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Investor's Guide to Commercial Real Estate Investing and Retirement Planning Using IRA-401K Part 3

John Krol
 


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Boomer's-Bank Part 3 of the eBook Boomer's-Bank

Financial Intelligence for Real Estate Investing This is the last part of Chapter 1 of the book where we start to Explore the options available to Boomer's or anyone looking to create enough Positive Passive Cash Flow to deal with what experts are expecting during the next 20 to 30 years.

Please understand I hope Everything on the negative side of this book are just BS, however if I am correct in my reporting then Something someone needs to take Action-and No one is coming in to Save the day outside of yourself. .

So here is the balance of the chapter PS: there are 21 chapters-and it gets better and better

What this means in practice is that you have to start figuring out how to consolidate the value of your assets. You have to invest in your future to ensure that you don't get caught up in the ever tightening financial noose. So why is real estate investment your answer? Let's consider for a minute the power of real estate. As we had mentioned earlier, for centuries real estate investment has been considered one of the most effective methods for building wealth. It's not just super-wealth that real estate can help establish, however, as it's a very down-to-earth investment approach. In Marin County, California, a married couple in their sixties was able to purchase homes for their two children in the 1990s thanks to their earlier decision to invest in a favorable real estate market about thirty years prior. If you're unfamiliar with Marin County, all you need to know is that it is one of the most expensive neighborhoods in the area surrounding San Francisco. It's a decidedly well-to-do area where real estate property values are basically skyrocketing, along with just about everything else. So how did a retired teacher and his landscape gardener wife manage to purchase two family homes in one of the most expensive neighborhoods in California?

Mr. and Mrs. Peterman bought a home in Marin in the late 1960s before the property values began their climb. The house they bought was relatively run down but it was a sizeable piece of land. After moving into their home, the couple started construction on their dream home positioned at the back of their property, in what was effectively their backyard. They built, from scratch, a three bedroom house suitable for their family. When that house was built, they knocked down the original house and raised enough money to build a second house on the front of their property.

By the time the Peterman children were thinking about college, Mr. and Mrs. Peterman were able to sell off the second house along with about half of the land that they had originally bought. Their profit was considerable since they made the purchase when property values were low and the sale when values for the area were climbing. The money they made not only allowed them to put their two kids through college, it also enabled them to make the down payments on homes for their children when the time came for the kids to settle down.

The Petermans enjoyed their considerable success not simply because they had ventured into the realm of real estate investing. Nor were they able to clear themselves of any debts and help their children avoid the financial quagmire to which people are undoubtedly prone when they live and work in a decidedly expensive neighborhood because they were in the right place at the right time. The real ‘X’ factor in the Peterman investment story is the fact that they used

their IRA and 401k packages to purchase their real estate properties in the first place. Among other things, this savvy investment decision meant that they didn't pay capital gains on the money they made from the sale of their second property. Mr. and Mrs. Peterman are also doing well in terms of preparing for retirement. All the money they have used to invest in their real estate has come through their retirement plan (hence no capital gains on the sales).

Considering this story, perhaps you're getting an idea about what really constitutes smart investment decisions. Unless you have a lot of money to play with, you should be entering into real estate for a very specific reason. It is always best to identify your goals at the outset. Do you dream of becoming the next real estate mogul in your community, a successful counterpart to Donald Trump? Do you have a sizeable debt that you are looking to get rid of? Do you dream about having several hundred-thousand dollars tucked safely away in your bank account? Perhaps even a few million dollars if you are prepared to stay at it for a while.

Establish what you are dreaming about, what you would really like to have in your life. You need a plan to turn your dream into a reality. Whether real estate is part of the destination you have in mind or is only a stepping stone to get you where you want to go, this book should help you build a viable plan to achieve your goals in a way that makes a lot of financial sense; not only for your immediate future, but, perhaps more importantly, for your longterm financial well-being.

Think about it for a moment. Real estate is a very diverse commodity. You have numerous options from buying a single family property that you intend to live in to perhaps leveraging a multifamily apartment building. You can also buy a parking lot or an office building complex. Why not buy a plot of land and use it to build several condos or, if the plot is big enough, build a planned residential community? In this day and age, investing in real estate is one of the smartest things you can do, period!

Unfortunately, most people don't have the first idea how to get their heads around this type of arrangement. The notion of owning real estate that is not just for their principle use or the idea of using their retirement plan to leverage and invest in the first place is somehow bewildering to them. It terrifies most people to think about the work involved. At least, they believe there's a lot of work involved. How do you make your money back? What if you've got to find tenants for an investment property? How do you do that? How do you go about selling a

property when you want to? Who do you call? A lawyer? A real estate agent? A financial planner or broker? What if you can't sell it for the price you paid? What if you just want to flip properties like those foreclosure deals you always hear about on television? Can you still use your retirement plan and if so, how do you go about organizing it?

All of these questions posed by an inquiring mind deserve a complete, fair, and rounded answer. The truth is that when it comes to real estate, there's no one answer that always fits the bill. Creativity is important.

The good news about this industry, as we shall emphasize at various points throughout this book, is that the prime commodity, real estate and particularly commercial real estate, are universally valuable. Their value is considerable and it's unlikely to fall very far below the mark. People are always going to need buildings for commercial use. They won't necessarily always need an office building in precisely that location but they will need something or the other. Places change, and thus commercial real estate is the best type of real estate you can possibly invest in if you want to be able to surf the waves of change that undoubtedly will affect your community over time.

But hold on a sec. The best news is yet to come. You don't have to be a Donald Trump to do well in this field either. Real estate investing is actually very straightforward once you have the mechanisms in place and the important numbers on speed dial. You invest some of your own money to buy a property through your IRA or 401k; you borrow some money against the value of the property. Either you keep the investment property as your primary residence or you turn the property into a source of income, the choice is yours. You can do some repairs, some renovation and development on the property, to increase its value. If you don't use the property as a residence for yourself, you either make your money back long-term by renting units or you flip the thing and resell it for more than you originally paid, avoiding problems such as capital gain because the money you make goes into your retirement plan. The precise details of each arrangement will vary depending on the type of property in question and your particular interest. If you want to make money fast, you are probably going into the flipping business; buying and then quickly reselling your properties to earn a fast profit that you can store away safely to keep your future looking bright and breezy.

What this book should do for you above all is to provide a definitive outline of the principles of real estate dealing. The general purpose is to chart the entire process for buying and eventually selling properties while leaving you plenty of room to maneuver within the general framework. Moreover, it also aims to provide a definitive explanation for precisely why this type of investment strategy is not only advantageous but, in many instances, decidedly necessary for securing a viable retirement plan.

End of Chapter 1

John Krol http://blog.ira-401k-realestate.com Boomer's-Bank The Investor's Guide to Commercial Real Estate and Retirement Planning How to Invest In Commercial Real Estate Using Your IRA or 401(k). . . Maximize Your Profit. . . and Save For Retirement

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