Diversify Your Rental Strategy: Comparing Short, Mid, and Long-term Rentals

Estimated reading time: 6 minutes

Rental property investing is a popular strategy for generating income and building wealth over time. However, not all rental properties are the same, and different strategies may suit different investors depending on their goals, preferences and risk tolerance. There are three main types of rental property investing: short-term, mid-term and long-term. Understanding how each work and becoming familiar with some of the different benefits and drawbacks can help you see how they can be lucrative alternative investments, individually or when combined to create a diversified portfolio.

Short-term Rentals

Short-term rental property investing involves renting out a property for a few days or weeks at a time, usually through platforms like Airbnb or VRBO. This strategy can generate high returns per night, as well as tax benefits and flexibility in managing the property. However, it also comes with higher costs, such as cleaning fees, maintenance expenses, insurance premiums and occupancy taxes. Also, short-term rentals are subject to market fluctuations, seasonal variations and regulatory changes that can affect the demand and profitability of the property.

One of the many advantages of short-term rentals is the higher rental income generally associated with these types of investments. Short-term rentals can charge higher rates per night than long-term rentals, especially as vacation rentals in popular tourist destinations or during peak seasons. They also offer flexibility by allowing the owner or manager to adjust the availability and pricing of the property according to market demand and personal preferences.

Short-term rental investing also comes with some challenges and risks. Short-term rentals simply require more maintenance, cleaning, marketing, and management than long-term rentals. They may also incur higher operating expenses with utility bills, insurance premiums, and fees from the rental platforms. These types of rentals are also subject to different laws and regulations in different jurisdictions, which may limit or prohibit their operation, as we’ve seen become an issue for some states across the US. Some homeowner’s associations or landlords may have rules against short-term rentals. Also, since short-term rentals are more sensitive to seasonal fluctuations, economic downturns, natural disasters, pandemics, and other factors, travel demand can sometimes be affected which inevitably will also affect a short-term rental in your investment portfolio.

Mid-term Rentals

Mid-term rental property investing involves renting out a property for a few months at a time, usually to corporate clients, students or travelers who need temporary accommodation, or displaced homeowners after a disaster. This strategy can provide steady rental income and lower vacancy rates than short-term rentals, as well as lower costs and less hassle than long-term rentals. However, it also requires more marketing and screening efforts to find suitable tenants, as well as more legal and contractual obligations to protect the property and the landlord.

Like short-term investments, mid-term rentals can charge higher rates than long-term rentals, as they offer more flexibility and convenience to tenants. Mid-term rentals can also avoid vacancy periods by adjusting the prices according to the season and demand. But, also similar to short-term, mid-term rentals require more maintenance and cleaning than long-term rentals as well as higher utility bills, insurance premiums, and management fees. Mid-term rentals also face market uncertainty over other types of rental strategies, because mid-term rental investing depends on the demand and supply of the rental market, which can vary depending on the season, location, and economic conditions. Mid-term rentals may experience lower occupancy rates or reduced income during off-peak periods.

Long-term Rentals

The last type of rental method covered in this article is long-term rental investing. Long-term rental property investing involves renting out a property for a year or more at a time, usually to residential tenants who sign a lease agreement. Many investors like this method, as it can offer consistent cash flow and passive income, as well as appreciation and equity growth over time. But long-term rentals come with their own drawbacks, too, such as more responsibilities and risks which can include tenant management, property maintenance, repairs and renovations, taxes and fees, and potential eviction issues. If the investor does not want to take on these duties, then paying for the services of a property manager or property management company is another expense.

Arguably the biggest advantage of long-term investment properties is the positive cash flow an investor can usually expect. In most cases, long-term rentals generate consistent monthly income from rent payments, which can help cover the mortgage, taxes, insurance and maintenance costs of the property. This can also provide a hedge against inflation, as rents tend to increase over time. Because long-term rentals can appreciate in value over time, depending on the market conditions, location, demand and supply factors, this can increase the net worth and equity of the investor and provide an opportunity to sell the property for a profit in the future.

While some may like the fact that rentals can be held for extended periods of time, others might see the illiquidity as a negative. Long-term rentals are not easily convertible into cash since they require time and effort to sell. This can limit the flexibility and mobility of the investor, making it harder to access the equity in the property in case of an emergency or a change of plans. This is certainly something to consider for self-directed IRA investors who may be needing to take distributions They also might not be the best choice for those who want to take a more passive investing approach, because long-term rentals require ongoing management and maintenance, which can be time-consuming and stressful if the investor has to deal with tenants, repairs, vacancies, legal issues, regulations and other challenges that come with being a landlord.

