Other Investments

Introduction to Wholesaling – Why should YOU care about it?

July 31, 2017

Have you ever seen the late night infomercials for making money in real estate with no money down? What about a local event in your hometown from a guru pitching real estate courses? What is wholesaling and does it work in all markets? Everyone understands that it takes money to make money. Is it true that I can flip a house without ever touching a hammer? Continue reading…

Alternative Investments Provide Many Options for Self-Directed IRAs

April 28, 2017

Authored by Tracy Stein – CEO & President of Prime Pinnacle Investments

The world of alternative investments was once a sleepy province populated by institutional investors making modest investments in start-ups and smaller companies. Today, the alternative investment landscape encompasses global markets in a variety of asset classes and thousands of investment firms managing trillions of dollars across the globe.

Self-directed IRAs provide an opportunity for investors to invest in alternative assets, either directly or through managed funds. When the assets are private – that is, not registered with the SEC – ownership might be limited to accredited (i.e., wealthy) investors. Purchasing individual assets or shares in alternative-asset funds offers IRA owners several benefits, including: Continue reading…

How Do I Set Up A Self Directed Retirement Account?

November 28, 2016

This video will walk you through the steps to set up your very own NuView IRA account. You can open your account online by going here: https://accounts.nuviewira.com/applications/esignlive.aspx.

Who Wants to Own a Hotel?

October 26, 2016

Guest Writer: Troy Antonik, Executive VP and CFO at Key Performance Hospitality Management

Continue reading…

7 IRA Questions to Ask Your CPA

March 10, 2016

Guest post by The Heroes Group:

1. Am I eligible for a Roth IRA conversion?
Is it recommended? A key benefit of a Roth IRA is that you don’t pay income tax when you withdraw funds in retirement (your earnings, or profit, are tax free). Before you consider converting, ask your CPA for your estimated tax liability. Continue reading…

Convertible Debentures – An Option in Volatile Markets

February 29, 2016

Guest post by Nelson Garcia:

The year 2016 has, so far, been the definition of volatility, which for many was unexpected. For some investors, switching from equities to fixed income securities (bonds) would be prudent to ensure the safety of the principal and a fixed return. Continue reading…

10 Things Investors Should Know About Real Estate Syndication

July 31, 2015

Guest article by Kim Lisa Taylor:

No doubt if you have a self directed IRA or substantial investment funds, you have considered investing in real estate. However, you may lack the funds to invest on your own or the desire to deal with the hassles of property management. A viable option for you may be to invest in a real estate ‘Syndication’ (i.e., a group real estate investment, also known as a Private Placement Offering) as a passive investor.

What is a Real Estate Syndication?

In a real estate Syndication, a ‘Sponsor’ or ‘Syndicator’ (which may be an individual or an entity) will typically identify a real estate asset, such as an existing commercial or multifamily property (or vacant land for development) or single family fix and flips, that will yield a sufficient return to pay themselves and their investors from cash flow during operations and/or equity on resale.

The Sponsor may obtain institutional financing for a portion of the purchase price and then pool funds from private investors to finance the down payment and closing costs, or they may raise all of the purchase money from private investors. The Sponsor’s job will consist of finding a suitable property, putting the group of investors together, and managing the asset on their behalf. For its efforts, the Sponsor will receive fees and/or a percentage of the ‘Distributable Cash’ (i.e., profits) left after all expenses and loan obligations have been paid.

What Kind of Returns Do Syndications Offer?

Typical investor returns can range from 6-12% (or more) annualized, calculated against the amount of money invested. The range varies based on the type of investment and the level of risk to which an investor may be exposed. The higher the return offered, the greater the risk.

For example, an investor or self directed IRA might take a position as a ‘debt partner’, in which case the returns will be calculated as interest on the amount invested. Such returns may be in the lower ranges, but the debt partnership position may be ‘preferred’ or ‘secured’ by a lien against the real estate, which is a lower-risk position.

