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Partnering IRA Funds: An Alternative Way to Fund Your Real Estate Investment

Did you know you can partner with other funding sources to increase your investment potential? Self-directed IRAs are the only retirement arrangements that allow individual investors the freedom to pursue alternative investments, such as real estate. Investing in real estate with a self-directed IRA offers many benefits to those who are looking for creative ways to save for the future. Investors have complete control over their investment choices. Unlike other IRAs, you’re not limited to stock, bonds or mutual funds. Self-directed IRAs provide the opportunity to save money for the future on a tax-deferred or tax-free basis. In addition, an IRA is considered a separate entity that can conduct business with others. This is a common strategy used in real estate investments. The process is fairly simple, but be sure to adhere to IRA regulations to avoid engaging in any prohibited transactions.

How do I partner with others to purchase real estate using a self-directed IRA?

  1. Identify the partner you would like to invest with.
  2. Perform your due diligence and confirm that the investment fits your strategy.
  3. Combine your self-directed IRA fund with other funds to purchase the property.
  4. Your IRA will own a percentage of the property and must be stated on the title when the transaction is recorded.
  5. All income and expenses (on a proportionate basis) from the property flow in and out of your IRA and not your personal finances.
  6. If the property is sold, your IRA receives the portion of the proceeds proportionate to the percentage of ownership.

A self-directed IRA can partner with anyone at the time of initial purchase, but after the transaction is complete, the IRA cannot conduct any business with a disqualified person. Doing this could lead to significant tax penalties.

The following people are considered disqualified persons:

  • You
  • Your spouse
  • Your lineal ascendants and descendants, and their spouses
  • Any person providing plan-related services (custodians, advisors, fiduciaries, administrators)
  • Any entity (business, corporation, partnership) of which you own at least 50 percent, whether directly or indirectly

What are the ways in which I can take advantage of the partnering strategy to help me save for retirement?

  1. Partner With Another Investor
    Investors are on the lookout for new opportunities, and networking with like-minded individuals can be a great way to find an investment partner. Partnering with a fellow investor offers the potential to learn from each other, as well as disperse risk between two people.
  1. Partner With a Relative
    While you are not allowed to buy from/sell to relatives, as they are considered disqualified persons for these purposes, you do have the option of partnering with them to purchase a new investment. This can be a great way to save for retirement together with a loved one.
  1. Partner With Yourself
    It is possible to partner your self-directed IRA funds with your personal savings for the purchase of a new asset, such as a real estate property.
  1. Partner With Another Self-Directed IRA
    Partner your account funds with the funds in another IRA to maximize your purchasing power. Find another motivated retirement investor to explore your possibilities.
  1. Partner With a Group
    Sometimes partnering with one account, one investor or only yourself will not provide enough funding for the investment you are interested in. In this case, you can partner with a group! Partnering can be a great tool for retirement investing, but it is important that you understand how to utilize this strategy for success.

It’s Easy to Get Started
All you have to do to get started is open an account and fund it. There are three ways to fund your self-directed IRA: transfer or rollover an existing retirement account, such as an employer’s 401(k), into a self-directed IRA; or make regular, annual contributions to your account. Once your account has cash in it, you can start investing immediately! As you read in this article, you can partner with other investors until you have enough cash to invest in real estate on your own. Download our free report about partnering your self-directed IRA with real estate here to learn more.

Disclaimer: Before you invest in this business sector using your IRA, it is best to consult with your investment, legal and tax advisor. Entrust does not endorse or recommend any of these investments. Proper due diligence by you, the IRA holder, is recommended before entering into any transaction.

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5 Tips for Buying a Foreclosed Home

(TNS)—Buying a foreclosed home is not like the typical home purchase.

In many cases, only one real estate agent is involved.

The seller wants a preapproval letter from a lender before accepting an offer.

There is little, if any, room for negotiation.

The home is sold as-is, and it’s up to the buyer to pay for repairs.

On the upside, most bank-owned homes are vacant, which can speed up the process of moving in.

“Buying a foreclosure is definitely a bit of a grind. It’s not easy,” says Robert Jensen, broker and president of the Rob Jensen Co. in Las Vegas. “You’re getting fantastic pricing, but sometimes it takes going through a lot of houses and writing a lot of offers to get the home you want.”

Find a real estate broker and a lender.
The first two steps for buying a foreclosure should be taken at the same time. While you’re looking for a real estate broker who works directly with banks that own foreclosed homes, get a preapproval letter from a lender.

Elaine Zimmerman, a real estate investor and author, recommends that shoppers first visit any site with a database of foreclosed homes. You also could look at a local real estate website that lets you filter the results to see only foreclosures.

