InvestorLoft Real Estate Investing Blog

First Time Home Buyer Savings Can Stack-Up with a Little Research

If you’re one of the few who hasn’t heard about the $8,000 first-time home buyer credit – listen up! That’s a fair share of dough for those who qualify, and this week’s blog will give you some tips on how to stretch your homebuying dollars even further. When looking for your first home, it’s hard to not think of that purchase as a significant investment. While InvestorLoft traditionally focuses on the needs of the investment buyer, we’re here to tell you that there are some handy tools (on both our site and others) that can help you make that $8,000 credit stretch even further.

So first-time home buyers: this list is for you!

Ways to Maximize Your First-Time Home Buyer Credit

1. Shop for Discounts – Everyone’s talking about the abundance of foreclosures on the market – so there MUST be deals to be had, right? Absolutely right. Using InvestorLoft’s PropScout search engine, you can actually search for properties by discount to market value and estimated equity! Not only that, but Forbes Real Estate frequently issues their Luxury Housing Index numbers weekly and MSNBC.com publishes up-to-date housing information (like cities with the highest foreclosure rates and info on the 10 priciest cities for owning a home). A little research lends to a keen eye for discounts!
   
2. Keep an eye on Craigslist! Real estate listings don’t just come in the classifieds of your local paper or online. While the risk runs high for potential scams, a trained eye will let you know if you’re looking at a potentially good deal. You can take the information from the listing you find and then research similar properties in the area or (preferably) just hand the info over to your chosen real estate professional and let them do the legwork for you. Think outside the MLS and let your Realtor help you!
   
3. Know Your Numbers - Sites like Bankrate.com are hugely useful for financial research. They’re a long-standing source of data for up-to-date mortgage rates AND the bank providing them. Pre-approval for a mortgage gives you eve more negotiating power when you need to act fast on a hot deal.
4. Set Up New Property Alerts – Searching every day for the home of your dreams can be cumbersome. On sites like InvestorLoft, you can save searches and have new results emailed when they post to the system! It’s kind of like a concierge for your home buying needs (but there’s no obligatory $20 tip required). Does the site you’re using to search email you targeted results or just random emails of new listings? Your time is valuable – make it count with targeted searching!
   
5. Leverage Professional Assistance – You might be the king or queen of finding aything you want online, but odds are, you’re going to use a Realtor to buy your home. There are thousands of experienced professionals ready and waiting to help you do the legwork for your new home search. Search for property is all they do, each and every day – chances are that they know a few inside tips about the area in which you’re looking to buy and may even hear about listings before you can find them online. Find a real estate pro you trust and let them help with the heavy lifting!

Your Virtual Key to Real Estate Investment

We find so much powerful information across the web on a weekly basis that we wanted to take a moment and fill our readers in on the “coolest of the cool” in this week’s real estate and investment markets.

Back on April 3rd, we posted Real Estate: the Self-Directed Perspective and have found that this subject is really heating-up across the web. Here are two complimentary posts on the subject of “retiring with real estate” that our readers might also find useful:

Real Estate: Market Slowdown Offers Deals for Real Estate Investors – DailyPress.com. Real Estate is on sale and the market’s current slowdown is offering great deals for real estate investors in the Norfolk, VA region. InvestorLoft members can search Virginia for investment property!

Using IRAs to Buy Real Estate: Six Reasons to Tap Retirement Funds Now to Buy Rental Property - (Chris Pummer) MarketWatch.com. There’s a lively discussion going on over at MarketWatch on Chris Pummer’s series of articles on investing in real estate with your retirement funds. This let us know that we’re doing the right thing at InvestorLoft by helping educate our members and site visitors on the details of using their IRAs to purchase real estate. Have you seen our 7-part series on the Basics of Real Estate and Self-Directed IRAs?

Bellevue, Wash. and DENVER – (April 13, 2009) - Guidant Financial Group and InvestorLoft.com announced today that they will be joining efforts to create more awareness around real estate IRA investing through both companies’ websites. Combining Guidant’s award-winning expertise in alternative investment facilitation with InvestorLoft’s reach within the real estate investment community, both companies are excited at the expanded offerings.

“Many would-be investors contact us looking for investment opportunities,” says David Nilssen, co-founder of Guidant, a leading provider of self-directed IRA services and business-financing solutions. “By combining InvestorLoft’s resources with our self-directed IRA services, our companies create an opportunity for investors to identify, evaluate and purchase real estate investments.”

Guidant’s website includes audio and video about self-directed investing, a glossary of investment-related terms and a plethora of informative articles,” says Nilssen. “The inclusion of InvestorLoft content will help fill a gap in our curriculum.”

