified investment. There is commercial property, residential property, raw land, mortgages and mortgage pools, trust deeds, etc. Following are three and why you may want to consider them in this economic climate.

Condominiums: Considering the current foreclosure rate, now is an optimum time to look towards condos as an investment with your self-directed IRA LLC. This is particularly true if you consider beachside communities for possible vacation rentals. Once the market makes a return to good times, you’ll be ideally situated to capitalize.

Undeveloped Raw Land: You can use your self-directed IRA LLC/checkbook IRA to purchase raw land. Many areas that have suffered from natural disasters like hurricanes and tornadoes may have particularly good deals on raw land, which can later be sold to developers for residential or commercial real estate development.

Invest in Commercial Real Estate: While the US economy has not reached the formal recession status, the general feeling is that the US economy is slumping. This has a negative, trickle down effect on business. Many close or look to restructure. All of these factors can add up to great investment opportunities for future gain.

You might have used a humidifier in your room or your child’s room during sickness at one time, but what exactly does a dehumidifier do and in what circumstances do you need to have one in your home?

Dehumidifiers are often used in damp areas of the home to keep the humidity down; this reduces the chances that mold will begin to grow in that area of the house. 

There are a few different kinds of dehumidifiers and if you are intending on purchasing one, them you might want to familiarize yourself with each kind and purchase one depending on your own situation.  These types include chemical absorbent dehumidifiers, dehumidifying ventilators, and heat pump dehumidifiers.

A heat pump dehumidifier extracts water from the air utilizing a heat pump.  This is somewhat similar to the pump that you find in an air conditioner.  The fan inside the dehumidifier brings the air inside the unit and a coil inside it is kept very cold so that the moisture in the air being drawn across it condenses.  This water drops into a bucket that fits into the bottom of it.  A second coil that is heated brings the cold air back up to room temperature and pushed back out into the home.  This is the most efficient type of dehumidifier for use in private residences. 

The type that works the best in warm climates is the chemical absorbent type.  This kind of dehumidifier uses a desiccant (a drying chemical) to absorb the water from the air that is pulled inside the humidifier by a fan.  It is also expensive to operate and so this kind of dehumidifier is much more efficient for large business buildings and industry complexes.  Homeowners should not purchase one of these.

A dehumidifying ventilator has what is called a sensor controller and what most other humidifiers have, an exhaust fan.  What the sensor controller does is turn the unit on when the humidity in the home or office building reaches a certain level.  These are not very efficient in homes that are located in humid environments because they bring air from outside the house to the inside.  These are most often used in basements and cellars.  Unfortunately, these can also depressurize whatever room they are located in and this can cause the spilling of gas.  Any gas furnaces near by should be properly vented.

Paper Document Drying

One of the worst things that can happen to someone who’s building a brand new home is discovering after the construction is completed that mold has been growing within his new haven.  It is indeed a problem and it might be more common than you would think.  

Mold can and does get built into new homes and a lot of the time, it’s the fault of the contractor for not properly inspecting or storing his building materials and by allowing the site to get wet from rain before the roof and walls are completed.  Sometimes what is supposed to be the interior of the home is left uncovered and when it rains, the building materials get soaked and are allowed to dry this way.  In warm, humid weather, this can allow mold to get a grip on the structure and begin to grow.  You’ll not only have the possibility of mold, but you’ll also put your home at risk of water damage.  Covering the building site with tarps or plastic sheeting should keep the rain, snow, (and the mold) out. 

You should make sure that the contractor and his/her workers are using good quality materials to build your new home with.  Testing the building materials for mold is one thing that you can do to make certain that it stays out of your home’s foundation.  If you go to the building site and you see building materials like wood and sheetrock being stored directly on the ground, tell your contractor that they need to be raised up to aid in the prevention of mold growth.  Your contractor should already know this, but irresponsible ones or those that are trying to make the process as easy as possible are the ones that you should worry about.  Check your contractor’s references and make sure they’ve done a good job for others in the past. 

The home should also be periodically checked for mold as it’s being built and after the building is completed.  No one wants to go to the trouble of building a home that will be worth quite a lot of money if it’s only going to have to be gutted to remove mold a few months later, right?

If you’re careful and you keep an eye on your home’s construction, you can prevent most kinds of mold and water damage.  If you’re not, you’re asking for quite a headache and the loss of a lot of funds.

Orlando Emergency Water Restoration

The current economic climate has caused many to worry about the economy and the future of their money. This is understandable. However, it shouldn’t cause you to panic. Remember, all economies are cyclical. Therefore, not only do they evolve they revolve. As a matter of fact, on the bright side, now has never been a better time to assess your investment options.

3 Ways to Capitalize on the Changing Economic Climate

Isn’t it time to put your IRA retirement funds to work for you. While others are lamenting about how bad things are, you could be capitalizing on the recession, building the foundation for enormous returns when the market bounces back – and it always does. Following are three ways you can capitalize on the current recession.

Start a Real Estate Foreclosure Business: This is an excellent service to start, particularly in the current economic climate, because there are so many foreclosures that banks can’t keep up. And, the beautiful thing about this kind of business is that you can structure it so that it even thrives when the economy recovers. How do you do this?

Overall, make it a real estate cleanup company. One of your “divisions” could be foreclosure cleanup. In this way, no matter what the economy is doing, you’re in an evergreen business that thrives.

Buy a Franchise: If you don’t feel up to the challenge of starting a business from scratch, use your self directed IRA funds to invest in a franchise. The failure rate of franchises is much lower than other startups, and most of the hard work is already done for you.

