By Kaaren Hall, CEO, uDirect IRA Services
I just returned recently the Fall Conference for the Retirement Industry Trust Association with some news about Self-Directed IRAs.
More Retirement Savings
For over 40 years you’ve been able to invest your retirement savings outside of the Stock Market into assets like real estates, notes, trust deeds, precious metals, private stock and more. Updated statistics from the conference: There is $24.5 Trillion in overall retirement assets. $7.5 Trillion of that is in IRA accounts. In the year 2000 there was $11.6 Trillion in retirement savings overall, so you can see this figure has more than doubled in the past 15 years.
News on the 60-Day Rollover
On Aug. 24, 2016 the IRS changed its appeals process for those who miss the 60-day deadline. (Now, with some “self-certification” legwork, you can fix the problem yourself. In a typical 60-day rollover, a person will take a personal distribution from one of their retirement accounts. Then, within 60 days, they deposit it into another retirement account.)
The IRS says that a taxpayer may make a written certification to a plan administrator or an IRA trustee that a contribution satisfies the conditions in Section 3.02 of this revenue procedure. This self-certification has the effects described in Section 3.04 of this revenue procedure. Taxpayers may make the certification by using the model letter (provided by the IRS) on a word-for-word basis or by using a letter that is substantially similar in all material respects. A copy of the certification should be kept in the taxpayer’s files and be available if requested on audit.
If you believe your 60-day rollover should not be a taxable event, discuss this with your tax professional.
The RISE Act
Senator Ron Wyden, who is a Democrat on both the Senate Committee on Finance the Subcommittee on Taxation and IRS Oversight, came out with a proposal called the RISE Act.
The proposal has more than a dozen provisions including:
- Raising the age for Required Beginning Date for Required Minimum Distributions
- Requiring valuations for IRA asset acquisitions
- Prohibiting investing in assets acquired at less than fair market value
- Elimination of Roth conversions
- Roth IRAs would be subject to Required Minimum Distributions
- Exempting small IRAs from RMDs (where account value is less than $150,000)
This proposal is open for commentary until December 8, 2016.
DOL’s Fiduciary Rule
This year the Department of Labor announced its Fiduciary Rule. To say this rule has caused controversy is an understatement. There are six lawsuits filed against this legislation.
The fiduciary rule redefines who is now a fiduciary and further clarifies the difference between “education” and “advice.” It’s important now for you to understand the relationship changes for your advisors, as the regulation impacts advice about a 401(k) and IRA rollover or distribution.
As providers of Self-Directed IRAs our industry is largely exempt from this ruling since we do not provide advice or recommend investments. We recommend the account-holder seek advice from a competent investment, tax or legal professionals before moving forward.
Again there is pending legislation so expect some changes. This new rule takes effect in April of 2017.
To learn how to self-direct your IRA, reach out to us at uDirect IRA Services. You can find us at www.uDirectIRA.com
By Sam Sadat
You’ll be happy to know that, last I checked, the laws governing miracles have not been repealed. Moreover, manifesting miracles is not exclusive to a lucky few. They’re available to all who refuse to believe in the concept of “impossible”. After all, couldn’t “impossible” be simply read as “I’m possible?”
Although the mechanics of creating miracles in one’s life remain mysterious, many of us, consciously or unconsciously, have already made them happen in our own lives – or at least we know people who have. Let’s be clear; we’re not talking about parting the Red Sea or bringing the dead back to life. The word miracle simply means any marvelous, wonderful, or amazing occurrence.
Being the cause of such an occurrence is ability innate to all of humanity and, though dormant in most of us, this ability can suddenly emerge under the right circumstances. No one really knows the precise mechanics of how miracles are manufactured, but I’ve been researching this phenomenon for years and I think I’ve been able to compile some pieces of the puzzle.
Below are just a few principles to experiment with. I hope you will begin to see that you too can make miracles happen in your own life.
Believe that miracles are real and can happen to anyone. After all, whatever you want is already here in the world. Where else would it be? All you need to do is make them appear in your life. Believe it and you’ll see it. It’s not the other way around.
Examine what you believe to be “impossible” and then change your beliefs. This is done by changing your thoughts. For this, self talk is crucial. Talk to yourself in a positive empowering way every day to replace those limiting thoughts you were programmed with since childhood.
