The No-B.S. Guide to Building Real Wealth in Your Self-Directed IRA or Solo 401k
When listening to feedback from Nabers Group clients, one message is loud and clear, “We want to see investment opportunities from you.”
I sent out a survey to all of my clients recently, and I’d love your input too. With my activities in many circles, I have access to mounds of solid investment opportunities. If you complete this survey it can help me understand what types of opportunities you are most interested in.
Click here to take the survey.
Mature investors close to retirement age are likely kicking themselves wishing they had pulled their money out of the market while they had the chance.
But too often these investors were told to “stay the course” and that “the market will come back.” Truth be told, no one knows for sure what the market will do.
But we do know is that you still have time to recover your losses – as long as you don’t just sit back and “hope” the stock market will recover. You have to do something about it.
Real estate can be a wonderful option for someone nearing retirement. With depressed housing prices, you may be able to find a home that offers positive cash-flow so that it provides a healthy monthly income. When the market recovers, you can consider selling the property only if the numbers add up and you will benefit from appreciation. If not, you can continue to cash-flow the property and create income for yourself for a long time.
So the point is that you’re never too old to consider alternative investments. A diversified investor is a smart investor at any age.
Recently I received a question from somebody looking into self-directed IRA/401(k) investment for themselves. They said, “I ran this by my financial planner in New York who said to roll over my IRA to put some of its money into my home is illegal.” This statement is technically correct. Putting IRA money into his primary residence would be a prohibited transaction. The disturbing thing about the situation is that these three people (a person, their realtor, and their financial planner) could all be on the same page about something so fundamentally ridiculous.
In the past 10 years, many people think “real estate investing” equals “putting money into my home”. Their home can’t be an investment in the first place because they are paying for it rather than having it paid for by a renter.
When somebody wants to help people rationalize buying the stuff they sell, they often call it an “investment”. Bill Clinton started changing the way people thought about government spending (when he was increasing it) by calling it an investment.
Selling a primary residence to a home buyer is selling a consumer product. It’s for their use. They can buy what they really need. Or they could get extravagant and buy the Lexus/Mercedes version of a home and spend more. Either way, it’s a consumer product if they are paying for it and using it themselves.
But realtors followed Clinton’s spin move and started calling home buying an investment. This really caught on once Fannie Mae, Freddie Mac, and the Fed all took actions to artificially inflate home prices in order to defer the recession of 2002. Once you could buy this consumer product (the home) and then have it rapidly increase in value (supposedly) and realize this value by selling it or doing a refinance cash out, then the talk about the home being an investment seemed to make sense.
Today, the bubble is over, and the illusion that your home is an investment should be easy to correct. If it was an investment, then somebody else would be paying the mortgage. If somebody else was paying the mortgage, they’d probably live in it instead of you.
It’s not to say that buying a home is a stupid thing to do. That can only be decided on a case-by-case scenario that depends on the buyer and the home in question. Buying a home can be a financially beneficial thing to do in some cases, but it hardly could be truthfully classified as “real estate investing”.
Back to basics: real estate investing means buying properties that produce income. And, yes, real estate investing can be done inside an IRA or 401(k). 
