I have been looking for an RIA firm that isn't affiliated and is truly independent.
I am a real estate broker who specializes in prospecting investment properties for my investor clients. I have learned that a self directed IRA or solo 401 is allowed to own real estate as an investment. These investments also include bank notes, deeds of Trust, mortgages, land options, rental properties, flips etc.
Adding these types of investments to a retirees portfolio creates a Win Win relationship for both the clients and advisors (RIA and RE Firms). These investments that I find can provide a high ROI as well as security depending on the area or the way the investment is leveraged.
for example, I only present real estate investments that have an equity position already then order a rental analysis from a property manager. Conceptually, if it is determined after performing this due diligence that the investment is worthy then I present it to RIA' firm(s) to present to their clients as an alternative investment. If I understand how an RIA's fees work, should the client decide to purchase the property, the Advisor would receive more income bc the clients total assets value increased equal to the price of the real estate asset they just acquired. Im sure there are also evaluation fees on behalf of the client. Also the client can leverage the property thru a non recourse loan, which is required in an IRA, they would only have to put down 30% of the cost of the asset but you charge on the total value.
Why are these more appealing to retiree clients and RIA firms. They can see and touch this investment. They know the area and are confident with the values and risks. They live right down the road from it. They can hire someone else to manage it for a nominal fee. Their advisors such as an attorney, FP, RE Broker, property inspector, appraisal all show that this is clearly a good investment. The RIA advisor can say that they have literally looked everywhere even outside of the financial sector for a great investment for their clients. This builds trust. Also if you think about it.
When is the last time you have ever financed a mut fund or a stock? Also when was the last time you purchased a stock with instant clear equity?
The reason for my dilemma is because I am looking into starting my own office that caters to retirees looking for alternative investments. We will look for these clients via RIA's and public education seminars. We want to inform people of their ability to invest in real estate with their self directed IRA or solo 401k and show them the benefits of this as a means of further diversifying their retirement portfolio.
Hypothetical I have an investor client who wants to buy a $1,000,000.00 apartment complex using $300,000.00 of his IRA monies as a down payment for a non recourse loan. Its worth 1.1 million and its fully rented for about 10,000 positive cash flow per month. He wants to hold it in his IRA but his current custodian with (typical financial firm) does not allow these types of investments.
So what do I tell this guy? Financial planners don't care about these types of investments bc they cannot make a commission off of them even though the IRS code allows for it. Or find an independent RIA that caters to these types of investment so that they can find you a custodian that carries these types of investments.
By the way Pensco Trust seems to be one of the best custodians in this arena they have a great website explaining this rule as well.
Thought this would be a great place to start. Any thoughts. be honest you wont hurt my feelings.