You might find the acronym REO, which means “real estate owned.” This signifies that the property has been foreclosed on and the lender now owns it and is selling it.

Get a broker on your side.
The goal of combing through foreclosure listings is not to find a house; it’s to find an agent. Banks usually hire real estate brokers to handle their REO properties. In many cases, the buyer works directly with the bank’s broker instead of using a buyer’s agent. That way, the commission doesn’t have to be split between two brokers.

“A lot of these REALTORS® have a long-term relationship with these banks, and they know of listings that haven’t even come on the list yet,” Zimmerman says. “Call them about the listings that you’re interested in, but also ask them about listings that may be coming up, because sometimes it may take a day or two or even a week before a listing actually comes onto the database.”

Get a preapproval letter.
Unless you plan to pay cash, you’ll need a recent preapproval letter from a lender. The letter will detail how much money you can borrow, based on the lender’s assessment of your credit score and income.

“The problem is, buyers want to find the house first, and then they think they’ll work out the financing,” Jensen says. “But the problem is, the really good deals on these bank-owned, they go quick—and the buyer doesn’t necessarily have time to try to work out the financing afterward. They need to work that out first.”

Zimmerman says some first-time buyers make the mistake of assuming that the bank selling the home will also finance the mortgage as part of the deal. “Don’t expect to get financing from the bank that foreclosed on it,” she says. “That’s a totally separate transaction, and they view it that way. The people in the (bank’s) REO department are not loan officers. They are getting rid of bad assets.”

Look at comps before making an offer.
There’s no rule of thumb on what the bank’s bottom line is on price. Just as with any other real estate purchase, you have to look at the recent sales prices of comparable properties, or “comps.”

“You really have to look at the comps in today’s current market conditions and write a competitive offer based on that,” says Jensen. “Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours.

“Sometimes it’s priced too high, and you can come in lower. A lot of times, buyers will come to me and say, ‘We want to write offers for half price.’ It just doesn’t work that way.”

Bid the higher price if homes are selling quickly.
Keep in mind that foreclosed houses generally are sold as-is. That means that you shouldn’t expect to get a discount to compensate for repairs.

Jensen says: “Let’s say the house is listed for $200,000, all the comps are $200,000, and so the client comes in and says, ‘Hey, look, I want to buy this house but I’ve got to do paint, carpet and fix some mold damage, so I want to take $15,000 off the price.’ You know what? All the other ones were in the same condition, and they sold for $200,000.”

Jensen further advises finding out how quickly comparable houses are selling. With foreclosures, a 3,500-square-foot house with a pool in a gated community might sell within days or hours, but more modest homes might sit on the market for weeks, or vice versa, depending on market conditions.

If the foreclosed homes you’re looking at are selling swiftly, “the best advice on a bank-owned property is to come in at your highest and best, unless the property has been sitting on the market forever with no activity,” Jensen says.

“If you’re going to be upset because you would have gone $5,000 more but you lost the property, just bid the higher price in the first place.”

Find tradespeople who can assess and repair damage.
Because repairs are almost inevitable with foreclosed houses, Jensen and Zimmerman recommend getting to know tradespeople who can assess and repair damage from pests, mold and leaks. Zimmerman says you should assume that the air conditioning needs to be fixed, and possibly the heating system, too.

It all sounds daunting—but at least you don’t have to wait for the owner to move out of the house.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Why You Really Don’t Have Enough Time

You may have decided to get into real estate so you could be your own boss, set up your own working hours and make a lot of money.

So, how’s that working for you?

The challenge with entrepreneurship is being laser-focused on dollar-productive activities. When you first get into the business, you need to learn the skills, implement systems, install new programs, deploy various platforms, study scripts, market and process transactions. That’s a full-time job, and you haven’t even begun to work with buyers and sellers.

But here’s where most agents fail: They get too busy working in the business and fail to work on their business.

By nature, our business is radically unpredictable. Buyers decide to buy, and sellers decide to sell on their own timetable—and we want to be there at that magic moment—but the intensity of showing buyers, servicing sellers and maintaining prospecting can be daunting unless you develop a plan to keep all the plates spinning and the income funnel full.

The plan is simple—but getting an agent to do it is the hard part.

