Archive for March 1st, 2010

Self-directed IRAs buy International Real Estate Investments

When people begin to consider investing in real estate, they usually think of investing within or near their own cities. While investing in your immediate area can be beneficial because its familiar turf, it may create a narrow perspective of the overall available real estate market and rule out far better options for ROI. A broader scope of opportunities entails crossing county, state, and perhaps even international, boundaries. In this article, we will explore purchasing international real estate with an IRA,. With the property being held within an investment portfolio, this option can in many instances enable greater diversification, tax rewards and other benefits for the investor.

It is often the case that self-directed IRA holders are told of laws concerning owning real estate within IRAs, prohibiting ownership of foreign real estate and strictly limiting ownership of domestic real estate. This is not entirely true, as evidenced on the IRS website: http://www.irs.gov/retirement/article/0,,id=111413,00.html. The actual self-directed IRA IRS rules are less restrictive than those of many major self-directed IRA custodians, who aim to standardize and limit the types of transactions that they conduct. With such mixed messages, it is for good reason that the public has been confused about what is and is not allowable. With the right structure in place, your IRA can own international real estate-whether it’s beachfront property in Costa Rica or a rental villa in Panama.

The key to loosening the restrictions on your IRA involves some very specific steps-first, opening a self-directed IRA, and then forming an IRS-compliant Limited Liability Company, or IRA LLC. In addition to offering freedom in making your own investment decisions, a self-directed IRA LLC gives you the ability to avoid 90 percent of the fees you might otherwise have to pay. Putting this structure in place allows you to have checkbook control over your IRA, meaning that you are relieved of having to ask your custodian to write a check (for which you must pay them a fee ) each time you wish to make a transaction.

The way that the structure works is really quite simple. The LLC itself would own the International real estate property, and the individual’s IRA would own the LLC. By maintaining checkbook control over the IRA, you are able to pay any expenses associated with the IRA real estate investments directly from cash within the IRA, in compliance with self-directed IRA rules set forth by the IRS. Though some may question the legality of the IRA LLC structure, the courts have consistently upheld it. If you are still uncertain, a good advisor will be able to direct you in the establishment of such a structure and provide examples of others who have already done so.

When you do make the decision to start investing in international real estate, your first concern will naturally be the potential return on your investment. Following closely, however, should be a comprehensive study of the stability of the country in which you are considering investing. A government that is susceptible to coups and civic strife will not be your best option. On the other hand, there is an abundance of foreign markets that are not only stable and low-risk, but poised for tremendous growth. Familiarity with and thorough research of an area are always advised, as well as securing a reputable advisor to help guide you based on your personal goals, interests and needs. When you are informed and take the proper steps, expanding your investment options outside of the country can open up many exciting, untapped areas to invest in for retirement.

Copyright 2006 � Daniel Cordoba, CEA and contribution by Joshua Geary of Best Online Results

About the Author
Daniel Cordoba is a Certified Estate Advisor and Principal of Asset Exchange Strategies, LLC. Asset Exchange Strategies, LLC through its website Real Estate IRA Newsletter helps investors gain greater control of their self-directed IRAs.

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Self-directed IRAs buy International Real Estate Investments

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Life Lessons From Leaders

Zig Ziglar has been quoted as saying “People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.” Inspirational quotes and sayings can help us stay motivated as we deal with life’s ups and downs.  Perhaps that is why some people subscribe to Reader’s Digest—for the inspirational stories that can provide a new perspective for our daily challenges.  Following are some of the best inspirational quotes and sayings and some commentary on the life lessons offered by these quotes and their authors.

Tomorrow is often the busiest day of the week.” – Spanish Proverb

Why is tomorrow the busiest day of the week?  Well, in my experience it is human nature to procrastinate and many of us postpone taking action, preferring to ‘do it later’.  We all know tomorrow is not promised, yet we tend to put off taking action until some unspecified, later date—usually euphemistically termed ‘tomorrow’.  This quote inspires me to take action today.

“Things may come to those who wait but only the things left by those who hustle.” – Abraham Lincoln

Hard work and hustle are more valuable than a high IQ, a degree from the right school, or any of the so-called factors that most people attribute success to.  Abraham Lincoln is remembered as a hard worker, yet few people discuss the fact that he overcame obstacle after obstacle before he finally became the President of the United States.  Lincoln was born into poverty and faced defeat and setbacks throughout his life. He lost eight elections, failed twice as a businessman, and suffered a nervous breakdown.  He began working at the age of the age of seven to help support his family, went bankrupt at 24, spent the next 17 years repaying his debts, but never gave up.  Although I may never be President, this quote inspires me to hustle and never give up.

