Investing in Europe and Self-Directed IRAs: Part 2

Greetings Rogue Investors,

This is going to be a blockbuster issue. First, I am going to update you on what we’ve found in Europe, then I’ll hand over the newsletter to Michael to talk about self-directed IRAs.

Investing in Europe

First, as I discussed last week, we are currently finishing up our second real estate research trip to the Mediterranean Ocean. In our quest to find the most beautiful and undervalued real estate in the world, we have hit pay dirt. Imagine the beauty of the rocky California coastline along the Pacific and add the spectacular sandy beaches of Florida. Now, imagine you could go back 20 years before these areas became too expensive and over crowded and you will start to appreciate this area along the Mediterranean. Add incredible and diverse culture and the best food in the world, and you have a place that is the closest to paradise that I have seen.

Here are some pictures of areas that we have visited in the last two days.

Believe it or not, the story gets even better. Not only is this a beautiful and undiscovered area, it is a great rental market. Today (April 27th), we just spoke with two real estate professionals (Vincent and Corrine) and they informed us that every day 10 to 15 people enter their office looking for properties to rent. At certain times of the year, properties command as much as 700 euros per week, assuming you can even find properties to rent. Combine this with low prices and you have an investment that will appreciate in value and is a cash flow machine.

What about property management? The local real estate agencies are hungry for rental properties and are all set up to manage your properties while you earn money from the comfort of your own home.

I guarantee that you will not find a more beautiful, profitable and enjoyable place on earth.

If you want a life changing experience, come join us in the Mediterranean on May 22, 2006. We only have a few spaces left so I encourage you to sign up before May 5, 2006. Here is the link for more information:

http://www.rogueinvestor.com/european_real_estate.html

Special Bonus Question

Can you can buy European real estate with your self-directed IRA?

The answer is yes. IRA rules do not prohibit you from purchasing real estate or securities in another country. The first step is to set up an account.

Self-Directed IRAs: Setting Up An Account

To realize the true power of your IRA, you need to find a company or trustee that specializes in true self-directed IRAs. Don’t be fooled by the big brokerage houses that say they have a self directed IRA. It is self directed only as long as you buy public securities, such as stocks, bonds and mutual funds.

Now, why do you have to set up a separate account?

The answer is that there are only a few IRA custodians set up to handle purchasing real estate in an IRA. The reason is that it requires a lot of paperwork and in some cases there is more perceived risk in buying real estate than securities. How they figure that buying shares of Ford, AT&T and Lucent is less risky is beyond me when you realize that real estate is backed by hard assets not paper.

So let’s start out this issue by looking at several IRA custodians and compare their prices and what they have to offer.

Pensco Trust Company

http://www.pensco.com

450 Sansome Street, 14th Floor
San Francisco, CA 94111

Mailing Address: P.O. Box 26903, San Francisco, CA 94126

Toll free: 866-818-4IRA (4472)

Client Services: 800-969-4472

Fax: 415-956-3016

 

Fees schedule: http://www.pensco.com/fees/Unlimited.asp

Example: Fees for an IRA valued at $100,000

Establishment Fee = $50

Annual Maintenance Fee = $200

Sterling Trust Company

http://www.sterling-trust.com/iramain.html

7901 Fish Pond Road

Waco, TX 76710

Mailing address: PO Box 2526, Waco, TX 76702

Phone: 254-751-1505
Toll free: 800.955.3434

Fax, IRA Services: 254-751-0872

Fee schedule: http://www.sterling-trust.com/pdf/stc_ira_fee_schedule.PDF

Three fee schedules: The Precious Metals IRA, The Basic IRA, and The Flex IRA. Any of these fee schedules can be utilized with a Traditional, SEP, Roth or SIMPLE IRA.

Precious Metals IRA: May hold only allowable precious metals including -- American Eagle gold, silver, and platinum coins, other coins as allowed under Internal Revenue Code §408(m)(3), and other precious metal products that meet the minimum fineness requirements and are manufactured by a NYMEX or COMEX approved refiner/assayer.

Basic IRA: May hold any number or combination of publicly registered or traded investments including – any asset permitted in the Precious Metals IRA as well as Mutual Funds, Public Stocks, Bonds, REITs, Brokerage Accounts, Public Limited Partnerships, Annuities, Bank Certificates of Deposit, Matrix NOW Accounts, and U.S. Government Securities.

