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Using your Self-Directed IRA to Invest in Real Estate

by Steve Westmark

http://www.TwinCitiesUSA.com/video/Todd-Grill-3-28-11mov

STEVE:  Hi, thanks for watching my video blog.  This is Steve Westmark.  Well, today, what I’ve done is I’ve brought in an expert in the area of investing in real estate through your retirement accounts.  And it’s Todd Grill of Entrust.  Welcome, Todd 

TODD:  Thank you very much, Steve, for inviting me here today.

STEVE:  The first question that I have for you today is you work in the area of investments, and so what makes your investment area different than what everybody else is doing in the marketplace? 

TODD:  What’s unique about the investment strategy that I’m going to talk about today is the fact that you’re able to use your retirement plan to invest in investment real estate, which is a very little-known strategy and very underutilized for the individuals.  And they’re able to take advantage of their retirement plan money and use those monies inside a self-directed IRA plan, which we administrate by investment real estate 

 STEVE:  Well, Todd, as I’ve probably said in past video blogs, the real estate market in the Twin Cities since 1970 through 2010 has seen about a 5% increase year on year over the last 40 years, and so real estate investment has been very good in the Twin Cities.  How does your investment vehicle help people buy real estate?

TODD:  Being able to use your self-directed retirement plan to invest in real estate gives you another opportunity, another source of funds that are typically underutilized or locked up into traditional investment vehicles.  When you open a self-directed IRA account and invest in real estate, you’re able to rehab that property with the IRA funds.  You’re able to rent that property out.  You’re able to sell that property and the gain all comes back into your retirement plan tax deferred.  So it gives your retirement plan another option, another opportunity to invest into real estate that you had only possibly done with private money before.

STEVE:  Well, Todd, you’ve also told me that you have over 2,000 people self-directing nowadays.  What are the top four or five things that you see investors are doing today in their self-directed IRAs?

TODD:  I would say the number one reason that people call us is so they are able to invest in real estate.  That’s probably the number one reason and number one investment of my clients.  A number of our clients are also investing in private stocks, what we call private placements.  We’re doing a fair amount of precious metals right now, gold and silver bullion.  And we’ve done in the past lots of different commodities and oil and gas leases and things like that.  But the number one reason is specifically for real estate because that’s where people believe they can make the most of their money in their retirement plans.

STEVE:  Well, Todd, thanks for coming in today and I really appreciate you just sharing some of your wisdom.  How’s the best way for them to get a hold of you to talk about this?

TODD:  The best way to get a hold of me is either our office.  The number there is 763-559-5363.  Again, that’s 763-559-5363.  Or if they like the e-mail, they can e-mail me at tgrill@TheEntrustGroup.com.

Twin Cities Real Estate Overview from 10,000 ft - Part 2

by Steve Westmark

http://www.TwinCitiesUSA.com/video/Annual-Report-Bmov

 Hi, this is Steve Westmark again, and this is the second in our series on the “Twin Cities Housing Annual Report for 2010.”  Today, what I want to share with you are some simple graphs that will show you what’s going on since 2006 in the Twin Cities marketplace.  The first graph that I’m going to show you is the closed sales graph.  That graph goes back in 2006 in showing we had 47,000 sales.  A continued drop until the 2009 year when we had a full year of tax credit.  And then we lost the tax credit for the last eight months of 2010, and you’ll see that the unit sales dropped.

The next graph that I want to show you is showing you where the median sale price was in the Twin Cities at the end of the year.  So in 2006, our median sale price, which half the sales were above 230,000 and half the sales were below 230,000.  And you’ll see that there’s been a slight decline until 2010 where we saw a slight increase, which I believe is showing that we’re at the bottom of our market and we’re coming and turning around, moving into a more positive marketplace.  The next graph is the average sale price.  And you’ll see that in 2006, it was at 278,000 and as you follow it to 2009, you’ll see the bottom price.  And then you’ll see quite an increase into 2011.

