June 2008 Archives

Guest blog from radio show guests from RealSource Retirement Services, Jeremy Hanks and Mike Madsen

Recent concerns from the stock and bond markets have caused many IRA holders to ask what alternatives are available to help them reach their IRA goals. How’s your IRA investment doing? Are you satisfied with its performance? Would you be interested in expanding your IRA investment opportunities?

Because IRAs may not borrow and thus take advantage of the higher return potential available in leveraged real estate, RealSource is pleased to provide to you an alternative through its IRA Builder program. This new product gives you the opportunity to self direct a portion of your IRA into leveraged high quality multi-family tenant-in-common properties. With the RealSource IRA Builder, RealSource has designed a way that allows you to enjoy the higher earnings potential of leveraged real estate. Here is how it works:

Program Description

• ·         Because IRAs may not borrow and the tenant-in-common (TIC) properties available through RealSource Equity Services (RSES) are each leveraged so as to improve potential returns, an LLC is placed in between the IRA and the RSES TIC. The LLC is often a Delaware LLC that is registered in the state where the property is located.
• ·         A one year renewable note is given from the LLC to the IRA to pass through the earnings from the TIC through the LLC to the IRA in the form of interest payments. The interest rate is set lower than anticipated earnings for the year from the TIC property. Points are charged by the IRA to the LLC when the note is renewed each year to pass through any remaining earnings.
• ·         The IRA holder may not manage the LLC due to being a disqualified person (party-in-interest) with respect to the IRA. Therefore Nate Hanks as the LLC manager signs on the loan.
• ·         Fees charged by RealSource Retirement Services for this service are minimal with the LLC manager charging one point from interest paid plus any costs, for example annual LLC renewal/registration fees charged by the state.
• ·         This program is also available for similar RealSource projects such as development projects through RealSource Development Services, LLC

Features and Benefits

• ·         Better investment alternative for your IRA. Investing in a TIC gives a higher and easily diversifiable return potential with low minimum investments for your IRA.
• ·         Class A & B multi-family properties. These large properties are professionally managed and due to their size they are often beyond the reach of individual clients.
• ·         Economies of Scale. Typically several of these larger apartment communities managed by a single property management firm gives TIC client owner groups significant leverage with property managers and competitive property management rates. Similar savings are made with other venders such as insurance.
• ·         Quarterly client income distributions. Financial reports and note interest payments are made on a quarterly schedule.
• ·         Simplified client involvement while giving clients informed control. RSES minimizes client involvement by consulting with TIC owners and the property manager, coordinating day-to-day administration while assuring TIC owners are kept informed and in control through:

­        Bi-weekly property updates on occupancy and improvements.

­        Quarterly client conference calls (or more often as needed) with each TIC owner group to discuss property activities and to hold owner votes on items such as budgets, distributions, and improvements.

For Additional Information

Please contact Jeremy Hanks or Mike Madsen, RRS@realsource.net or (800) 929-2150 or go to www.RealSource.net