Flex IRA: May hold any asset permitted in the Precious Metals IRA and/or the Basic IRA as well as Private Stocks, Private Limited Partnerships, Limited Liability Companies, Promissory Notes or Corporate Debt Offerings, Managed Commodity Trading Accounts, Trust Deeds/ Real Estate Contracts, Tax Lien Certificates, Real Estate, or other private placement investments or non-standard assets.

Example: Fees for a Flex IRA valued at $100,000

Set-up Fee = $25

First Year Annual Fee = $75

Annual Renewal Fee = $100

The Entrust Group

http://www.iraplus.com

Offices directory: http://www.iraplus.com/all_franchises.sqrl

Fee schedule for traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs and Coverdell (ESA): http://www.iraplus.com/iraplus/info/fees_assets_value.sqrl

1. Option 1: fee based on asset value of account

Account Establishment Fee = $50

Minimum fee = $125; maximum fee = $1,750

Example: Fees for an IRA valued at $100,000

Set-up Fee = $50

Annual Recordkeeping Fee = $550

2. Option 2: fee based on number of assets

Account Establishment Fee = $50

Annual Record Keeping Fee =

Minimum Annual Record Keeping Fee: $195 Per Asset, and/or Liability per year: $195 paid at time of acquisition

Fee schedule for Health Savings Accounts: http://www.iraplus.com/iraplus/info/hsa_fees.sqrl

Fee schedules for (1) Do Your Own Qualified Plans, and (2) “NOT” Do Your Own Plans, used for Entrust Individual 401(k) Plan and Entrust Flexible Profit Sharing 401(k) Plan: http://www.iraplus.com/iraplus/info/qp_fees.sqrl. This is for sole proprietorships, C corporations, S corporations, partnerships and other similar entities, and business owner, spouses, partners without common law employees.

Equity Trust Company

http://www.trustetc.com/index.html

225 Burns Road

Elyria, Ohio 44035

Phone: 440-323-5491

Toll free: 877-693-8209

see http://www.trustetc.com/company/contact.html for directory of departments

Fee schedule: http://www.trustetc.com/investment/investment-fees.html

*Assumes payment by cash or check.

Example: Fees for an IRA valued at $100,000 (standard fee)

Set-up Fee = $51.50

Annual Fee = $437.75

Millenium Trust Company

http://www.mtrustcompany.com

820 Jorie Boulevard, Suite 420

Oak Brook, Illinois 60523

Toll free: 800-258-7878

Self-directed IRA information: http://www.mtrustcompany.com/ira.html

Fee schedule: http://www.mtrustcompany.com/forms/Self_Directed_IRA_Fee_Schedule.pdf

Establishment Fee = $50

Annual Account Fee = $150

Example: Fees for an IRA valued at $100,000

Establishment Fee = $50

Annual Account Fee = $150       

Annual Asset Holding Fees: depends on assets

Fiserv

https://www.fiserviss.com

717 17th Street, Suite 1700

Denver CO 80202

Mailing address: P.O. Box 173859, Denver, CO 80217-3859

Toll free: 800-521-6974

Self-directed IRA information: https://www.fiserviss.com/portal/page?_pageid=1840,626893,1840_627486&_dad=portal&_schema=PORTAL

Fee schedule for traditional, Roth, SEP and SIMPLE IRAs: https://www.fiserviss.com/pls/portal/docs/PAGE/IAS_HOME/IAS_ASSETSLIBRARY/IRA-IA-1517.PDF

Annual Administration Fee = $55

Example: Fees for an IRA valued at $100,000

Annual Administration Fee = $50

Investment Related Fees: depends on investment type

TruSource, a division of Union Bank of California, N.A.

http://www.trusourcepartners.com

3080 South Bristol Street, 2nd Floor

Costa Mesa, California  92626

Toll free: 800-274-8798

Self-directed brokerage IRA information: http://www.trusourcepartners.com/asp/services.asp#sdbira

Trust Administration Services Corporation, a subsidiary of First Regional Bank

http://www.trustlynk.com/Advisors/trustlynkcorp/index_ap.asp

5950 La Place Court, Suite 160

Carlsbad, CA 92008

Toll free: 800-455-9472  

Fax: 760-603-0887

Self-directed services information: http://www.advisorsquare.com/new/trustlynkcorp/default.asp?storyid=2015878694