Invest in Real Estate with IRA: Use your self directed IRA to invest in real estate, especially now that the economy is in what many view as a recession can pay huge dividends over the next 5, 10 or 15 years from now. It’s simple math: buy low and sell high. When do you remember interest rates and real estate prices being so low? Now’s the time to buy, not panic, for these are some of the best deals you’re going to find for along time.

Most of the time when electronic items become water damaged, they’re on and running and this is what causes the majority of the damage. The electricity and water flowing through the object at the same time is what fries the electronic components inside, not just the water itself.

What almost became a horror story for me was when I left my $40 CD player in the floorboard of the car along with a bag of ice that my brother was supposed to have retrieved after I got home. He didn’t and when I got in the car the next morning, it was completely submersed in water. The worst mistake I could have made at that point was to try and turn it on. Whatever you do, if you have a piece of water damaged equipment like this and it isn’t dry yet, do NOT try to turn it on! I let my CD player dry for about two weeks (after taking the batteries out) before I even considered trying to power it up. An article in the Washington Post claims that a Blackberry that had fallen into the toilet survived because it was put in a bowl of uncooked rice for a few days because rice absorbed all the moisture. If you’re going to go this route, make sure the rice is of a larger grain so it doesn’t work its way inside the device.

If you’re faced with a problem where a liquid spills into a device that is powered on and connected to the current in your wall or the current in your car, disconnect the device from its power source immediately. If it has batteries, too, remove them to make sure it has no power source at all, in case you accidentally press the “on” button. You don’t want to get shocked by touching it while it’s still plugged in, if it plugs into the wall in your house.

Other devices larger than cell phones and CD players get water damaged and those are computers, televisions, stereo equipment, video cameras, and etcetera. These items are best cared for by a professional and in fact, if you have any doubts as to your own ability to work on your smaller water damaged items, it’s really best to do this, anyway. If you’re going to call a professional, though, you should do it quickly: the liquid gradually corrodes some of the internal metal components.

Flooded Basement

A self-directed checkbook IRA gives you checkbook writing privileges on your individual retirement account (IRA). This means you can invest in foreign real estate with your checkbook IRA if you so choose.

A self-directed checkbook IRA means you don’t have to consult with an account custodian every time you want to access funds as they relate to your real estate investment. Whether it’s putting a down payment on a real estate investment overseas, or consulting a real estate attorney to guide you through the international investment waters, you can don’t have to get “permission” from anyone on how to use your money.

Why Investing in International Real Estate Represents the Best of a Global Economy

Investing in real estate with your self directed IRA represents the best of what a global economy is all about. No longer are the best deals right in your back yard. Many financials now tout that foreign markets that trade in everything from real estate to energy resources are some of the best investments around.

Reap the Rewards of the Cyclical Real Estate Industry by Investing Internationally

Real estate is a cyclical industry – whether it’s here in the United States, or in Latin or South America. What goes up will come down. One only has to track patterns from years gone by to see that. You can use your checkbook IRA to reap the rewards of the cyclical real estate industry by investing internationally. How? Quite simply by taking advantage of deals in hot markets.

For example, if you live in Seattle and the market is not favorable there, you may be able to pick up some great deals in Argentina or London or Dubai. With a checkbook IRA, you can capitalize on opportunities beyond U.S. borders. Investing abroad not only brings more lucrative opportunities your way, it adds depth to your retirement portfolio. And, this is the advantage of investing in a global economy. That’s the power of a checkbook IRA.

We all want the same action Stevie Ray Vaughan had. I mean guitar action, string height, neck relief, fret level. I’m talking the way the ‘action’ on his guitar is set up. Why would someone want a guitar ’setup’ like Stevie Ray’s? Well for one thing, he is one of the best blues guitar players that ever lived. A relatively close second to Jimi Hendrix.

‘Lenny’, was one of Stevie Ray’s favorite guitars. Because I do some setup work and understand the specs Stevie Ray used for this particular guitar, I wanted to share the specifications with you. I reviewed a ‘Lenny’ guitar, and boy oh boy is it setup nice. Briefly, I love to do setup work, it’s very mechanical and precise and I enjoy setting up guitars for people and then hearing them say “it never played like this before.” I am not a guitar maker though, I am a setup artist.

Stevie Ray’s ‘Lenny’ Setup specs:

Scale length 25-1/2″ with a compounded 7-1/4″ to 12″ compound radius.

Frets are huge, .110″ x .055″ new.

Strings are GHS Nickel Rockers, super large guage .013″to .058″. Must have had giant super human strength in his hands!

Nut action is .o20″ on low E at nut and 3.5/32″ at 17th fret. On the high E the action is .012″ at nut and 5/64″ at 17th fret.

Simply put, these are the most critical points of adjustment. Not the only ones, but combine the different adjustments in the proper order and you have a guitar set up like Stevie Ray. Realistically speaking, if you have the specs, than it can be setup up your way or to your favorite guitarists specs.

Personally I like an even lower action, or string height over the frets. As low as I can get it without fretting out. I came up with my own strategy from reading and trying setup adjustments from many players, such as Jeff Beck and Eric Johnson, to name a few. I also craft a bone nut as a replacement nut for all of my guitars.

With that being said, I don’t recommend doing your own setup work. Especially if you have never done a setup or don’t have the correct tools. I would like to suggest trying it on a cheap guitar the first time. If not, for a perfect setup find a competent guitar luthier and give him the setup specs that you want.

Got any questions? Fell free to ask via our comment area. I will attempt to answer all questions. If you like the vibe, please share it with others. Enjoy.