Posts Tagged ‘checkbook control ira’


Thursday, January 9th, 2014

An ICO account is a great way to team up with a partner or your spouse to invest in real estate and build both of your retirement accounts.


Meet George and Betty.  They each have an IRA account.

  • George’s account value = $250K (Roth IRA)
  • Betty’s account value = $125K (Traditional IRA)
  • Total IRA = $375K

This husband and wife duo has found an investment property that is worth $1 million.  If they fix it up, along with appreciation, they estimate that in 3 years it will be worth $2 million.

Their objective is to purchase the property with their IRA monies and have the capital gains go back into their IRA accounts.


George and Betty will send us their ICO account applications.  We set-up an IRA for George, an IRA for Betty, one LLC and help them rollover their IRA accounts with their current custodian into the new self-directed account.

George & Betty direct us to transfer money from the IRA to LLC in the form of purchasing membership units.

George & Betty’s combined IRA accounts do not have enough money to make the purchase on their own so the LLC secures debt financing of $625,000 from a lender.

The LLC purchases the $1 million property with its own money plus the lender monies.

The LLC rents the property to generate cash flow to make the required payments to the bank for the loan.

Property appreciates to $2 million over 3 years.

LLC sells the property for $2 million, enabling the loan to be paid back to the bank and allowing the LLC to receive $1.34 million net from the sale.¹ The LLC will have to pay taxes on gains related to debt financed portion of the sale, but the remaining profit can go back into George and Betty’s IRAs TAX DEFERRED!


George and Betty used money from their IRAs, each owned by the LLC.

The bank financed some of their $1 million purchase.

The property sold for $2 million and after the loan was paid back to the bank, George and Betty had $1.3M to put back into their IRA accounts. That’s return of almost 360% in approximately 3 years.

The ICO account offers a great opportunity for husbands and wives or business partners to build their retirement nest egg by investing in non-traditional assets like real estate.

Visit our website to learn more about the self-directed world – view brochures, videos and more.  While on our website you can chat with one of our IRA Specialists, or you can give me a call directly.  I would love to chat with you about your investment goals and find out if our ICO account is the best fit for your situation.  Please also check out Accuplan and me on your favorite social media site(s).  We are continuously posting educational information about the self-directed world.


Jaclyn M. Grella

800-454-2649 x1119

[email protected]


¹Based upon a $675K note, 30 years, 7% interest, paid for a period of 36 months. No fees or other closing costs included. Rental payments received not included in distributions. Any applicable UBIT not factored as a result of using debt financing. These figures and results are for illustration purposes only. Actual results experienced may vary depending on your circumstances.

Real Estate Update – Housing and The Self Directed IRA

Saturday, November 24th, 2012

The recent housing starts for October 2012 shows a 3.6% improvement. The south and midwest regions of the country are showing the most robustness. The chart below shows the historical housing starts numbers.

Chart: Housing Starts

What we see if that the bottom has been formed with clear support. Starting in Jan 2012 we see the uptrend pattern forming. With the favorable numbers shown in October 2012, we are not seeing a pattern or trend that causing a break in the upward trend line.

Multi Unit Starts

The numbers also show that we are seeing upward trends in multi unit properties. The demand continues to be there to support the starts on such properties.

What these numbers mean for self directed IRA

As we have noted in previous updates, we believe a bottom has been formed in the real estate market. Prices appreciation is still tamped down. Demand continues to be strong for rentals and multi unit rentals. The economic recovery continues to be soft and delicate. However, barring a new major meltdown, which is possible, investment properties are ripe for picking up at low prices. We continue to support hard assets in your retirement portfolio. We still believe that real estate investing is good for those self directed IRA investors that do their homework on the right investment properties.

Self Directed IRA Economic Update – How About That Jobs Number!

Sunday, June 3rd, 2012

This past week we saw one of the fingers of instability give away in the form of a very poor jobs numbers. To be specific, there were only 69,000 new jobs added last month. This number came in at about 1/2 of the recent average and expectations. As you can see from the chart below, the monthly change numbers are showing a trend to the down side.

This weak jobs number is confirmed by Economic Cycle Research Institute’s “Weekly Leading Indicator” or WLI index. The index turned down from being slightly positive to a neutral and heading negative. This indicator measures future economic activity over the next 2 months. The last time this number turned negative was April 2011 when we had another major sell off in the markets.

Since the supposed recovery has been fueled by quantitative easing (QE2 a/k/a printing money), a continued weakness in the WLI suggests that the effects of printing are wearing off. This was inevitable. And now that we have a really poor jobs number, we are seeing correlation and confirmation of the weakness signals that the economy has been and is slowing.

What Does This Mean?

For one, it means that the Fed is going to continue to scrutinize this jobs figure along with other metrics. The White House was probably caught with their pants down around their ankles on this jobs numbers and rest assured that there will be corresponding pressure placed upon the Fed to take action. The Fed is not likely to knee jerk over this number. They will most likely continue to watch over the next 1-2 months. If the WLI and jobs related data continue to bear out what we are currently seeing, then they are most likely to engage in QE3 (print some more money).

What Does This Mean Regarding My Self Directed IRA?

First of all if you have a self directed IRA, you’ve  made a wise decision to properly diversify your portfolio. In regards to this new data, it would seem that metals would be a wise choice for the next several months to a year until we start seeing readings that would indicate a new direction. Even though we don’t see real estate prices coming back any time soon, real estate can be a very good choice in many markets for the right type of investor. We don’t necessarily think you will see price appreciation in your real estate portfolio anytime soon, but we do believe that you will continue to see strong rental demand and good cash flow on the right properties.