Understanding the Right Strategy for You

You may find that one type of rental strategy suits you more than another, or you might be thinking, “Wow! All of those sound like they have something unique to offer” and be interested in trying all three. While some could argue that it’s best to start with one rather than jumping in headfirst all at once, it’s certainly possible.

One way to combine these three types of rental property investment strategies is to allocate different properties or units to different strategies depending on their location, features and market conditions. Let’s say that an investor owns a condo in a tourist destination that is rented out short-term during peak seasons. Then, they use this same condo as a mid-term rental during off-seasons. At the same time, they also have a single-family home in a suburban area around the same location that is rented out long-term to a stable tenant. In this example the investor has diversified their income sources and reduced their exposure to market volatility utilizing all three rental strategies.

If taking on all three at once seems overwhelming, real estate investors may also switch between strategies for the same property or unit depending on the changing circumstances and opportunities. For example, an investor may rent out their property long-term until they find a good deal to sell it for a profit, or they may rent out their property short-term until they find a reliable tenant to sign a long-term lease. This strategy works different than the first example, but still gives an investor the chance to maximize their returns and optimize their asset.

As you can see, rental property investing is not a “one-size-fits-all” approach, but rather a combination of different options that can be tailored to fit different situations and financial goals. By understanding how each work, the pros and cons of each type, and combining them in creative ways to create unique opportunities, investors can achieve their desired outcomes and enjoy the benefits of real estate investing!

Rental properties can also be held in a self-directed IRA. Learn more about holding short-term rentals in your IRA in our blog article. If you are interested in learning about the tax advantages of holding rental properties in your self-directed IRA or have any questions, schedule a 1-on-1 consultation with a Quest IRA Specialist.

Choosing the Right Operator for Your Real Estate Syndication

Estimated reading time: 8 minutes

Real estate syndication offers a fantastic opportunity to invest in properties beyond what you could do on your own. However, it’s not without its share of challenges. One of the most critical decisions you’ll make in this type of investment is selecting the right operator. In this blog post, we’re going to delve deep into the art of choosing the right operator for your syndicated real estate investment. We’ll also explore the potential consequences when an investor skips due diligence on their operator through a hypothetical case study.

The Players in the Game

Before we delve deeper into the roles of General Partners (GPs) and Limited Partners (LPs), it’s essential to grasp the unique dynamics at play in the world of real estate syndication. This partnership is akin to a well-orchestrated symphony, where each participant plays their specific role, contributing to the harmony of the investment. The GP takes the lead as the conductor, while LPs blend their financial prowess seamlessly into the composition. Together, they create a powerful ensemble that can reap substantial financial rewards. Now, let’s take a closer look at these roles and how they interplay to produce successful investments. 

The General Partner (GP) — The GP is the heart and soul of the operation. They’re the ones actively managing the investment. Their responsibilities include finding and conducting due diligence, purchasing assets, daily management, refinancing, and sales decisions. In return, they expect to see cashflow and equity returns.

The Limited Partner (LP) — On the other hand, LPs (Limited Partner) are the passive investors who receive passive profits. They conduct their due diligence on the presented GP information, provide the necessary funds, and respond to the GP’s requests. In exchange for their capital, they get to relax and enjoy a share of the profits without actively managing the deal. 

Why This Partnership Arrangement Works

In real estate syndication, success is often a team effort, and the synergy between General Partners (GPs) and Limited Partners (LPs) is the driving force behind it all. The GP is like the captain of a ship, steering it through the tumultuous seas of property acquisition, management, and profitability. They bring the deal flow, management skills, and a desire to make the deal a reality — and often need capital to turn those opportunities into reality.  

However, even the most skilled captains need resources to sail their ships, and this is where the LPs come into play. The LP is financially equipped to invest but may lack the deal flow, expertise and/or the drive to actively manage the investment. Therefore, they provide the essential financial backing that enables the GP to turn opportunities into reality, creating a formidable partnership that fuels the engine of real estate syndication. With their distinct roles, GPs and LPs are like two pieces of a jigsaw puzzle, perfectly fitting together to create a complete and successful investment strategy. 

Vetting Your Operator

At the core of any successful partnership is trust. When venturing into a syndicated real estate investment, the first step in vetting your operator is to conduct a personal gut check. Do you genuinely like them? Are they authentic, transparent, and honest in their dealings? Trust is the foundation of any successful partnership, and these qualities serve as the bedrock upon which fruitful collaborations are built. Now, let’s dive into other details of vetting your operator and ensuring a successful investment.

