Real Estate From Costa Rica – Answering Your Private Money Questions – Part 2 of 3
February 23, 2010 by Chris Yates
Filed under Real Estate Investing
This is the second post in a series where I answer student questions from Costa Rica. In the video that accompanies this post, you can go for a ride with me in the cockpit of a “puddle jumper”. If you’ve never flown on a small plane before, it’s quite an experience. Tag along with me for a quick ride over the rain forest, and then I’ll answer a couple of student questions about real estate investing and private money lending. To see the video for this blog, just click the links in the questions below. You can always view the library of videos I’ve posted on real estate investing and private money on the CM Yates YouTube channel here: http://www.youtube.com/user/cmyatescapital
Question #1: We sell a lot of foreclosed property on ebay. Until recently, this was a fantastic cash business. However, things are going bad quickly. We’ve proven in the past that we can sell these properties with owner financing for substantially more than we can by selling them for cash. We would prefer to go to straight seller financing sales. The problem is, financing won’t cash flow our business. How can we put together the “cash flow financing” for 2 years that will allow us to make the switch in this environment? After 2 years, we’re self sustaining…….until then, we’re in bad need of cash. Thanks, CD
- Chandler D., AR & MO, USA
Sounds to me like you need a more stable (longer term and less expensive) funding model for your deals, Chandler. See my video response to your question here in Part 1 of this week’s video blog, where I can provide more information: http://www.youtube.com/watch?v=IjCad14NK64
Question #2:
I just read an the article about the SEC’s charges against someone for putting on “free lunch” seminars, to allegedly scam senior’s out of their retirement money. The article mentioned a new SEC site (http://investor.gov) that is supposed to educate investors and help them avoid scams, have you seen the site? If you have, what do you think about the material on the site?
- Stephanie P., Atlanta, GA, USA
Stephanie, you can see my initial response to your question in Part 2 of this video blog, found here: http://www.youtube.com/watch?v=nYaVnPB7yXE After just taking a look at the SEC site, I believe that it offers a fair description of what the SEC does and some very valid resources for investors. A lot of people are scared to invest in anything right now. On one hand, most people just lost a lot of money in the stock market and don’t trust it enough to go back in. On the other hand, there are stories left and right about people stealing money from retired folks or ripping someone off this way or that. What’s an investor to do? Well, they should get educated about the investments that they are considering, do some due diligence, and move ahead. Sitting on your investment capital is one of the worst things a person can do right now, and there are a lot of viable places to put it to work for a pretty strong yield with stable collateral. I, of course, favor real estate. But, that’s what I know. I definitely believe that a person should invest in what they know, and nothing else.
While on the topic of investments, a recent e-mail conversation with Amy Sheflin of Entrust New Direction IRA revealed the following tid-bits for the current year:
“2010 offers a unique opportunity for some to avoid that altogether. In 2010, the requirements to convert an IRA to a Roth IRA are waived. That allows investors to pay tax on the value of the IRA account now (at their 2010 income tax rate). Once that tax is paid and the asset is held by a Roth IRA, when the property is distributed at retirement NO tax is due on the asset at all. This is true no matter how much the value increases between now and when the investor retires. In the past, the investor needed to make less than $100,000 to take advantage of this option, but again in 2010 that requirement is waived and anyone can convert to a Roth. It is a good thing for real estate investors to be aware of for 2010.”
“On the report offered at http://RealDistribution.NewDirectionIRA.com/ we go into a lot of detail as to the taxes due when a property is taken as a distribution.”
Look for next week’s post where I take you down the “roads” of Costa Rica through the jungle and to one of my favorite spots on the coast. I’ll be answering even more questions then and have some exciting new locations planned as well, so keep your questions coming in! Pura Vida!