No matter what’s happening, only you have the power to block your day. This begins with blocking out dollar-productive activities by using a My Perfect Week Planner.*

The system visually helps you lay out a perfect week so that you’re able to establish a rhythm of daily habits that result in regular, consistent income. Think of blocking your time using a traffic light as an example:

  • Red is for non-negotiable time. These hours are reserved for your personal “big rocks” like sleep, family time, etc.
  • Yellow is used to time-block a daily prospecting hour. I can imagine you rolling your eyes right about now, but prospecting is the key to getting paid regularly. Pretend that this is sacred time, even if it’s 15-30-minute increments five days a week, and stick to it. Whether you’re prospect-phobic or simply believe prospecting is limited to cold calls, think conversation, not solicitation. Rotate through your sphere of influence with scheduled calls to update contact information and to share a save-the-date for your future client appreciation party. These approaches are easy and friendly.
  • Green is the easiest time to block on your weekly calendar. These are appointments that are related to earning or receiving money, and are usually the most fun. Block in green the hours you’ve earmarked for closings, listing appointments or working with buyers.

The goal is to increase the green in your weekly calendar. You wouldn’t want to miss a closing, so why not block out a small increment of time to talk to more people in order to make more sales so you have more green in your week?

Sit down at the beginning of each week to plan. Real estate has plenty of opportunity for busy work that will rob you of energy and income, so take control of your week before the chaos hits so that you can do those activities that serve and pay you first. It’s also a good idea to get a good coach to help you learn new habits to plan for success, and hire out the administrative work so that you can focus on being the CEO, building your business every day, one day at a time.

*For a complimentary copy of My Perfect/Productive Week Scheduler, visit http://bit.ly/2raO1Dj

Murphy_Terri_2018_60x60Terri Murphy is a communication engagement specialist, author, speaker and coach. She is the author/co-author of five books, and founder of MurphyOnRealEstate.com. Contact her at TerriMurphy.com or Terri@TerriMurphy.com.

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Bring Calm to the Chaos in Your Business

As the selling season continues to pick up, many agents find themselves busy and struggling to fit everything into their days. Although they’re grateful for the business, they worry that other important people and tasks are falling through the cracks. As a result, they may work long days in an effort to squeeze it all in and boost productivity, only to find themselves tired, frustrated and less productive. Here are some best practices for bringing calm to the chaos in your business…

  1. Prioritize
    When you have your priorities in place, you know where to spend your time. What are your priorities? On the business side, it could be to expand your database 25 percent or to surpass last year’s sales figures.

On the personal side, your priorities may be your children’s sports games or plays, a weekly lunch date with your spouse, a weekly morning meeting with a community group, or volunteering with a favorite organization. Your priorities are the things you don’t want to miss, no matter what. Pencil these in to your schedule before anything else.

  1. Organize
    Once your priorities are set, you can then organize everything else. Breaking the process into these four segments will allow you to regularly review your schedule so that you’re focusing on the things that are most important to you instead of becoming bogged down by less important tasks. This will help you become more productive, serve your clients better and honor your priorities.
  • Your year: Throughout the year, take out your calendar and pencil in your priorities—a family vacation, a long weekend, your children’s activities, industry workshops, client parties and other important days. Although nothing needs to be set in stone, including these things in your calendar will help you plan the rest of your year and ensure they don’t get overlooked.
  • Your month: Each month, review the priorities you’ve already accounted for on your annual calendar and add in other important activities that have come up since, such as workshops and seminars, holidays perfect for getting social with clients, etc.
  • Your week: At the beginning of the week, review what you have scheduled and include any important meetings, client lunches, etc.
  • Your day: In addition to making time for lead generation and your personal and business priorities, fill in the rest of your day accordingly. If you find yourself putting out a lot of fires, make time at the end of the day to handle all the unexpected challenges that arose during the day.
  1. Systemize
    A system will help you commit to both your priorities and your newly organized schedule. It provides a framework to follow so that you never have to wonder what you need to do each day to optimize your business. Over time, you’ll build the successful habits that are sure to cause your business to thrive. Remember to rely on a good CRM to help ensure you stick to the system and track your progress toward your goals.

Along the way, a coach is a valuable person to have in your corner as you try to calm the chaos. A good coach will provide an objective perspective on your business each step of the way; from helping you define your priorities to helping you organize your week. Additionally, they can help you pinpoint the aspects of your system that may prove the most beneficial to your business and help you achieve your goals within your desired timeframe. In short, a coach will help you reach your potential, optimize your productivity and build a thriving, successful business.

For more information, visit buffiniandcompany.com.

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agent photo
Dorothy B. "Dot" Rhone
Broker/Owner
Century 21 Covered Bridges Realty, Inc.

ABR, CRS, CRB, GRI, e-PRO, SRS, SFR, One America
Office:  570-784-2821 x 19
Cell and Text: 570-204-0279
Email: Dot@DotRhone.com
Licensed in PA # RM421649

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