InvestorLoft is the first technology-driven real estate investment marketplace to effectively solve the challenges of identifying, analyzing and funding investment opportunities. Having experienced a similar gap in educational content and trusted resources for referral, InvestorLoft is enthusiastic about the resources that the relationship with Guidant offers their site members as well.

“With an estimated 70-90 percent of IRA holders unaware of their ability to purchase real estate through their IRA, there is a strong need to educate our members by providing solid educational tools, particularly information about innovative investing solutions as offered by Guidant,” says Walter Charnoff, co-founder and CEO of InvestorLoft. “We’re excited about the relationship with Guidant and look forward to leveraging their expertise on the utilization of retirement funds for purchasing real estate and other alternative investments.”

By teaming up, Guidant and InvestorLoft plan to help investors take a more active role in their future investments and get one step closer to achieving their investment goals.   

About Guidant Financial Group

Guidant Financial Group provides self-directed IRAs and business-funding solutions through IRAs and 401(k)s. Guidant’s services allow investors the freedom to make investments in real estate, franchises, businesses, tax liens and more by accessing their retirement accounts without penalty before retirement age. For more information on Self-Directed IRAs or Business Financing please visit www.guidantfinancial.com.

Contact: 

Marty Weishaar 
Guidant Financial Group^TM 
Phone: 888.472.4455 ext. 3248 
Facsimile: 888.418.0374 
marty.weishaar@guidantfinancial.com

Self-directed IRAs can build your nest egg

Many investors have become disenchanted with recent stock market volatility, stories of corporate scandal and corruption. In addition to impacting retirement account values, these events have also strained investor confidence. It is no wonder then that more and more investors are pushing their advisors to offer Self-Directed IRAs (SDIRAs) that allow them to invest in alternative assets which they believe will provide greater diversification and control over their retirement nest eggs.

Factors
While the list of alternative investments includes a wide-ranging group of assets–including private equities, hedge funds and mortgages–one area that has captured the greatest level of interest is real estate.

Typically, real estate comprises 60% of clients alternative asset investments. Some real estate advisors suggest that falling prices combined with increasing inventory is creating new investment opportunities. As prices begin to fall, the pendulum may swing past center to create oversold conditions, providing opportunities to buy real estate at low prices. Some areas in the U.S. may already be starting to experience this phenomenon.

Another factor to consider is that many real estate investors are being squeezed out of the market due to the current credit crisis. This has created a unique opportunity for cash-rich retirement plan investors. These investors are either purchasing the real estate outright, through a partnership, or LLC. It is estimated that the first of more than 78 million baby boomers will begin to retire this year. This group controls more than $14 trillion dollars in retirement plan assets. These assets are being rolled-over from employer-based plans to individual retirement accounts. Many baby boomers have already begun to shift away from traditional equity investments to those that generate income, such as, income-producing property. Add these factors with the possibility of equity appreciation, and it is clear why real estate is growing in popularity.

Opponents of using the SDIRA to invest in real estate focus on key concepts which they believe have a profound effect on individual financial strategies. Before engaging in any transaction prudent investors are wise to consider them. First, profits personally made in real estate, if long-term, are taxed at the capital gains rate of 15%. When a SDIRA sells a piece of real estate there are no taxes due at the time of sale. However, when the owner takes a distribution from their retirement account, the proceeds will either be taxed at their ordinary income rate (for a traditional SDIRA) or are tax-free under the Roth SDIRA.

Additionally, SDIRA investors cannot depreciate property or write off interest from their mortgage on their personal tax return. Another important issue concerns the access and use of property held inside the SDIRA. Neither the account holder nor his or her family members may have personal use of said property; doing so would result in a prohibited transaction. SDIRA firms, such as Trust Administration Services can help educate investors about how to use a self-directed retirement account to invest in alternative investments and other investments.

Taking the First Steps
Any investor that has been intimately involved in a real estate transaction is already familiar with the basic requirements of buying real estate in a SDIRA. There are other issues which must also be considered, such as ensuring the proposed investment is not a prohibited transaction. This is why choosing the right self-directed retirement plan custodian is important. Important factors to consider when selecting a self-directed IRA custodian include experience, a consistent service record, organizational structure and wealth o expertise.

After the proper SDIRA custodian has been selected, the investor should request and complete the appropriate forms for their Traditional, Roth, SEP, Simple, Individual 401(k) or other qualified plan(s). The SDIRA advisor will guide the individual through this process.  Once the account is established, the SDIRA custodian will forward the transfer form to the resigning custodian, whether that is a brokerage firm, mutual fund, insurance company, bank or trust company. Upon receipt the prior custodian will transfer the assets to the new SDIRA. A high-quality SDIRA advisor will make the process seamless for investors.