Another option for investors is an ‘equity partnership’ position, where the Distributable Cash is split proportionately between the group of investors and the Sponsor, whose compensation can range from 25-50% of the Distributable Cash. In this case the investor returns may be greater, but they will be dependant on the performance of the property and the Sponsor’s ability to maximize returns by increasing income and minimizing expenses.

What Information Should I Get from the Syndicator?

Prior to accepting any investor funds, the Sponsor is required by securities laws to provide a set of offering documents that explains the terms and discloses the risks of the Offering to prospective investors. Further, Sponsors typically answer to their investors by means of periodic newsletters, financial reports, and/or teleconferences. Unlike a stock investment, investors may also have some limited voting rights regarding major decisions affecting the company or their investment.

10 Things Investors Should Know

Before investing in a real estate syndication, you should carefully review all of the offering documents provided by the Sponsor and look for (or ask) questions regarding the following things:

  • The Sponsor’s background, education, and experience with similar investments, if any.
  • The team members involved in acquisition and operation of the property, including attorneys, CPAs, other members of the Sponsor, property managers, and affiliates that may receive fees, etc.
  • Cash distributions to investors during acquisition, operation, and disposition of the property including the proposed timing and anticipated percentage returns.
  • Sponsor fees and cash distributions.
  • Anticipated duration of the investment.
  • Property information, including the type and condition of the property, the purchase price, financial history, proposed ‘value add’ and exit strategies, and pro forma financial projections.
  • Dispute resolution provisions.
  • Voting rights of investors.
  • Provisions for removal of the Sponsor.
  • What law firm structured their offering and drafted the offering documents, and is the firm experienced with securities offerings?

Seek Professional Advice

In addition to satisfying yourself with respect to all of the items listed above, you should seek advice of your own attorney, financial advisor or accountant regarding the investment.

  • Your attorney should determine whether the offering complies with applicable securities laws. A Sponsor that disregards the applicable laws (or drafts their own documents) may expose itself and the entire investment to unnecessary civil or criminal liability, or they may be unaware of their fiduciary obligations to their investors.
  • Your CPA or financial advisor should evaluate the financial merits of the investment based on past financial statements for the property and pro forma projections provided by the Sponsor, and its suitability for your investment portfolio.

Where Can I Meet Syndicators?

Become a member of your local real estate investment clubs and attend their meetings on a regular basis, and attend the informational seminars offered by your self directed IRA administrator.

Kim Lisa Taylor, of TROWBRIDGE & TAYLOR LLP, practices Securities Law and handles Real Estate Syndication, Private Placement Offerings, Private Lending Documents, Partnership Agreements, and Entity Formation. Kim can be reached at (904) 584-4055 or by email [email protected].

What is your Retirement Number?

February 20, 2015

Guest Article by Paul McGarigal:

When asked, “What is your number?” many people have no idea what you are talking about. The number, of course, is the amount you will need to retire. Let’s take a look at how to figure out your retirement number.

If you now live on $7,500 a month gross combined income, that’s a $90,000 per year family income. Sounds like a lot to most people, yet this income amount puts you in the top 15 percent of all families in the United States. If each person in a retiring couple receives about $1,500 a month from Social Security, then that’s only $3,000 a month toward the $7,500. Where will the other $4,500 a month come from?

Here’s one scenario: If you manage to save $300,000 in your IRA/401K by the time you retire at a 5 percent annual return (of which there may not be too many offering that return) that would be $15,000 a year or $1,250 per month, which is not enough. But how about $1,200,000 at 5 percent? That’s $60,000 a year, or $5,000 a month, which when added to your $3,000 Social Security benefit will put you closer to what you need to live the same as you did when you worked.

So if $1,200,000 is your retirement number, how are you going to get that amount in the years you have left to work? Let’s say you are 40 years old and will work 25 more years. The math is easy. $1,200,000 divided by 25 is $48,000. This is the amount needed each year to add up to $1,200,000 over 25 years.

How are you going to get $48,000 a year, you ask? Real estate. You can purchase a home for 3.5 percent – 25 percent down, depending on its use. Then, with the help of a real estate professional, you can learn how to have tenants pay your mortgage for the next 15 – 25 years, while you receive tremendous income tax advantages. This may be the only way you will ever come close to saving or accumulating a $1,200,000 nest egg for retirement.

