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The Self-Directed Real Estate Professional

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By Jennifer D. Meacham

Power team coach and real estate investor/developer Loral Langemeier first learned about self-directing IRA investments into real estate in 2002. Since then, she's added millions in tax-sheltered income to her portfolio through IRA real estate buys. And she's coached hundreds of agents how to do the same, for themselves and their clients.

"I discovered that most people's IRAs are dying," she says. "And there are a lot of people that have 401(k)s that are still with their old company and it doesn't take much for them to be able to move their money to a self-directed IRA account and start creating wealth with it. Real estate is our primary vehicle."

I sat down with Langemeier, between meetings in the San Francisco Bay area, to uncover her strategies:

Q. What IRA strategies have your clients employed?

A. They'll take a self-directed Roth IRA, and they'll buy an option on a piece of property and "supercharge the Roth." What I mean is the cash partner takes $1,000 or $2,000 in profits, and the Roth takes the bulk of the profits.
We also did a multi-unit sale where two different doctors wanted to ‘supercharge' their traditional self-directed IRAs. They borrowed each other's IRA dollars, with 4 percent notes back. Then the doctors each got a loan on that piece of property, using that promissory note as the down-payment. They were able to get a regular 80/20 finance loan, which sidestepped the non-recourse issue. (That's because the IRA itself was not holding title-it was only used as collateral for what was essentially a personal or business loan.)

A lot of my clients also use real estate corporations, tenancy in common arrangements (TICs), or LLCs with their IRA deals. They can quit claim the property straight into the LLC, holding title in an LLC even though they still hold title in their own names.

Q. How is "non-traditional" IRA investing, in real estate, changing the market?

A. It's affected the market greatly. Investors have been pulling out of their mutual funds, bonds, stocks to reinvest in real estate. And there's going to be an interesting sustainability of the market as the younger generation starts doing the same.

As far as people working in the field, my income tripled this year thanks for IRA investments, and is expected to triple next year.

Q. IRA transactions do involve adhering to strict IRS rules on lending and self-dealing. How do you assure you're not toeing the line?

A. You have to work with someone to make sure your clients don't put their IRA money at risk. We work with Entrust Mid South, a division of one of the larger self-directed account administrators, in Louisiana. Jay Pearson is a Mid South partner and one of my power team members. We do multiple projects together.

Q. Do you self-direct your own IRA?

A. Absolutely. I have promissory notes, participating notes in land projects, options in land projects and various single-family or small apartment projects. I hold options probably more than anything else-because they're the cleanest, easiest, cheapest way to get into property because it puts a lien on the property for a small initial cash outlay.

Q. What power team strategies do you recommend when working with IRA investors?

A. A lot of people don't use real estate-specific partners, and they should: bookkeepers, CPAs, IRA custodians. Figure out who is in the streets already doing what you want to do, and develop those partners in the markets where you want to expand. Let them take care of it.

BOXED ITEM
Team training with Loral Langemeier

Loral Langemeier have three upcoming "Team Made Millionaire" workshops that may be of particular interest to Power Team Report readers. The workshops are held from 9 a.m. to 4 p.m., and are scheduled for the Hyatt Regency in Phoenix, Ariz., on April 21; in Chicago on May 12; and in Dallas on June 15.

"You'll get to see the millionaire-maker process and see the team in action," she says. "We also briefly cover IRA use for real estate investing."

These workshops are free to PTR readers who enter TWEB0107 in the VIP Code box on the registration page, and $495 each otherwise. For details call 1-888-262-2402 or go to liveoutloud.com/programTeamMadeMillionaire.php.

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