Archive for September, 2014

Important Self Directed IRA Rules You Need To Know

Thursday, September 11th, 2014


Retirement investing can be much more fun when you are in charge of your own retirement. One of the best thing about taking control of your own retirement is that you can decide what your retirement is invested in. You don't have to have only stocks and bonds. You also don't need to take control of all of your retirement accounts. If you want you can take control of a portion of your retirement monies and invest that yourself. Those that do this typically do it through a self directed IRA.

A self directed IRA is the same thing as a normal IRA except that you are able to invest in real estate properties, gold, private companies and much more. The possibilities are endless.

As we previously talked about in one of our last posts, Baby Boomers are arriving at retirement with more debt, and specifically more mortgage debt. We also mentioned that one of the best ways to arrive at retirement with less mortgage debt is through a self directed IRA.

We want you to help you learn the rules to self directed IRAs so that you can take full advantage of your retirement. While there are rules you need to be aware it shouldn't be overwhelming. The rules are pretty straight forward and once you learn them they apply to all of your investments. There may be a few changes here or there depending on the type of IRA retirement account that you have but for the most part it should be pretty straight forward.

You need to be aware of some of the biggest issues and most broken rules when investing with your self directed IRA. Here are a few self directed IRA rules to be aware of:

  1. Disqualified Transactions – There are a few things that you cannot invest in as well as a few scenarios that make some investments disqualified.
  2. Disqualified Persons – While you can invest in just about anything there are a some people that make all investments disqualified.

These are two of the biggest issues that investors have when investing their retirement. There are other issues that you much be aware of but this is a starting point. If you need help figuring out more about disqualified transactions or disqualified persons please contact us and we can make sure you are investing correctly with your self directed IRA.


INVESTING IN CHICAGO WITH Ray Urrutia of Pull The Trigger Enterprises, LTD

Wednesday, September 10th, 2014

We all know about Chicago, but is it a good time to invest there?  To help answer that, we asked Ray Urrutia, President of Pull The Trigger Enterprises, LTD.  Ray not only has 14 year of experience in real estate, but is also an educator and mentor to investors.

Ray, tell us a little about your company.

I have been in the real estate business for approximately 14 years and in Sales and  Marketing and Executive Management for 30+ years.  In real estate starting in 2000 I started a company to pursue distressed properties put together a team to work with lenders on short sales; raised capital to acquire properties or wholesaled properties to investors. The skills I have learned in the disciplines of real estate I did and put into practice.  We started a REI (real estate investment club) and what was born from that process was Mentoring LLC to teach real estate investing.  2000-2007.

I am also a Real Estate Broker for the past few years along with continued investing.

Pull the Trigger Enterprises, LTD was created recently and launched to coach real estate investors on the disciplines identified (16) along with marketing; business processes; critical thinking skills and providing capital.  PTT is educational and provides tools and processes to identify a real estate transaction and give the student the expertise necessary to make an informative decision and the ability to ask the right questions.


Our mission is to educate and empower the beginning real estate investor and with the experienced real estate investor provide structure and systems to grow.  Educate; teach the disciplines and strategies in 16 core areas. Empower; through education we will empower the real estate investor to grow organically and gain INDEPENDENCE.

We will provide resources to support the real estate investor at any level; this process will provide a mutual benefit to investor and Pull the Trigger Enterprises to enhance profits.

We are also involved in Bulk purchases and REO’s around the country.

Tell us some stats about you or your company – average close time, negotiations, how many sales/purchases made, types of properties sold or bought)

With coaching students our focus is Single Family Homes providing capital, construction management, and construction teams, legal and accounting expertise coupled with coaching.   Our respective long term strategy is Multi unit’s 5-25 unit buildings.

We believe the market is $150k – $250k for flipping and for the most part this would apply almost anywhere in the country with the exception of the larger cities like Chicago, Detroit, LA or NY. The surrounding suburbs would be ideal.

Once a property is acquired our expectations is to close out in 120 – 180 days the exit strategy is a retail sale leaving the investor student with an approximate 25%-35% ROI( based on 20% invested = $40k) realizing in six months.

Do you have references our clients can call? Yes

Do you work solo, or are you part of a team? I have a team- accountant, attorney, realtor, project manager, acquisitions manager, appraiser, lender (exit) capital firm.  The benefits on having a team is bringing the various skill sets to work together to accomplish more.  We are currently involved in 3-5 projects a month and want to increase that to 8-10.