Cost
The fees associated with maintaining a SDIRA vary among firms and is one of the most important distinguishing factors. Most SDIRA firms choose to charge based on a percentage of assets, while a minority employ a transaction-based fee schedule, which is typically kinder to larger retirement accounts. When considering alternative investments, which have longer time horizons with potentially higher returns, the percentage of assets fee approach may not be as beneficial to the SDIRA account owner. Consequently, each account holder should consider his or her specific situation before determining which is best.

Summary
Ongoing market volatility, combined with the need of baby boomers to generate income, and retire securely, is causing investors of all shapes and sizes to take a hard look at their investment allocations to ensure there is a proper mix of opportunity and risk. As investors needs change, alternative assets and self-directed retirement accounts will become important tools to diversify and grow retirement wealth.

TommyJoe A. Valenzuela is Vice President of Sales and Marketing for TAS (Trust Administration Services), a division of First Regional Bank and online at www.trustlynk.com. He has over fifteen years experience in the financial services industry. He is a guest speaker at industry conferences, addressing topics such as taxable investment strategies and retirement plan investing.

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

Professional Networking Done Right!

Social media and the resulting social networks have been invaluable for the world of real estate and investment. What used to require a lot of leg work has been simplified with sites like Twitter and Facebook, giving “instant gratification” with building professional relationships. But like cell phone etiquette in the mid to late 90’s, the social media rules governing these sites are hazy at best. When should I tweet? What should I say? Do the people around me really need to hear every detail of the day? The successful adopters of social media, especially Twitter, generally have a similar list of “Twitter Do’s and Twitter Don’ts.”

DO: Be personable. View your interactions online with the same courtesy and respect as contacts you have in person. Talk to people. Respond to something that particularly inspires you or was especially educational. If you’re introduced to someone, return the favor. We’re all here to help each other and competition should be tempered to facilitate the networking atmosphere. You never know when an act of kindness will be returned as closing on a huge deal or finding the property bargain of a lifetime.

DON’T: Try to sell something with your first interaction. No one likes the person at the party who shakes your hand with their right and holds out a business card with their left. Be considerate with your introduction. Ask questions. Make small talk. Remember details. When you send a message to initiate a business transaction, people will be more inclined to engage if they know you’re not just out for yourself. Setting up auto direct messages on Twitter? It’s like eating garlic before a first date: avoid the temptation.

DO: Fill out your profile. Add a picture of yourself and give a small description of who you are. While many people decry the loss of “privacy,” you want to give an accurate representation of yourself. You don’t need to reveal every detail of your life to be genuine. This will build trust with potential contacts and show that you have a personality. People like interesting people. Show them how interesting you can be! Include keywords like “real estate” and “investment” to help your profile come up when people are searching based on profession or expertise.

DON’T: Set up “ghost” accounts or multiple accounts. Unless you are familiar with how to create an alter-ego, it’s best to be yourself online when building professional relationships. Multiple accounts may discourage networking if word gets out that you have three other profiles – people may wonder what you have to hide.

DO: Build your network of followers/friends around your target demographic. Social media is all about laser-proficient target marketing. Look at the profile information of the people you’re following or adding as friends. The best networking is with people who are also passionate about real estate and investment. They’ll double your efforts by telling their networks about you.

DON’T: Aimlessly add friends and followers. Beginning on Facebook or Twitter is overwhelming, resembling the panic that set in when you were the new kid in school and didn’t know anyone. Resist the temptation to start adding as many friends and followers as you can in the first few weeks. It may feel like you’re getting somewhere if you’re following 2,000 people on Twitter or add 500 friends on Facebook, but the sheer number complicates getting to know people. Start small, build slowly.

DO: Be business appropriate. For the most part, you control what people read about you online. When your online presence is polished and professional, you’re regarded as polished and professional. Talk about what you’ve learned about real estate investment over the years and the helpful article you read this morning. Skip the conversation about the latest family drama. It’s your personal brand – treat it like it’s your own rendition of Coca-Cola.

DON’T: Keep your updates and profile private and protected. This may seem counter intuitive to business: “I don’t want my competitors or other investors to see who I’m talking to!” But this will discourage networking. If your main goal is to build business, open up for all to see and follow.

DO: Post with a purpose. Along with being business appropriate, it’s also smart to have a goal in mind when posting. With a 140 character limit, these small bits of information cannot be empty calories. Make every tweet/update/link/note/comment count, packed with highly nutritional food for thought. Think of your Twitter stream in a condensed form – so powerful that a little bit goes a long way.

DON’T: Be an attention-hog. Remember the guy we talked about earlier who hands you a business card when introduced? The other social media party pooper is determined to do whatever it takes to have the spotlight following their every move. You know the type – loud, typically obnoxious, and starts conversations with, “Enough about me. What do YOU think about me?” While it’s appropriate at times to talk about yourself, remember basic rules of conversation. Social media is not a monologue.