Self Directed IRA Investing

I’ve been thinking for the past few weeks how best to organize and show important data like ROI and Cash on Cash Returns.   I’ve explained in detail my Yields or ROI in other posts.    Cash on Cash Return is the Yearly Cash Flow divided by the Cash Invested.  With out figures like that and a way to vaildiate them, quoted figures are hard to understand.   

I’ve taken all the important parts of the Notes I have in my Roth Self Directed IRA and logged them into a spreadsheet. I’m going to stick with this sheet and add to it every month.  I’m open to comments and if you think there is a better way to show what I have in my spreadsheet please email me or leave a comment, I’m interested in your ideas.

Here’s what I came up with. 

If you scroll down in the spreadsheet you’ll see that so far my Self Directed IRA has a Total profit of $10,927.89 and my ROTH IRA is worth $63,145.36

The return so far is 20.93% .  I came up with 20.93% by dividing my Profit by the Cost of Investments.  My Cash on Cash Return for this coming year will be 24.64%. 

I arrived at the Cash on Cash Return for the year starting last June 2007, because that’s when I started to have the current cash flow of $1072.13 a month.  The period for the Cash on Cash Return is from June 2007 to June 2008.  I think it’s a good benchmark to see if what you are about to do is worth the effort, however it not good enough for me to rely on that alone.

I Hope this helps to make it easier to understand why I take the effort to actively manage my own IRA account.  As always comments are welcome.  I think I have another Note I’m going to create and add to my Portfolio, I’ll write a post next week if the deal goes through.

Will

I get email from Alex Gurevich on different Real Estate topics and the last one he sent me was going to be where he interviewed Mr. Dick Desich the Founder of Equity Trust Company  . They are an IRA Custodian that I listed in one of my last posts.   Here’s a little blurb about Mr. Desich on Alex’s page.  I signed up and listened to the interview,  among several topics that Mr. Desich talked about, there were 2 that I think were best ideas. 

Of course the Interview was also touting Mr. Desich’s seminar where he goes into more details, which I would most likely attend if I could get the time off of work.  Here’s the link to hear it yourself…..

The 2 takeaways I liked the most from the Interview were:

1. The idea of a Private Bank.

      The idea of a private bank to me is a conceptual idea, not actually opening a physical location, in that if you and all your friends, relatives, and others that you know and trust open Self Directed IRA accounts.  Then you can Pool your money to get into bigger transactions. 

It could also work if there is one real active investor that knows a lot of other Passive investors.  The active guy, a guy like me,  he goes out and finds good secure property, Notes, or whatever the group likes.  He then pitches the deal to the passive folks and they all pool thier money to invest in it if they like it.  Of course this is just a high level overview of the Private Bank idea but I think it could have some tremendous benefits for those retirement accounts involved.  

I’m working on this myself and have done something similar where 3 different parties went together to lend money.   Now I’m working to find those folks who want to do it regularly, not just once in a while.  If my next Note deal works, I’ll go in on it 50-50 with a good friend of mine and I’ll post the details if we do it.

2. Using your SDIRA Account to help create and shelter cash even after you retire.

  To me this was a golden nugget that I really never thought about before, but it really only pertains to those with Self Directed ROTH accounts.  Before retirement you think in terms of saving and investing for when you no longer work.  No one I know of, thinks that after you retire that you can and should still invest using your IRA, eveyone thinks in terms of liquidation.  Now that you have an Self Directed IRA account why not use it and continue to do a transaction in with it so that once you gain your profit it’s all TAX Free.  Here’s an example, Mr. Desich used I believe.  Your 70 now and have to withdraw cash from your IRA, why not take that cash and invest in something you know like flipping houses and create some cash, and withdraw that new cash out of the IRA as a required distrubution.  You’re making money tax free using your IRA account. 

Here’s a link to the whole recording in case you want to hear it all.  I get nothing from it, just thought it would make a good post to my blog.

Will

It’s been quite a while since I made a post.  Since my last post I’ve analyzed a few Notes to see if they would fit into my Self Directed IRA.  Because of my small amount of investable cash I need to find some smaller, but nevertheless secure Notes.  You can see from my post here that as of last Aug I had  $ 6,800.00 in cash to invest with.  

Here’s this months cash flow that incereased my Cash to over $9,000.00 this last month.

Now 1 month later I’m up to $9,183.89 

A friend of mine has sent a few Notes my way and 1 of them looks good to me.  If the deal goes through I’ll write a post about it. 

Will