Just three houses at $250,000 each now will double in value over the next 25 years, assuming only a 2.9 percent average rate of appreciation. So, $250,000 multiplied by three is $750,000 and multiplied by two is $1,500,000. Selling them at age 65 would fund your nest egg and help you enjoy 20 to 40 years of retirement.

Of course, this is the short version of a much more complex formula that will be different for each couple. But hopefully you are at least thinking about your retirement number and now see how real estate and a knowledgeable real estate agent can help you get closer to reaching your goal.

Paul McGarigal has been in the top 1 percent of all Realtors in Central Florida every year for the past two decades. He is also very involved in his community and volunteers with youth sports and the YMCA, among many other non-profits. This article was also featured in the April 2013 edition of  Central Florida Lifestyle

Technology Levels the Playing Field for Self-Directed Investors

December 4, 2014

Guest article by Matt Lutz:

Anyone with a self-directed retirement account will tell you adding alternative investments to the portfolio can supercharge investment returns and enables investors to participate in asset classes where they are most skilled and knowledgeable. After one learns about self-directed investing, he or she will typically make the same types of investments utilizing the self directed account that he or she would make outside of the account. A real estate investor who owns single family rental properties will use self-directed IRA (SDIRA) funds to buy single family rental properties or a tax lien investor will participate in tax lien auctions using his or her SDIRA. Assets like single family housing and tax liens are great allocations of SD funds. Individual investors with knowledge of the local real estate market have the same advantage as institutional investors. The barriers to entry are very low. Anyone with money can buy a mobile home, a single family home or attend a tax lien auction. The only restriction is the amount of money the investor has. With knowledge and capital the individual investor can continue to participate in the asset classes.

Self-directed investors it seems by nature are an inquisitive bunch and want to learn about other asset classes. Most have looked at businesses and thought “I wish I could get returns like that” or “how do I invest in something like that?” Many of those businesses or investments are often controlled by institutional investors or specialty finance companies who don’t want anyone entering their markets. One thing we know about competition is that it reduces profits. The institutions want to protect the superior yields they are able to achieve. Prior to a few years ago, if an individual investor could break into those markets, it required a tremendous amount of the investor’s time and energy to find deals and then additional time and effort to conduct due diligence. Technology has changed that.

The most recent credit crisis is a great example of how technology has affected different asset classes. Everyone knows the banks were overrun with non-performing subprime single-family mortgages. A very similar thing happened in the late 1980’s to the Savings and Loans Industry with commercial real estate mortgages. The S & L crisis had the highest number of bank failures since the Great Depression with 797 thrifts shuttered and total assets of $394 billion. The problem was so large the United States government created the Resolution Trust Corporation (RTC) to liquidate the non-performing loans and collateralized assets. The RTC became a massive government institution that existed until 1995 when its duties were transferred to the FDIC. The most recent crisis although much larger (and scarier at the time) was much different. Technology enabled non-performing loans and properties to be sold via online auctions. Not only did technology help liquidate the non-performing loans much faster than the previous crisis but investors, large and small, could participate. Mortgages and REO’s (Real Estate Owned) were sold individually or in pools. An investor with a self-directed IRA could participate in the same auction as a Greenwich hedge fund. The Greenwich hedge fund might have a capital advantage but the individual investor knows his or her local real estate market much better.

So what other asset classes are are now available to individuals because of technology?

Consumer and small business lending are experiencing tremendous changes. Peer to peer lending companies like Prosper and Lending Club allow individuals to apply for unsecured personal loans up to $35,000. Individual investors can participate by investing as little as $25. The peer to peer lenders underwrite and service the loans. The investor’s decision is whether to invest and if so, how much? An individual investor has the same opportunity and the same information as a bank or specialty finance company.

