InvestorLoft Real Estate Investing Blog

In these days of tightened lending criteria and the stated income mortgage having gone by the wayside, what’s a real estate investor to do? Creative financing requires putting on your thinking cap and looking for new, untapped sources of liquidity. Forget thinking outside the box – you need a whole new frame of mind when it comes to your real estate financing needs.

The process of purchasing real estate in your IRA is relatively simple, yet widely unknown and the subject of this week’s blog. For those in search of a financing source for their real estate investment goals, we’ll plant some seeds worth cultivating today.

The lending environment today is a far cry from where we were 12-24 months ago. While many of the tools that real estate investors used to achieve their goals have now been dispensed with (i.e.: stated income loans, 80/20 loans and the Option-ARM), there’s a pile of money just waiting to be used and it’s likely you’ve been sitting on it this whole time: your IRA. Most investors aren’t aware that they’re able to expand beyond the norm of mutual funds, stocks and bonds with their retirement kitty, but it’s an easy process.

Here are 3 tips to get you started on the path of utilizing your IRA to invest in real estate:

1. Find a custodian for your IRA. There are specialized custodians for self-directed and real estate IRAs. Consult our handy list of custodians to begin your due diligence process.
2. Learn about non-recourse loans and how they can help you finance your real estate purchase by using leverage in your IRA.
3. Review permitted and prohibited transactions. Purchasing real estate in your IRA doesn’t come without Uncle Sam’s restrictions. Once you know what they are, finding a qualifying property is simple! 

For the real estate investor, there’s no better time like the present to move forward with investment property acquisitions. The trends of days past have left us with a ripe market climate for having not only abundant choices for our real estate portfolios, but ultimately the pick of the litter. In this week’s blog, we’ll review the circumstances that have real estate investors in one of the most favorable positions in history and the hows and whys of the history itself.

To briefly recap the culprits of the current “perfect storm” let’s itemize the recent market actions that have us where we’re at today:
 

• Speculative buyers drove-up purchase prices without substantiating value, creating artificially high purchase prices that were unsustainable.
• Unscrupulous and predatory lending practices led to unsuitable use of various lending strategies (think the Option-ARM), light to no down payments and loose underwriting.
• A large portion of the would-be renter pool became homeowners due to the above, upping vacancy rates and diminishing the cash-flow potential of investment property.

It’s all over the news. You can’t flip channels without hearing about it. The housing market is in a spiraling decline. In a year wrought with mortgage bailouts, increasing foreclosure rates and inventory galore, what does this mean for the real estate investor?

It’s simple. While the foreclosure climate is unfortunate for those caught in its grasp, it offers a potentially favorable scenario for the liquid real estate investor.

Year-end means that banks want to get REO property off their books. This places YOU, the investor, in prime bargaining position. Have you read our article on Foreclosure Listings? If not, it’s an excellent primer and what you need to know and consider when looking at REO properties.

First and foremost, get your financing and purchase funds lined-up. If you’re ready to be aggressive with a bank on one of their properties, cash is king and the more you can bring to the table (100% if possible), the more favorable the bank will likely see your offer.

Our advice? Don’t turn off the news. Keep watching. As the panic thickens, the real estate investment community will find itself in a more and more beneficial position. It’s a well-known fact that you should buy low and sell high. Get in on the current real estate market lows and build yourself a robust portfolio. 

If you have ideas on strategies for foreclosures and foreclosure investing, we look forward to your comments below.

 

 

Online Self-Directed IRA Learning!

Click and learn! We’ve had such incredible traction from investors who currently use their self-directed IRA to invets in real estate that we wanted to let everyone know how it’s done. We’ve launched our Self-Directed IRA Learning Center and invite you to stop by an have a look-and-learn.

From a detailed seven-part series on the basics of self-directed and real estate IRA investing to more advanced strategies, this section of our Resource Library is ready and waiting. There are also the most up-to-date IRS publications available for download for our members’ convenience. One-stop shopping and learning for your investment goals!

There are so many people out there who don’t know that they can use their retirement fund to invest in real estate, and self-directed or real estate IRAs make it simple.

Have an idea for an article you’d like to see in this category? Drop us a comment here.

Investment Property Search at InvestorLoft.com

When we designed our PropScout investment property search engine, it truly was with the investor in mind. There’s nothing more frustrating for an investor than to have to sift through listing after listing to find a suitable property for your investment goals. We deceided that enough was enough and developed a smarter way to search.

This week, we’ll answer a few questions that we’ve received via email regarding the PropScout Search Engine. We’re always looking for ways to improve our service offerings and much thanks to the members below for asking. We’re happy to answer!

How do I know the properties that come up in my PropScout search are legit? – Mark M. (Illinois)

Only licensed real estate agents are eligible to list their properties on InvestorLoft. This means you’re not going to run across fly-by-night deals listed by unscrupulous individuals just looking to grab your earnest money check and run. While there’s no substitute for a thorough due diligence process when acquiring any investment, including real estate, we started from the most logical place to protect our members: the licensed real estate agent.

I have a very specific cash flow requirement for any property I add to my portfolio. Can I search by cash flow on InvestorLoft? – Jennifer A. (Arizona)

On the PropScout search page, just scroll to the line marked “Search by YOUR desired minimum annual Cash Flow” and select from the drop down menu. Hit search, and your results will be on-target and easy to review.

Not only can you search exclusively by cash flow, but cap rate, equity, property type and more. The PropScout Search Engine was designed specifically cater to the needs of the real estate investor. 

How is PropScout any different from searches I perform on other online real estate sites? – Carolyn W. (Colorado)

We’re glad you asked! See, most real estate investors aren’t so concerned with number of bedrooms, granite counter tops and upgraded flooring. They want to know that a property makes financial sense for their portfolio. That being said, you won’t find the typical “residential” search criteria on InvestorLoft’s PropScout. What you WILL find, however, is a solid list of qualifying financial criteria to build a search that suits YOUR needs. Swimming pool? Take it or leave it. Cash flow? Now that’s something we want to hear about!

If you have additional questions about our PropScout Search Engine, ask them here! The InvestorLoft Team will get you answers. Thanks for stopping by!