How experienced are you at negotiations? I am very experienced.  In my career I have been involved in negotiating multimillion dollar contracts for large corporations.  I am currently involved in many bulk purchases from $2M – $23M and above.

How many homes, commercial properties, land, etc deals did you close last year? 30 personally

What is your business philosophy? The benefits of any transaction must satisfy all parties involved; must be profitable; protected and mitigate risk to its lowest common denominator.  We don’t know what we don’t know…


Tell us about your service area: Our current market area is Chicagoland, well diversified with all types of properties and values

How is the market doing?  The current market is doing well in most sectors; like the country at large there is pent up demand for first time buyers and of the 55 Million come out of foreclosure some are ready to buy again.

What types of properties are being purchased/sold? Single Family and 2-4 units

What major construction projects are happening? The commercial sector developed land is being built upon with major retailers; good indication that the consumer is getting more confident with their jobs and income.

What major retailers are present or moving in? In the Chicagoland area it is Walmart; Sams Club; Overseas grocery store chains are moving in building 200,000 square foot facilities etc.

Typically, what expenses is the landlord responsible for? Trash Water and Sewer; there are tools to put the onus on the tenant through breaking down the bills based on square footage of rented space.

What is the unemployment rate? National is 6.2% the Chicagoland is a little higher at 8%


What is average the purchase price? $220k

What is the average rent? $1300

What is the average time a property is on the market? Non-stressed less than 30 days if it is priced right and solid location

Is it a better time to buy an investment property for quick resale or hold onto the property long-term to rent it out? Flipping at this time; buy and hold in two years

What type of marketing do you do when listing a property? All social media; internet; post cards;

How do you keep the client informed about the progress of the transaction? If being rehabbed every two weeks along with pictures via email and Dropbox.


Do you recommend self-managing a property or hiring a professional manager? The strategy I have always employed was that any holdings under three properties can be self-managed in the 2-4 unit range; Multi unit buildings 5+ should hire a Property Manager.  Yes we do have Property managers.

What service providers do you work with/recommend? Our services run from Property Manager; Legal; Accounting; Rehab ( fully gutted); general maintenance; product suppliers; Plumbers; Electricians; HVAC; Landscapers; painters and Roofers.  Our objective is to provide as much or as little support as our client needs.


What is the average rehab cost to help achieve a better return? This view is determined by the type of property and its location.  The examples are as follows:  1. Lincoln Park Chicago north side Acquisition is $450k needs $200K in Rehab and sells for $850k.  In this example we could go high end in materials because we can realize the return on investment 2. Western suburbs acquisition is $110k rehab is $50k moderate materials and sells for $220k – $250k.  As a rough guestimate I use $35 per square foot, unless I believe we can add an additional floor or rooms then my guestimate is $45-$50 per square foot.

Do you recommend self-managing a property or hiring a professional manager? In most case especially with Self Directing retirement accounts where the account holder cannot be part of the process I recommend hiring a professional management company.

What repairs or upgrades do you recommend to get the biggest “bang for your buck”? Kitchens- granite; Cabinets; sink; appliances.  Bathrooms – completely gut and replace with excellent materials especially the shower/tub; tile and flooring; also if you could expand the bathroom take advantage of it.

What are you looking for during an inspection before a property is purchased? Structure; all mechanicals electrical, HVAC, Plumbing;  roof and foundation

What should a client do with a property before putting it on the market? I recommend a final walk through 1. Before paying out final construction invoice 2. To insure contractor meets expectations of plan.  This is where we come in and provide this expertise:  Statement of Work; Waivers for next release of funds; and timeliness of completion. We oversee project as project manager.


What about long term hold 5-10 years? These projects are Multi Unit and would require 20% participation or all cash transactions are buildings fully occupied and cash flowing.  The property management and maintenance are taken care of.

What is the security of these types or any type of projects? The security is the real estate.  When pursuing these projects it is always recommended to see a complete package of what the details are i.e. buy and hold; flip; term ; how much cash is needed; exit strategy; expectations of returns.

What are the various types of real estate transactions? There are 18 different type of real estate transactions and each one brings its own set of criteria and agreements along with investment requirements.

How do I determine my strategy within my retirement account? There are many factors to determine a strategy that ask questions such as; what percentage of funds available do I want to allocate towards real estate?  What type of returns am I looking for? Where am I in retirement?   Do I want to be aggressive or paced?