Small business funding 

A very profitable business controlled by specialty finance companies is buying trade receivables or factoring. Factoring is a $3 trillion dollar industry run by companies like CIT. What is it? Factoring is the sale of accounts receivable (invoices) to finance companies (factors). The finance company discounts what it pays the seller of the invoice. Example. Let’s say Joe’s Hammer Company sells hammers to Home Depot. Home Depot is Joe’s biggest customer but it’s slow to pay which is normal practice for large companies. Home Depot might not pay Joe for 120 days. That doesn’t help Joe pay his employees or electric bill so Joe will sell Home Depot’s invoice (the legal obligation to pay him) to a factor. Joe receives a discounted amount of the the invoice immediately and the finance company will receive the entire amount in 120 days. The factor determines the discount amount and Joe has to decide to “take it or leave it.” Sometimes the discount can be as much as 30%. It is a very profitable business for the factor because businesses will continually sell receivables to meet their cash flow needs. It’s also a great business because a company like Home Depot (the obligor) has very good credit and is legally responsible to pay the invoice. The odds of not receiving payment from Home Depot are very slim.

Technology has disrupted the factoring business as well. Recently an online marketplace has launched that allows companies to sell their trade receivables to self-directed investors. Allegheny Exchange operates an auction format exchange that allows companies like Joe’s Hammer Company to sell its invoices at a discount to individual investors. The exchange provides credit ratings of the invoice sellers and invoice obligors, validates the invoices being sold and facilitates the payment process between the invoice sellers, buyers and obligors. The sales of the invoices are full recourse to the sellers which means the sellers and obligors are legally responsible for paying the invoice buyers. The exchange is a turn-key solution for investors to participate in a market previously controlled by specialty finance companies. Technology not only allows individuals to participate in the asset class but greatly reduces the time and effort normally required to make investments. The investors only responsibilities are deciding which invoices to buy and how much they will pay for them. The appeal of trade receivable investing is apparent; short-term, high yielding assets with an invoice obligor legally responsible for payment and full recourse to the invoice seller. Because most trade receivables are paid within 60-120 days, they are a superior alternative to money markets and commercial paper to park cash between longer duration investments.

Matt Lutz, a Pittsburgh entrepreneur, has been utilizing a self-directed IRA for the past ten years. He was featured in the June 6, 2012 Forbes Magazine article, ‘Go Rogue With Your IRA.’ He has used his IRA to buy real estate, trade receivables, tax liens, performing and non-performing mortgages, and floor plan loans for car dealerships. He is currently the Managing Partner of Allegheny Exchange. Matt can be reached at [email protected] or by phone at 412-841-5009.

A Walk in the Woods – Investing in Timberland

September 25, 2014

Guest article by Tom Brickman:

With the stock market at all-time highs, many have forgotten that six years ago everyone’s stock portfolio lost a gut-wrenching 40 percent in eight months, and with money market rates around 0.4 percent, cash is not keeping pace with inflation. High volatility with a low yield is an unpleasant combination for anyone, and while alternatives seem scarce, investing in timberland tends to satisfy many security needs.

People are beginning to turn to timberland investments, in fact in America there are 23 million private timberland owners. Prices for stocks and bonds can go up and down dramatically over short periods of time, sometimes as short as a single day, but timberland values tend not to fluctuate. Over 50 percent of the return from timberland comes from biological growth – trees get bigger at a steady rate independent of market factors. Diversifying a portfolio by investing in timberland can reduce value swings.

What are the different types of timberland?

In the south there are a few different types of timberland: land that will grow pine trees (dryer ground), land that will only grow hardwood trees (wetter ground), and farm land.

The kind of land you buy depends on the mix of motivations you have for buying it. Those motivated purely by financial benefit will seek investment-grade pine properties. In the south, this is land that has been planted with genetically improved loblolly pine. Those more interested in hunting, which means less return, will seek properties that have more hardwood land, perhaps with a lake or river frontage too. Investors motivated by conservation may seek longleaf pine or hardwood land along major rivers. Investors motivated by a farming lifestyle or by crop and livestock markets will seek land suitable for cultivation or pasture. Returns from farmland tend to be more volatile than returns from timberland due to government involvement in the markets. Many investors have a mix of motivations and accordingly seek a mix of land types.

How do you go about investing in timberland?