Now one of the things that I want to point about the 2010 is that in the last eight months of that year, there were fewer first-time homebuyers because of the first-time homebuyers tax credit.  The next graph that I’m going to show you is the graph that shows months supply at year end.  And you’ll see that we had a higher amount of 8.4 months in 2006 down to a low of 2.5 months in 2008.  And now we’re dealing with about a 7.5-month supply.

The next graph I want to show you is showing what’s going on in new construction, and this is the area that I believe is going to turn our marketplace around in the near future, and it hasn’t quite happened yet.  It shows that back in 2006, we were up at nearly 7,000 homes being built, and now we have an inventory of only about 2,000 new construction homes on the market.  Until we get our laborers, our electricians, our carpenters back to work with new construction, we won’t have the health in our Twin Cities real estate economy that we would like to see.

The last graph that I want to show you from this is where it’s in the area of talking about distressed home sales, and it shows where we’ve gone in our marketplace.  That in fact in 2006, there were only 3.5% of our marketplace were either bank owned or short sale type sales.  And we peaked in 2009 in the percentage of sales being at 43%.  2010 you’ll see that it’s dropped down to 39.9%.  So we’ve begun to see also the end of that, though it’s only a slight decline.  But we may continue to see that for the next year or two.

Well, thanks for watching this.  At the very end of this blog, you’ll be able to download this whole report from 2010 and print it out on your own computer.  Thanks so much for watching, and if you ever have any questions, please give me a call.  Thanks.

 

 

Twin Cities Real Estate Overview from 10,000 ft!

by Steve Westmark

http://www.TwinCitiesUSA.com/video/Twin-Cities-Real-Estate-Overview-From-10000-ft

STEVE:  Hi, this is Steve Westmark.  Thanks again for watching my weekly video blog.  This week, I’m going to break this into a two-week series, and it’s a series built upon this report that comes out once a year in the Twin Cities called “The Twin Cities Housing Annual Report for 2010.”  For this week, I want to kind of give you an overview of what’s gone on in the Twin Cities marketplace since 1980.  So that’s been over 30 years of what’s going on in transactions, sales, listings, and average sale price.

As you look on this sheet that you’ll be able to see online, you will see that in 1980 that the average sales price in the Twin Cities was $74,000.  And in fact, for about 25 years, we did not have an average sale price decline except for one year in 1988.  Now in the last 2000s, starting at around 2007, we began to see the decline in the average sale price because of the housing bubble that burst.  Part of it had to do with the mortgage lending fraud that was going on in the marketplace and then the sheer difficulties of our real estate marketplace.

A couple of things that you would want to look at if you like getting into statistics is following the number of listings that are on the market compared to the number of sales that are there.  So if you go to more recent years, for instance in the 2004 year, you’ll see that there were 97,000 listings that were on the market and 58,000 sales.  And so, almost 60% of the homes that were being listed were being sold.  What changed in the marketplace is then if you go down to the next couple of years where you look in 2006, and we had 108,000 listings and only 47,000 properties sold, which was down in the 40 percentile area for sales happening.

And that’s where you see oversupply with underdemand.  And that’s what we’ve been going through in this historical review when you follow the marketplace.  Now what you’ll see when you look in 2010 is that in fact we’re at 82,000 with 37,000 sales.  We’re still slightly under the 50%, but the sooner we can get to 60% of our properties selling that are going on the market, the more we’re going to be back to a real estate market.  So our marketplace historically has gone through smaller supplies, then larger supplies.  And now we’re moving back to a little bit shorter supplies.

So we look forward to next week as I get into the very specifics of what’s happened in the 2006 through 2010 real estate market.  Thanks for listening this week.  Have a great day.

 

 

 [END OF RECORDING]

 

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The Steve Westmark Team
RE/MAX Advantage Plus
14451 Highway 7 Suite 100
Minnetonka MN 55345
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877-SOLDING
Fax: 952-241-1600