Questions for Ray:

Pull The Trigger, LTD

Phone: (630) 429-4025

[email protected]

Questions for an IRA Specialist:

Jaclyn M. Grella



Investing in Companies with a Self Directed IRA

Monday, September 8th, 2014

Invest In A Business

There are so many things you can invest in with a self directed IRA. One popular investment inside of a self directed IRA is to invest in a company with your self directed IRA. We want to make sure you make the right choices when investing with your self directed IRA. The following are some of the self directed IRA rules for investing in a company with your IRA

Generally, your IRA can invest in almost any type of business entity. The two major exceptions are: (1) an S-corporation (due to the S-corp rules); and (2) any business owned or managed by a DQP (due to the IRS prohibited transaction rules – see Internal Revenue Code § 4975).

IRA-LLC: Your IRA can invest in a brand new LLC, purchasing its member units in exchange for IRA funds. The IRA owner may do this to segregate funds for different kinds of investments or for ease of asset management. For example, if an IRA buys a new LLC and uses the LLC’s cash to buy a rental property, the renters would simply write a check to the LLC rather than to the IRA. The LLC maintains a separate checking account to hold income from its activities and to pay expenses associated with its assets (such as property taxes, insurance, repairs, etc). An IRA-LLC can also reduce custodial fees, be quite useful for multiple-owner situations, and make transfers/sales easier (no retitling of LLC property, just transfer/sell the LLC’s member units).

For custodial reporting purposes, the LLC’s manager must report to AET a year-end valuation (and any pro rata values for IRA members owning less than 100% of the LLC). If active income is generated, or debt used, the K-1 or valuation should state how much of the income allocated to the IRA member is subject to UBIT or UDFI.

Please be aware that the use of such an LLC does not get around the normal IRA rules. All the prohibited transaction rules, as well as UBIT/UDFI, still apply if the LLC is an IRA plan asset. This means you (and other DQPs) cannot receive compensation for managing it, personally pay LLC expenses, provide sweat equity to the LLC properties, get full-recourse lending, etc.. Note that IRA contributions and distributions must still flow through AET, not any IRA-owned entity.

If you would like to invest in an existing company you can do so but you must make sure you are following specific guidelines. Contact us for help figuring out how to investing in an existing company with your self directed IRA.

Operating Agreements: If 25% or more of an entity is owned by one or more retirement plans (including IRAs), then the “plan asset” look-through rules are invoked, meaning the entity assets will be deemed plan assets and the managers of the entity will become fiduciaries of the plan(s). If this might occur, the entity’s operating agreement should have special language preventing the possibility of a prohibited transaction. Many LLC providers, if they give an operating agreement at all, will provide one with generic LLC provisions, leading to a significant risk that an IRA investing in it may later become disqualified. AET might not accept unsatisfactory language. Please verify with your advisor that for any companies your IRA will be a substantial owner of (especially new IRA-LLCs), the operating agreement has the appropriate custom language.

We would love to help you invest in a new or excisting company with your IRA. Please contact us today and we can get you on your way to investing with your retirement accounts.

Author: , Self Directed IRA Professional
[email protected]

A Self Directed IRA Can Help You Reach Retirement With Less Home Debt

Thursday, September 4th, 2014

Less Mortgage Debt

The sheer cold hard facts are that Baby Boomers are coming face to face with a major housing crunch and many are expected to struggle to afford their homes throughout retirement. According to the Joint Center for Housing Studies of Harvard University came out with some statistics to prove this. By 2030 there is going to be more than 73 million retirees that are 65 and older. Many of these retirees are going to need to put more than 30%. Part of the issue with this is that a good majority of Baby Boomers are entering retirement with less savings and more debt than previous generations.  The majority of this debt happens to be mortgage debt.

While the findings go on to paint a bigger picture I wanted to focus on the fact that many Baby Boomers will be going to retirement with major mortgage debt and how you can make sure you aren't adding to this statistic.

While all of us would love to not fall into this statistic it is a lot easier said than done. Even thought it takes a lot of hard work and determination the fact is it can be done. You can get to retirement with little mortgage debt.  It takes a bit of work on your part but again, you can do it! While there are plenty of ways you can get there I want to focus on one way that isn't quite as popular but that can make a big impact.  There is a way to make sure that you do not fall into the same trap that Baby Boomers have gotten themselves into. Being able to afford your home during retirement is very possible with a rental property inside of a self directed IRA.