Don’t expect a miracle. Be a miracle. This is achieved through knowing who you are, separate from your reputation, labels and possessions. Who are you really? A clump of matter suspended in time and space, or a magnificent source of love, energy, and potentiality? Find a quiet place, close your eyes, and try to perceive your greater self. You’ll soon realize you’re not a human being having a spiritual experience; you’re a spiritual being having a human experience.
You often hear me talk about how we’re all energy. This is not New Age chatter but Quantum Physics talking. Energy in different frequency or vibration becomes matter in all its varied shapes and forms, us included. Miracles don’t happen when you’re hard and closed up. They happen when you’re soft and receptive. You can do this by getting connected with and resonating with the rhythm of life. The more you can harmonize your thoughts, words, and actions the more life responds to you. And this response can sometimes take the form of the miracles you so desperately seek.
Meditate often, walk in nature, and look up toward the skies rather than down toward the ground. That’s one big difference between humans and animals. We can hold our heads high and look at the skies while animals are gazing down. Miracles are up above not down below.
Now go out there and be a miracle!
By Cody L Cox
I’ve driven my SUV for 18 years now. I bought my Blue GMC Envoy brand new in 2003. Since that time, I’ve enjoyed 210,000 miles with her, but she’s getting a bit tired. I’ve enjoyed not having a car payment for a decade, but she’s been needing some help to get back and forth to the bus depot for my morning bus jaunt down the valley and back. Whether I’m ready or not, I’m going to soon be looking for a new ride.
I’ve had my eye on those Jeep Wrangler’s you see everywhere. They never were everywhere until I had my eye on them. I especially like the Rubicon models. Not only do they look the best, but I just like saying that name – RUBICON. Go ahead, say it out loud. RUBICON. It’s a fun word to say. I think it’d be fund to drive.
The actual Rubicon is a river in Italy. During the Roman republic, the Rubicon marked a boundary between a certain Roman province to the north and Italy proper, which was controlled directly by Rome. It is said that Caesar deliberately broke the law in crossing the Rubicon and made armed conflict inevitable. https://en.wikipedia.org/wiki/Rubicon He is attributed to have uttered the phrase alea iacta est, which translates into the Die is Cast, essentially meaning there was no turning back. This is essentially where I am at in my Note business.
Before I entered the note business, I was trying to be a regular real estate investor, just like everyone else. I was trying to get houses under contract, and then either selling the contract to another local investor (wholesaling) or doing light cosmetic rehab myself (fix & flip). It became very apparent I wasn’t very good at it. My heart wasn’t in it. Marketing consisted of large chunks of time and money hoping to find distressed owners or absentee landlords, then sending out letters attempting to persuade them to call me. Then, after sending out 1,000’s of letters, the 2 – 3 calls that came in were not really motivated to sell. Plus, there were 50 or more other folks locally doing the same thing. Portland is a highly competitive market. Everyone wants to live here. If I was able to get one potential seller to show me their property, because I had a day job, it was tough to schedule an appointment during a time that worked. This whole process wasn’t working. Too much outgo for the trickle coming in. I lost motivation and spent a bunch of money. I then had a revelation one night at a Northwest REIA meeting (Thank you Joe Varnadore), transitioned to notes, officially changed my company name and you know the rest of the story.
My Rubicon happens as GoDaddy is sending me reminders that my website domain names for my previous business, Northwest Property Options, is expiring. If I don’t send them their renewal fee within 5 days, the domain cancels. NWPropertyOptions.com becomes available for someone else. My answer is alea iacta est ~ the Die is Cast. I’m a note investor – and there is no turning back.
Whats your Rubicon? Have you recently had to face one? I’d love to hear about it. This may not sound like a big deal, but mentally and formally, moving past the past is a big deal. While I didn’t do much business, there is a small sense of loss as I move to much bigger and much better things.
Did you watch my Friday Stroll about risk? Crossing the Rubicon is definitely taking a risk. Do that here:
Another risk moment happened this past Thursday night. I was invited to speak before Northwest REIA at their June General Meeting. The house was packed, and I had a great time speaking to the membership. Thank you once again to Dave Metzker and Christian Bryant for the opportunity.