In general, there are two ways to go about investing in timberland. One way is direct private investment where the investor owns the asset. The other is indirect investment where you purchase stock in a public company that owns the asset. The way you invest depends on your motivations.

Direct Investment

Direct investment gives the investor more control over the decision of when to sell timber. This can have a very beneficial impact on returns. You can purchase land to meet a variety of motivations. Disadvantages include the task of finding assets to buy, discerning fair value, finding asset managers, and finding buyers when you are ready to sell (lack of liquidity).

A key issue with direct investment (mostly affecting smaller non-institutional investors) is that markets for privately owned rural land are notoriously difficult. For example, finding assets to buy is difficult because there is no central clearing house of properties available for purchase and the for-sale-by-owner market is huge (our experience is  up to 50 percent of private land sellers do not use an agent to find a buyer). Also, discerning fair pricing requires expertise in appraising land and standing timber. Consequently, most investors engage professionals to assist with finding, buying, managing and selling land.

Indirect Investment

Publicly traded forest products companies seek to maximize financial return. Buyers with this motivation find a good fit here. Advantages to indirect investment are that it simplifies the task of finding, buying, managing and selling timberland assets. The price is published every day so there is low price uncertainty. And, the companies have professionals to manage the assets (selling timber, planting trees, fixing roads, paying property taxes, etc.). A disadvantage to investing in a public company is that quarterly demand for dividends, which affects share price, forces these companies to sell timber even in poor markets.

Institutional investors (pension funds, endowments, sovereign wealth, etc.) and high net worth individuals often address these issues by investing through Timberland Investment Management Organizations (TIMO’s). These are private companies that specialize in finding, buying, selling and managing timberland assets. Although most have financial return as their mission, some specialize in conservation timberland. The best TIMO’s offer geographic diversity (US & global) and have decades of experience identifying deal flow, managing the purchase process, managing the asset on a day-to-day basis, and finding buyers when it’s time to sell.

People who don’t meet the minimum investment threshold for a TIMO (most investors) can get professional assistance from an enormous network of rural land and forestry professionals. Many of these are small, local companies or individuals with deep knowledge of the asset and long experience with local land and standing timber markets.

Is investing in timberland right for you?

This is a question only you can answer. The purpose of this article is to give you a starting spot for further investigation. Here are some thoughts to consider:

  1. Get professional assistance for direct investment. A key issue is that the hardest mistake to overcome is paying too much. The saying is you make your money the day you buy it.
  2. A diverse portfolio is your best protection against loss of value. So only add land if you are looking for diversity.
  3. Direct investment in land requires patient money. Getting in and out of the asset takes time. So only use funds you can afford to invest for 10 years or more. Using your self-directed IRA to buy land is allowed and is the perfect kind of money to use.
  4. Land does not service debt well. Be careful that your reach does not exceed your grasp.

Learn More:

  1. Data on ownership & financial performance of land:
    1. The National Council of Real Estate Investment Fiduciaries (NCREIF):
    2. The Forest Research Group
    3. U. S. Forest Service Resource Bulletin WO-1
    4. Family Forest Owners: An In-depth Profile. By The Sustaining Family Forest Initiative
  2. Direct investment & management professional
    1. All individuals – farm and timber land:
    2. High Net Worth Individuals and Institutions:
  3. Timberland investment & management professionals
    1. Resource Management Service
    2. Campbell Global
    3. Forest Investment Associates
    4. The Hancock Timber Resource Group
  4. Farmland investment & management professionals
    1. Hancock Agricultural Investment Group
    2. American Society of Farm Managers and Rural Appraisers
    3. UBS – Agrivest
    4. TIAA-CREF Ag Investments


Located in Birmingham, Alabama, Tom Brickman has 37 years of experience in timberland investment and management businesses across the United States and Central America. He is a Registered Forester, Certified General Appraiser and Real Estate Broker, and helps people buy, sell, and care for rural land. Tom can be contacted via email at [email protected] or by phone at 205-936-2160, and for more information on buying rural land in Alabama, you can visit Tom’s website at www.CyprusPartners.com.