A self directed IRA is just like a regular IRA except for one major difference. The major difference with a self directed IRA is that the custodian (fidelity, schwab, etrade, etc) only allow certain investments inside of your retirement account.  Most of the times they only allow for stocks and bonds. They may offer a few other choices but typically they allow for anything that can make them more money. If a custodian allows for a truly self directed IRA then the investments that you can put into your IRA is endless. Now that you know what a self directed IRA is we can begin to help you see just how you can arrive at retirement without having to worry about a mortgage.

The basic idea is to buy a home through your IRA and rent that home out. That way those who live there can pay the mortgage for you and your IRA can be diversified in something other than the stock market. Now the logistics of this aren't too difficult to figure out and with the help of Accuplan Benefits Services you will be able to set up an account and invest in that home you want.  As with any retirement account a self directed IRA has certain rules that you must abide by. The following is a great starting point to learn about some of the self directed IRA rules. In our next post we will discuss some of the rules that pertain to self directed IRA investing and some of the rules that apply to owning real estate inside of an IRA.

Baby Boomers and any generation that still has yet to arrive at retirement can arrive with less mortgage debt with real estate IRA (self directed IRA with real estate). If you need help figuring out how you can get a real estate IRA contact us today or comment below for help.


Learn From Other Mistakes & Skip These Retirement Mistakes

Monday, September 1st, 2014

Common Retirement Mistakes

Some of us may think it but we aren't perfect, nobody is. Mistakes are part of our every day lives. Some mistakes don't seem to have very big consequences while others seem to have huge consequences. While it is important for us to learn from our mistakes it is also important for us to be able to learn from others mistakes. If we don't have to why should we make the same mistakes as our parents, siblings, friends and anyone else? I don't believe we should have to. We want to make sure that you don't make mistakes that many others make with their retirement. That is why we want to help you out with your retirement. We want to help you avoid some common mistakes with retirement accounts. If you don't avoid these mistakes the consequences can be bad enough to wipe out a lot of your potential earnings from retirement account.

Here are some of the most common mistakes made with retirement accounts:

Not Saving As Much As You Can

This is the most common mistake out there. Many of us find excuses as to why we can't save for our retirements. The truth of the matter is, in our 20s we more than likely have more disposable income because we have less debts and things we have to buy just to survive. It isn't until our we are quite deep into our careers and making a lot more when we have disposable income comparable if not more than when we did in our 20s. The thing is, the earlier we start saving and the more we save the biggest impact it can have on our retirement because it has years and years to make interest. Are You Too Old To Start Saving For Retirement?

Don't Count On Your Employer

Pensions and great retirement benefits are slowly becoming the thing of the past. With that being said, there are so many people that lean on their employers too much. Don't keep waiting for that perfect job with the perfect retirement benefits and a pension to start saving for retirement. Make a decision today to start planning for your retirement and then get saving.

It's VERY Hard To Beat The Market

It can be very tempting to invest in stocks you feel are great and doing it yourself or maybe you The truth of the matter is that while most investment professionals tout being able to make you fat money it might actually not be worth paying them extra money for investing your money using some new improved algorithm for choosing the best stocks or for them touting having some of the best industry professionals who can see where the market is going and can pick the best stocks. It isn't that easy. The best bet is to choose a fund that mimics the market. Why is this so? Because it is very hard to consistently beat the market. Once you have that index fund set up another great option is to diversify your portfolio. Invest in something other than the market. Real estate investing with your retirement account is something that is very wise. Learn how to invest in real estate with your IRA or 401k.

A Few Other Things To Be Aware Of

While these are some of the most common mistakes that can really hurt your retirement they are not all of them. There are almost no reasons for cashing out your retirement account. Not just because you are taking money out of your account that could make some serious compounded interest but because by doing so it can force you to pay big tax fees. You should also make sure you are doing business with the best. Fees and other issues can cause your retirement account to really suffer. Make sure you know what is normal to be charged and it is smart to shop around. Even a change in fees by 1% to 2% can mean thousands of dollars lost.

You may be one of those who have already made some of these mistakes but there are plenty of others who have made them as well. The idea is to learn from your mistakes. If you haven't made them, please learn from others and do your retirement a favor staying clear of these common mistakes.

If you would like to get the most out of your retirement by diversifying your investments into things like gold or real estate then contact us and we can help.