Thank you for reading. New assets are in the works. I’ve got about 350 new assets on 5 or more tapes I’m reviewing. I hope to add another 10 or more before the end of the month. This might be the time to talk to me and see if we can cross the Rubicon together.
Together, our potential is infinite!
Copyright © 2018 Trinity National Holdings, LLC, All rights reserved.
Our contact information is:
Cody L Cox ~ Portfolio Manager
Trinity National Holdings, LLC
By Kathy Fettke
Kathy Fettke gives insight on a recent fraud investigation
Real estate, like any investment, can attract lots of scammers. How do you really know who you’re dealing with? You see ads everywhere for “turnkey” rental properties, but what does this really mean, and how do you know who to trust? The owners of the Bay Area Equity Group, a turn-key property provider located in Campbell, California, were recently arrested on suspicion of fraud. I saw these guys at a real estate expo I attended last year and they seemed like nice enough people. What happened?
Real Wealth Network has over 14,000 members now, so it’s pretty easy for us to get information. It turns out that one of our members purchased property through the Bay Area Equity Group. I asked him about it and here’s what he told me he thinks happened:
In the Beginning…
– They started out with good intentions.
– They made guarantees of 15% returns on rental properties in Detroit, MI.
– They offered to cover repair costs in many cases.
– They wanted to offer the best deal in town.
Testimonials on their website raved about what a great deal it was. “No worrying about property management! No vacancies! No repairs!” Who wouldn’t want that? In reality, that type of situation can exist, but usually only in a triple net lease situation where the tenant agrees to pay all expenses and repairs. It cannot work in a situation where the seller takes on such enormous responsibility for thousands of clients .
Here’s what our member thinks happened next:
– Operating costs ended up being higher than expected.
– They started to get behind on making owner distributions
– They realized they couldn’t meet the guarantees.
– They didn’t want to let their investors down.
How Ponzi Schemes Begin…
Often times operators need to rely on new money to feed the old promises. In this case, our member suspects this is what happened:
– Allegedly the owners started to buy distressed property, perform a minimal rehab, and then resell far above market prices.
– Proceeds from the sales allegedly went to pay for the former guarantees.
– It still wasn’t enough.
– Desperation kicked in. Allegedly they started to sell the same property twice to different people, but only record one sale.
Our member told me, “Earlier this year, I had spoken with the guy currently behind bars and explained how reneging on commitments (guarantees, payments) made during the property purchase would undermine confidence in the company. He believed, probably rightly so, that if the company didn’t make such across the board adjustments, the whole company would go under. According to the lawsuit, it was his partner who relied on the above more desperate title fraud approaches to raise cash and keep the company going.” Whatever the reason, no one wants to get stuck in a situation like this, and they don’t have to. There are so many ways to protect yourself when buying real estate. I asked our member what advice he’d give. Here’s what he said:
10 Ways to Protect Yourself
1. Do not invest all your capital or entire retirement in one geographic area, especially a distressed location.
2. It’s best to avoid highly distressed regions if you are a first-time investor.
3. Use a reputable title company or attorney to make sure the property is properly recorded at purchase.
4. Always purchase title insurance to ensure clear title.
5. Be leery of turnkey deals that isolate the owner too much from rental property operations and financials.
6. Prior to purchase, insist on hiring your own property inspector.
7. Determine how the appraiser was selected. I suspect that Bay Area Equity Group was trying to influence the appraisal process.
8. Visit the property (or at least visit the area initially so you understand what you’re buying).
9. Look up public records so you know who currently owns it, how much it sold for before and if it has an IRS tax lien or other liens.
10. Ask for a scope of work done prior to purchase, and verify it with an independent inspector.
Real Wealth Network has been vetting out property sellers since 2003. These are just a few of the items on our checklist. If you’d like to receive the full duediligence checklist or receive a list of companies that passed our scrutiny, simply visit www.RealWealthNetwork. com or call 888.RWNetwork
About the Author: Kathy Fettke is the CEO and Co-Founder of Real Wealth Network. She specializes in helping people build multi-million dollar real estate portfolios through creative finance and planning. Kathy is also host of The Real Wealth Show and is a frequent guest on CNBC, FOX Business News, CNN and CBS MarketWatch.