If you are reading this article you are likely concerned about your life savings, particularly if you have invested in a 401K or IRA.
You should be concerned. Things are extremely unstable in the market today.
With inflation rearing its ugly head, and the government printing money and continuously raising the debt ceiling to help bail out the country from Covid, there are signs that a major correction similar to 2008 (or worse) is inevitable. It is possible that you would lose a large part of your life savings if that were to happen.
First of all, kudos to you for being smart enough to start and maintain a 401K or IRA and putting money away for your future. You wouldn’t believe how many people don’t and are dependent on Social Security for their retirement (which still may or may not be in existence by then).
So now the question is: If that correction happens, how can you protect your money?
Well, if you have insight into the stock market and are following the economic indicators, you MIGHT be able to time it correctly and request to have your money moved into a very conservative money market account of similar nature.
The problem is timing the market.
Realistically, very few people study the stock market, read all the info from economists, and actually know when this is going to happen.
Make a mistake and you could pull out too early and potentially lose thousands or tens of thousands in gains from an upswing. Then, if you leave it in the conservative money market too long you miss out on the huge upswing gains that can occur when the market picks up again.
That’s the reason why most financial advisors recommend not trying to time the market. Very few people are successful.
So, what other options are there?
Passive investing in multifamily real estate can be the answer for many savvy investors.
One key reason is this: If you are actively invested in a deal as inflation causes everything to rise, it will boost your profits. Boosting your profits would balance out any losses you could potentially have from the stock market correction. In fact, you could exceed those losses with gains in your overall portfolio.
Let me explain.
Investing in a multifamily investment is similar to investing in stock but it is much less complicated and far more secure. The stock market and cryptocurrency are extremely volatile, particularly right now.
(If you already know what investing in Multifamily is all about, you can bypass this section while I explain. And pick up a little down the article.)
A multifamily investment means investing in apartment complexes (typically large ones).
You get all the joys of owning a property, (passive income and great tax benefits) but don’t have to deal with all the hassles of being a property owner (repairing leaky roofs at 4:00 am in the rain, trying to evict tenants that won’t pay rent, and so on).
You might be wondering how you could possibly afford to buy a large apartment complex. The answer is simple: Partner with an operator/sponsor company that puts together a group of investors. A group of investors can accomplish so much more than an individual investor.
Before you commit, though, make sure you do your research. Find an operator/sponsor company that first and foremost has a great reputation and strong referrals.
A reputable company such as 1 Vision Capital LLC has the time and the expertise to search out the right deal which is the most important part of your financial success in any investment.
Because almost everyone knows how incredibly lucrative owning real estate can be, you can imagine that owning large apartments is more lucrative than owning single family homes.
But the reality is most people don’t know how to find a good deal and generally cannot afford to do it on their own. The good news is a well-versed, seasoned operator/sponsor company will typically take care of every aspect so you don’t have to.
First, they research their markets in great detail to make sure the market they are purchasing in has strong economic growth and an increasing population.
A sponsor/operator’s first priority should always be the investor and making sure their money is safe, because even more important than the high returns you should see, is making sure you don’t lose your money.
Next, the operator/sponsor company will make sure everything is financially sound so that it will be profitable. They will inspect the property thoroughly in order to avoid pitfalls like major unseen damage that can be very costly.
A good company will always invest their money in the deal as well, so you know they have skin in the game. They will be 100% transparent about how and where your money is being used by providing quarterly reports.
Then, the operator/sponsor company will take care of all the financing, hire a highly efficient and professional management company to take care of the property, and implement the business plan to ensure its financial success. In most cases, the plan will include renovating the property and rebranding it.
Eventually, they handle the sale of the property and return the profits to the investors.
Very much like the stock market or any investment, there is always a hold time in order to allow for the asset to increase in value. Luckily, companies like 1 Vision Capital have many ways of implementing forced appreciation to intentionally increase the value. Our approach is more proactive rather than just sitting back and hoping the asset will go up in value.
Generally, the hold times range from 3 to 7 years. The most common hold time is 5 years and typically investors’ profits range from 17% to 20% annualized returns, which beats the average stock market return by double or sometimes even triple!
Also, the tax benefits are huge.
Profits are typically paid out on a quarterly basis and many times are tax-free for most of the term, due to the depreciation of the building. The problem with most investment assets including your 401K and IRA, is when you receive your profits, the capital gains taxes can take a huge chunk of your profitability.
Not to mention the huge early withdrawal penalty.
When you invest in a multifamily investment you have a far better chance of hanging on to a large portion of your profits. This is because of depreciation and something called forced depreciation through cost segregation. (Which I will be happy to explain)
Upon sale of the property – when it comes time to split all the final profits with the investors – the investor can usually reinvest the profit into another property (called a 1031 exchange) and pay zero capital gains.
There are so many ways to find the money to invest.
Many times you can actually do it with money from your IRA or 401K, although there is a process that we can help explain.
Right now money is very cheap.
What I mean by that is, right now is a great time to use the equity in your home to do a refi cash out and make your money work for you. Interest rates are at an all time low and won’t be changing much in the near future. The returns on a multifamily investment will grow faster than the equity in your home.
So ultimately, when the major correction happens, (and it will happen) your profits from your multifamily investment will have saved most or all of your losses from your 401K or IRA.
More than likely your net worth will be higher. Depending on how much you invest, potentially significantly higher.
That, in a nutshell, is how you can avoid losing money from losses in your 401K or IRA.
For more information, call us at 818-448-8594 and we can help put together a plan to keep your hard-earned money and see it grow faster in ways you probably never knew existed.
Also, check out our website at www.1visioncapital.com for lots of informative reading.
Or you can email me directly at casey@1visioncapital.com or schedule a consultation with me here: Calendly – Casey Purvis
