There is a huge problem out in the self-directed IRA community and that is paralysis because of a lack of perspective. Today is a great day for investing in hard assets such as real estate in your self-directed IRA. Even though no one knows where the true bottom is most investors will miss the opportunity and not capture the full potential of a rebounding market or in this case a stabilizing market. So let’s take today’s news and put it into perspective.

More information on opportunities can be found on www.myrealestateira.com

The bailout for the failed mortgage industry and its financier Wall Street has passed. Included in the bail out are insurance giant AIG and the take over of bad mortgages. What is the difference in the bailout between AIG and a Wall Street Firm? What will become of the markets? What opportunities does this provide the beleaguered investor?

A closer look at what really happened and we’ll use Lehman Bros. in our examples. The defaulted mortgages totaled 6% of all the mortgages sold by lenders. These mortgages were sold to conduits like Freddie Mac or Fannie Mae who in turn sold the mortgages as to Wall Street collateralized securities. The term collateralized was indeed generous because Wall Street firms like Lehman Bros. who sold them to investors really had a “Trust me” guarantee without adequate backing. When the ball began to unravel everyone got caught in the game causing a lack of confidence. And because of the lack of confidence large investors like China and institutional investors stopped buying mortgage backed securities. Fannie Mae and Fannie Mac stopped buying loans from banks. Banks stopped making loans.

So what will happen from here? First of all, there will be a transformation to more regulated business models that require deposits rather than reliance on market confidence for example; the two largest securities brokers in the U.S. recently applied to become bank holding companies, gaining approval transform themselves into deposit-taking institutions.
The bailout has two very different faces to it. AIG has a short term capital problem and AIG has hard assets and supposedly the feds are going to keep their feet to the fire on a two year repayment schedule.

Wall Street firms such as Bear Stearns heavily rely on investor confidence. Bear Stearns suffered from a confidence problem causing a hemorrhage of cash flow with no credit availability to stem the bleeding. Fortunately, for Bear Stearns they were first and the grace of the feds was upon them. Lehman Brothers also relies on investor confidence so the feds had to flip a coin and decide who the favorite child would be Lehman Brothers or AIG? Hard assets win out again.

Wall Street’s mortgage conduit Fannie Mae and Freddie Mac had to be salvaged to maintain order in the markets without aid to these entities home borrowers, lenders and investors the stock market would have been completely confused and certain loss of confidence would have caused chaos in the market.

With that, Wall Street was gone, a victim of the mortgage-fueled credit crisis it helped to create Fannie Mae article. And helped it did by pressing lenders to loosen standards and then creating gains on the sale side of the business through REITs and other real estate related investments it created its own little vacuum that was certainly heading towards implosion.

The end result should be a stabilization of the real estate market and a more predictable rate of return. The day of the grab and flip investor escalating market values is over and a more reasonable appreciation rate in the housing market should take over. In fact, many areas that have been hit hard such as San Diego County are seeing an increase in sales but with deflated sales pricing of about 20% under their value two to three years ago. That is beginning to look like a bottoming of the market slide for real estate market. That is good news for the self-directed IRA investor looking for steady rate of return and a so very important attribute “hard assets” to rely upon rather than market confidence. And that is exactly where the “wall street investment community has fled to is hard assets!” Why shouldn’t you be there as well?
Self Directed Real Estate IRA

Investment options
Certainly assessing risk is just as important as determining your return on investment. Please view this link for a risk vs. reward analysis and I believe you’ll see that the investment suggestions below merit consideration. This chart is for illustration purposes only and should not be relied on for actual investment criteria by itself.
Real Estate – Why? In contrast to the market today, there are loans available for real estate purchase in your IRA at a 60% loan to value. There is no lack of short sale opportunities for your IRA (a short sale is the purchase of a property near foreclosure a discounted price). And there is no shortage of foreclosures at bargain prices.
Today, the five fastest growing states are Arizona, Nevada, Idaho, Georgia and Texas.
The South and West again monopolized the list of fastest-growing states with Utah, North Carolina, Colorado, Florida, and South Carolina rounding out the top 10.1
Much of the overall population growth is expected to come in the South and West, with states like Nevada, Texas, Florida, Arizona and Georgia leading the way. The South showed the largest increase in renters last year, accounting for three out of five renter households added nationally.
Private Loans – There obviously a great need for funds on a short term basis. Your IRA could be obtaining a return on investment up to 21% A.P.R. by loaning to real estate investors at a 60% LTV secured by real estate.
Futures – Remember when gas prices at the pump spiked? Your IRA could have profited from market instability through futures. Whenever there is instability in Wall Street futures markets or commodities often do very well. It is best to designate a small amount of your IRA and to use a managed account in this market when first starting out. There are managers that have returned 2% to 4% per month in this economy.
Does this require all of yourself-directed IRA? No, take a portion ease into this new method if you are unsure. Take small steps, we are confident that small steps in this direction will provide a profitable return. In a short while hard asset opportunities will be the primary investment and the stock market will be the “me too” investment. Self-directed IRA Advisors can help you be in the driver's seat. Honestly ask yourself this question, are you now and will you continue to lose by waiting?

Daniel Cordoba, CEA is the principal of Asset Exchange Group a self-directed IRA advisory group located in Austin, TX. More information on opportunities can be found on www.myrealestateira.com

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