The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

Self Directed IRA Real Estate Trends

Monday, May 28th, 2012

Real estate has and continues to be a key holding in a large percentage of self directed IRAs. We saw the activity level high in pre-2008 and now, we see that level coming back, but for different reasons. Below we will look at a couple of key metrics to give you an idea as to what is happening with investment and rental properties.

Apartment Absorption Rates

One of the key trends to watch and follow Apartment Absorption vs. Home ownership. The trend has been and is away from home ownership to apartment living. The following chart from Marcus & Millichap clearly shows this trend.

What we see is that there is a strong trend away from home ownership and into the apartment life. The importance of this trend is that as a current or potential real estate investor with your self directed IRA, the need for rental property is increasing. The psychology of people is shifting from home ownership to being a renter. The financial and economic drivers are pushing people to become renters. The bottom line is holding real estate in your self directed IRA could be profitable and wise.

Vacancy Rates

Vacancy rates across the country were at 5.2% at the end of 2011. That is a 40 basis point (0.40% – 5.6% to 5.2%) decline. That is very significant. Below is another graphic from Marcus & Millichap. Without diving into specifics, what you see are steep declines in vacancy rates across most of the major US Cities. This is just further support for increasing rental demands.

So, what does this tell you about holding rental or investment real estate in your self directed IRA? Our analysis says that the demand for rental property has been increasing and will continue to increase as more foreclosures are disposed. This will be compounded by the fact that the economy is and will continue to grow very slow which puts pressures on wages. This motivates and maintains renters.

Given the predicted slow economy, potential global recession, your portfolio needs to have a good compliment of tangible assets such as real estate and precious metals. This is why we continue to believe that now is still a good time to hold real estate in your self directed IRA.

The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.

Roadblocks That are Preventing a Economic Recovery and how to Position a Self-Directed IRA

Friday, May 18th, 2012

As we continue to see the bogus numbers coming out of Washington, and the political rhetoric that comes from the President’s reelection, we thought we would look at what stands in the way of a solid recovery, and compare that to what the government is actually doing.

Issue 1 – The National Debt

We are currently running a debt rate of 360% of GDP. This means that we are spending way more than we generate in the total economy which also means that we are not saving anything. This debt level is more the 100 points higher than the high water mark of 1928. So, on relative terms we have way more debt than we did prior to the great depression.

We all know that you cannot continue to maintain such massive amounts of debt without some negative impact. The current projections show that the government debt will continue to increase in 2012 and 2013.

Why is this important? Because at some point, the government has to continue printing money and attempting to borrow to pay for this debt. This eventually reaches a point where the government cannot borrow anymore. This in turn leads to a crisis where the government has to cut back drastically, miss payments, tax more, etc. It becomes very severe austerity.

Issue 2 – Worldwide debt

There is a lot of attention and focus on Europe and their financial crisis. This is because their debt situation is worse than the US debt crisis. Currently, we have about $55 trillion in debt and we have $15 trillion of GDP or a debt ratio of about 360. In the 17 countries that are in the euro, they have about $68 trillion of dollar-equivalent debt and only $14 trillion of GDP, so Europe is even more heavily indebted.

Why does this matter? Because the Europeans will and are implementing austerity measures. This is leading to a shrinking economy and social unrest. Countries in this shape of not consumers and great trading partners which means that we are not exchanging our goods and services with them. This leads to economic contraction in the US.

Issue 3 – Printing Money

When the government engages in quantitative easing (a/k/a printing money), it injects more liquidity into the system. One of the effects of this is that its shifts the demand curve for goods and services because there is more money in the system. This causes the price for goods and services to increase. So, the average Joe or Jane Lunch Bucket is seeing a 2% annual increase in wages during QE2, but because of printing, prices went up 4%.

So, in reality the regular person is getting worse off because price increases, due to printing or QE, is eroding their purchasing power. Therefore, people start cutting back on spending. Consumer spending is 2/3 of the spending, so reductions in this component leads to slower economic growth and actual shrinking of GDP.

What’s ironic about this printing of money is that you have the President out running around demonizing the wealthy, saying the he is for the little guy, but the reality is that his economic policies (and Bernake), actually makes the wealth gap larger and hurts the average American. So, the average American is getting worse off due to a loss of purchasing power as a result of money printing. This will only lead to economic slowing or contraction.

Issue 4 – The Required Solution May Be Too Hard

If the money printing is going to be turned off, the government is going to have to:

  1. Get social security and medicare under control
  2. Get the tax system under control

These are two big drivers of the government debt and obligation. The willpower that may be required to correct this may b a very tall order and not feasible. If these two issues do not get addressed, then we are looking at some very difficult economic conditions.

How does this impact my Self Directed IRA?

As we’ve discussed in previous blog posts, we firmly believe that every retirement portfolio needs to be properly balanced with some assets that deal with real estate, precious metals, or other tangible assets that are out of the direct manipulation and control of Wall Street and the Federal government.

With the current national and global debt issues, current and pending austerity, and total lack of political action and willpower, it only makes sense to have a self directed IRA with loans, metals, real estate, private stock, etc. The interesting thing about assets such as real estate, private stock, small business, etc., is that they become desirable in both good and bad times.

The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.