Fee schedule for traditional, Roth, SEP and SIMPLE IRAs: http://www.advisorsquare.com/new/trustlynkcorp/default.asp?storyid=2015878694

Example: Fees for a Flex IRA valued at $100,000

Establishment Fee = $35

Annual Fee: $150

Transaction Fee and Asset Fee: varies

Fee schedule for qualified business retirement plans and custodial accounts: http://www.advisorsquare.com/new/trustlynkcorp/default.asp?storyid=2015878694 (includes profit sharing, money purchase, individual K and defined benefit plans)

Fee schedule for 401(k): http://www.advisorsquare.com/new/trustlynkcorp/default.asp?storyid=2015878694

In the next issue, I will dive into how to get started, what you can and can't do with your IRA and how to combine your IRA with an LLC.

Happy investing,

Michael and Bryan

Upcoming Events

May 12, 13 and 14: Super Tax Sale Seminar in California

Come join us for an unprecedented 3-day Super Seminar.

On Day 1 you will go out with us in the field to research tax sale properties for the San Bernandino County online tax sale starting on May 15, 2006. 

On Day 2 you will spend a full day in the classroom going over the hot new field of online tax sale investing.

On Day 3 you will learn how to buy tax lien certificates and tax deeds over the counter without attending any sales. Bring your checkbook because at the end of Day 3 you will be prepared to purchase over the counter tax sale properties for minimum bid without any competition. You can either earn the full interest rate of 12% to 18% or buy tax deeds for pennies on the dollar.

Both authors of Rogue Real Estate Investor Collection will be teaching the Super Seminar. Their motto is, "We are not done until your last question is answered."

Come join us in sunny California. Here is the link for more information on the

Super Tax Sale Seminar in California - May 12, 13 and 14: http://www.rogueinvestor.com/tax_lien_course.html

May 22 - 25 plus travel days: A Slice of Europe

What can you expect?

Unique Beauty and Low Market Valuation. The properties we've located in Europe are some of the most beautiful I have ever seen and the prices are 50% to 75% less than what my market value estimates indicate they should be.

Growth in Real Estate and Commerce. Unlike the United States, some areas of Europe are only beginning to participate in an upswing in real estate values. Starting from low market valuations, these areas will likely appreciate in value for at least the next 10 years, if not longer. Real estate in the areas we have identified has appreciated at an average annual rate of approximately 25% to 30% per year.

Demographics and Aging Population. Just as the United States is experiencing an aging population and increased demand for real estate in warm, southerly climates, so is Europe. This trend is resulting in increased demand for Mediterranean properties.

Location. Imagine experiencing over 330 days of sunlight and moderate to warm temperatures. Imagine snow skiing one day and laying on the beach the next – all within a couple of hours of your vacation home and/or investment property. In the U.S., you would have to pay a fortune for a location like this.

Euros. The conversion of most of Europe’s currency into euros has been a big success. In addition to huge cost and efficiency savings, euros have opened up trade barriers between countries causing an economic boom in business. However, the benefits of this conversion are just starting. Given these factors I think it is very likely that the euro will appreciate against the dollar over the next 20 years. By investing in European real estate you can participate in the appreciation of the euro.

Language. Many European countries teach English as a second or third language. Europeans recognize that trade with Great Britain, Ireland, Australia, Canada and the U.S. is extremely important. And, unlike the United States, speaking another language for the modern European is not terrifying. They embrace other languages and cultures, while still maintaining their own.

People. Contrary to popular belief, one would think that Europeans would be less than friendly with Americans. However, we experienced some of the nicest people in the world.

High Speed Trains and Infrastructure Improvements. High speed trains, traveling at about 120 miles per hour, are making it possible for individuals to live far from the large cities and commute into work. The high speed trains are equipped with wireless Internet so you can work on the train during your commute. Each time a new high speed branch is completed, the area grows economically and real estate values rise. The Mediterranean properties we have located are just beyond high speed train access. However, by 2009, the area we are targeting will be connected to the high speed line.

On May 20 through May 25, 2006, Michael and I are heading back to this area with the goal of purchasing properties for ourselves and assisting other Rogue Real Estate Investors that want to do the same. If you would like to own "Your Own Slice of Europe," I challenge you to come with us on our next scheduled trip. Here is the link for more information:

http://www.rogueinvestor.com/european_real_estate.html

If you have any questions, please call us at 913-381-4520.