I had another article prepared for you today that was scheduled to launch at 7 this morning but when I awoke I saw an email from my business partner John Dixon over explaining the answer to my question yesterday I knew I had to talk to all of you about retirement. I had emailed him asking how I can capitalize on the decision for the UK to leave the EU. I have two Johns who have backgrounds in finance and understand stocks on a global level and I have to ask the one who tells me this….
Britain’s exit of the European Union is being called Brexit. The European Union is a political-economic union that now consists of 28 countries but was established after the Second World War with just a handful of countries to pool resources. The EU has authority over economic policies, immigration and trade. The European Union takes control away from the individual governments and many feel this causes inequality. What happens when these countries will share prosperity however they will share economic downturns as well; especially after the 2008 financial crisis. The one way they have been making people poor is their policies regarding trade. Big European companies will lobby and have the European Union set a higher tax, limit the amount of product imported and have strict regulations. Even if European manufacturer produces inefficient, poor quality products, you will pay more for goods imported that are the better quality and cheaper to make. The same concept is done with food. This raises inflation, people pay more and their income stays the same.
The UK chose to leave the UK in search of freedom from the control of the European Union so the middle and lower class of the country can prosper and not just the elites. Sound familiar? The elites having control. Yes I’m talking about the United States.
So how will this affect you? You might not realize but if you have retirement account such as a 401k, you have already lost money. About 2 trillion dollars were lost in the markets after this event. This has influenced markets all over the world. Your 401k is being actively managed by someone you do not know and these fund managers have put your money into foreign investments such as the UK. The United Kingdom has been the largest source of foreign direct investment. When I explain this to people, I often find their emotions run hot. They realize they have no control over their retirement and rely on hope they will have enough money by retirement and have no economic crisis along the way. They decide they don’t want to rely on hope and decide to have investments or assets they control.
My advice, Charity, keep buying real estate.
Well isn’t that lovely? I thought he was going to tell me to invest in the Euro as it will come up or let him invest in some shorts for me on the Euronext. Nope…keep buying real estate. Now, I will probably ask the other John for advice on the stock market but in the mean time I decided to remind myself why I love real estate as an investment anyway.
What do you want for your retirement? Do you want to travel the country in an RV, bask in the sun at your beach house, travel the world, or just be able to spend all the time you can with your chubby faced grandchildren? Retirement means something different for each of us but the reality is that for most of America, these are just dreams.
I know I like to pick on Millennials because I tend to think of them as being in their very early 20’s, like 20. The reality is that I only missed that marker by a couple of years. This generation includes anyone born 1980 or after. Only 27% of people in this age group have any retirement plan at all according to a 2015 survey by the Investment Company Institute. Gen Xers aren’t doing much better with only 33%.
Even if you have an IRA, who controls it? What is happening to your money right now?
You have the option of a self-directed IRA allowing you to control the investments that are in your portfolio. You have the option to diversify as much or as little as you choose with things like real estate, notes, and even gold and silver.
We know that real estate has been consistently stronger than any other investment throughout history. Here are some ways to grow your retirement portfolio through real estate.
1. Buy rental property now. I do not care if you are 26 or 62 there is never a wrong time to start this process. Just one piece of property, if you purchase it early enough, can be the majority of your income. If it is purchased a little later in life it can be a serious improvement to your income. If you place one rental property into your IRA, you will see growth in monthly revenue over the years as inflation drives up rental prices. The more you buy, the better. This of course, is different from what you are buying to create income. This property becomes the property of your IRA.
2. Sell properties with owner financing. Any properties you chose to hold in your IRA can be sold with owner financing allowing you to receive a large down payment and a monthly income from the note. This will be an accrual for you over time and can also be an actual income each month once you retire.
3. Flip in your IRA. Maybe you have a retirement plan with a considerable amount of money in it right now and you want to roll it over to a self-directed IRA. Maybe your accrued payments from rentals and notes have given you enough to start thinking bigger. You can buy and sell property in your IRA while continuing to receive the tax benefits of a retirement account. You have the option to flip a home and return your profit to the account. This allows you to grow your return in leaps and bounds.
4. Fund your deals through your IRA. Let’s say that you have rolled your retirement to your new self-directed IRA and you now have about $100,000. You can be your own private lender so that you can both make money today and save for your future. Your IRA can lend your LLC the money it needs for all or part of the acquisition and rehab cost of your flip. Your IRA, meaning you, set the interest rate. Remember, you do not want to screw your future self for a few dollars today. I recommend setting the interest rate between 8 and 12%. The Now You gets the profit from the flip; Future You gets the interest.
5. Fund the deals of others. Once you have a large enough amount to fund either the acquisition or renovation of a property you can start to earn high returns on that money by being a private lender to other investors. You can just sit back and allow your money to go to work for you. Of course, in this scenario, your profit goes to your retirement.
*If you are interested in using your IRA, home equity, or other liquid asset as being a private lender for other investors please complete a contact form. I have students who are working with me directly and would appreciate this option. I would love to speak to you in full detail about private lending.
Brevity is not my strong suit, I know. So I will try to cut it short; rather than continuing to yap I am going to leave you with this link to options for establishing a self-directed IRA.
But first, I do want to remind you that the only person who REALLY has your best interest at heart is you. Stay educated, informed, and in control.
Happy Investing My Real Estate Junkies!!
I was born an entrepreneur. I am pretty certain that I was peddling passies in the hospital when the nurses left the room.All of the other kids in the neighborhood were riding bikes and playing with dolls I was selling jewelry out of a catalogue and creating a back yard consignment shop. At 21 I became a real estate investor and fell in love. This was/is/ and always will be my passion. I have been madly in love with flipping, holding, and writing offers on real estate that seem crazy for 18 years. Ladies and gents I am willing to share the love of my life with you. Maybe its polyamory maybe its jut because I can’t shut up about it. Either way I will be sharing every mistake I ever made and the lesson that came from it. I love questions. Please ask away!!!