Don’t find fault, find a remedy. – Henry Ford

Henry Ford, often credited with revolutionizing industry and perfecting mass production methods, was an expert at using other people’s ideas and making them better.  Other people made cars before Ford but Ford made better cars and sold them for less. Other people designed and built car factories but Henry Ford built the biggest factory of his time and made the entire factory a moving production line.  How did the son of a farmer (Ford’s parents fled the Irish potato famine in the 1840s) achieve all this with little formal training?  Henry Ford developed the attitude of a problem-solver.  When others saw insurmountable obstacles and problems, Ford saw opportunity.  Where others saw failure, Ford recognized an opportunity to learn from his mistakes and try again.  When he realized he didn’t know enough about electricity to pursue his dream, he took a job working at an electric company.  When his investors backed out on him, Ford raised funds by selling shares of stock. When his assembly line workers were unhappy Ford bucked the entire industry standard and increased pay while cutting hours.

Henry Ford’s story is inspirational because it proves that hard work, finding creative solutions, and remaining persistent even with repeated failures is the key to solving life’s problems.  In fact, Ford’s attitude laid the foundation for his success.  He knew that every big problem is really a collection of smaller problems.  Instead of dwelling on the problem and placing blame, Ford faced his problem and focused on solutions.  Henry Ford knew that placing blame on others, external circumstances, or life in general only makes the problem worse. Henry Ford inspires me to see ‘problems’ as opportunities.

One secret of success in life is for a man to be ready for his opportunity when it comes. – Benjamin Disraeli

Benjamin Disraeli entered politics (unsuccessfully) in the early 1830s but did not hold elected office until 1837.  For the next 31 years it always seemed he was on the verge of wielding power and influence but somehow, things never worked out in his favor.  He stayed the course and in 1868 finally became the British Prime Minister due to a resignation.  However, later that year in the general elections he was unseated.  It wasn’t until 1874 that he got another opportunity to implement his political ideas.  Two years later, once again Prime Minister, he was recognized by Queen Victoria with the title of Lord Beaconsfield and continued to shape his government’s policies.  In addition to a successful political career, Disraeli also gained renown as an author, solicitor, and social figure.  His words provide inspiration because Disraeli exhibited patience and preparedness long before he reaped the rewards others enjoyed.  He was (and still may be) the only British Prime Minister of Jewish heritage and achieved social recognition even though he was not wealthy like many of his political peers and was often at odds with some politician or another.  We can take note of his words because he lived accordingly, waiting patiently for many years for opportunity to come his way.

If you can dream it, you can do it. – Walt Disney

Many people are familiar with some of Walt Disney’s various accomplishments— pioneered the animation field, created Mickey Mouse and the world’s first synchronized sound cartoon, held the patent for Technicolor for two years, Academy Award-winner (48), Emmy Award-winner (7), Oscar Award-winner (26), winner of the Presidential Medal of Freedom, creator of the first full-length animated musical feature (as well as numerous other classics), first to present full-color programming, inventor of the multiplane camera, etc.—however one of his most inspirational characteristics was his vision.  Walt Disney had the ability to see something that didn’t exist yet, harness his energies, and turn his vision into reality.

Disney supervised and orchestrated the acquisition of 43 square miles of swampland –twice the size of Manhattan Island–in the middle of Florida. He planned to build a “Disney world” of entertainment which would include an amusement park, resort hotels, and his Experimental Prototype Community of Tomorrow (EPCOT). Crazy?  Not to Walt Disney.  In fact, people willingly sold him their property thinking it to be near worthless.  Eventually he used dummy corporations and cooperative individuals to avoid a burst of land speculation that could derail his dream project.  In return for leading economic development in central Florida, the governor gave Walt Disney the authority to establish an autonomous quasi-government giving Disney full control over building codes, zoning, planning, and the like.  Walt Disney World required $400 million and 9,000 workers to build, and Walt Disney passed away before seeing it completed, but it doesn’t matter—Walt ‘saw’ his dream come true long before any of us did.

Following in the footsteps of successful people is a great way to get started on your personal path to success, however, searching a little deeper to see what makes them ‘tick’ can provide you with even more motivation.  From time to time your friends at Black Swan Management will give you a sneak peak at what makes us tick, and the lessons we’ve learned from individuals we admire and respect.  Like the great Zig Ziglar once said, “success is not a destination, it’s a journey.”  So enjoy the journey. We are.  As always, happy investing.

About the Author

Anthony Sills, M.B.A. formerly traded FOREX from the Atlanta Financial Center and has worked for stock advisory services, brokerages, Fortune 100 companies, and national banks.  Mr. Sills is currently a licensed loan officer and freelance writer.  You can reach him at anthony@BlackSwanManagementLLC.com

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