Professional Background: Experience matters. How many syndications have they completed, and how many deals have they taken full cycle? An operator with a proven track record, one who has navigated the intricacies of multiple successful syndication ventures, is a valuable ally. Their experience inspires confidence, assuring you that they have the ability to manage the investment and mitigate potential risks. 

Track Record: Investigate whether your operator has had an asset go sideways in the past and how they handled such situations. An operator’s ability to adapt, problem-solve, and recover from setbacks is a testament to their resilience and expertise. Learning from their past experiences can provide valuable insights into how they manage adversity and mitigate risks.

Investment Strategy: Understanding your operator’s typical investment strategy is crucial. Are they focused on cash flow, forced equity, or buy and hold? This insight helps you align your expectations with their approach and ensures your investment goals are in harmony with their strategy. Additionally, scrutinize the major risks associated with their chosen strategy, particularly concerning lending. Awareness of potential pitfalls allows you to be prepared and make informed decisions.

Team Composition: The strength of the team is crucial. Who’s on board, and what’s each person’s role? A well-rounded team can skillfully navigate challenges that may arise during the investment process. A diverse set of skills and expertise among team members can be a reassuring sign that your operator is prepared for all contingencies.

Asset Management: The person responsible for managing the assets plays a pivotal role in the success of your investment. Their experience and dedication are crucial, as they will be the ones overseeing the day-to-day operations and ensuring that the investment stays on course. The individual tasked with asset management should be well-versed in property management and have a track record that shows their ability to handle the responsibilities effectively.

Communication Plan: Clear and consistent communication is the compass that keeps a syndication investment on the right path. Your operator should have a well-defined communication plan in place. Inquire about how they intend to keep you informed about the investment’s progress. This could include the distribution of financial documents such as K-1s and regular updates on property performance. An operator who communicates transparently helps build trust and ensures you’re well-informed throughout the investment journey. 

Waterfall Structure and Fees: Lastly, gaining a comprehensive understanding of your operator’s profit-sharing structure, fees, and any catch-up provisions is crucial. Clarity in financial matters prevents future disputes and allows you to make informed decisions about your investment. Understanding how profits are distributed and what fees are associated with the investment ensures you’re well-prepared for the financial aspects of the venture. 

Watch for These Red Flags

In the world of real estate syndication, it’s not all sunshine and rainbows. As an investor, you need to be vigilant and keep a keen eye out for potential red flags that might indicate a risky partnership (check out all 8 Red Flags here). Here are some warning signs you should never ignore:

Only One Managing Partner: A lone operator might seem like they can handle it all, but this could be a risk. Real estate syndication is a complex and multifaceted business. Having multiple partners on board brings diverse skills and perspectives to the table, which can be invaluable when facing unexpected challenges. The strength of a team often outweighs the abilities of a solitary operator. 

Operator not Fully Committed: If your operator isn’t fully devoted to their real estate business, it could spell trouble for your investment. Success in syndication requires dedication and full-time engagement. Part-time operators might not have the bandwidth to give the investment the attention it needs. A lack of commitment can lead to poor decision-making and neglect of critical aspects of the investment.

Lack of a Track Record: Inexperienced operators may lack the skills and knowledge needed to navigate the intricate waters of real estate syndication. A lack of a track record means they haven’t encountered and solved the myriad challenges that arise in these ventures. When it comes to your hard-earned money, it’s safer to entrust it to operators with a proven history of success. 

Operator not Actively Participating: An operator should lead from the front, actively participating in the deal. Their presence and involvement are essential for the investment’s success. An operator who is passive or distant from the investment can hinder the decision-making process and hinder the property’s performance. An engaged operator provides leadership and guidance when it’s needed most.

No Co-Investment by the Operator: Co-investment by the operator is a powerful signal of their commitment. When operators have their own capital invested in the deal, they have a personal stake in its success. This aligns their interests with those of the investors, motivating them to make the investment flourish. A lack of co-investment could be a signal that the operator lacks confidence in the deal or isn’t fully committed to its success. 

Illustrating the Impact of Due Diligence 

Consider two scenarios that underscore the transformative impact of due diligence on an operator in real estate syndication. 

In the first scenario, Jane, an enthusiastic but inexperienced investor, entrusted her funds to Sam, an operator who offered promises of high returns with minimal risk but lacked the necessary experience and preparation for effective management. Within a year, Jane’s investment turned into a stressful ordeal. Chaotic property management, unpaid bills, and disgruntled tenants revealed Sam’s inadequacies as a capable operator. Moreover, erratic communication added to Jane’s woes, culminating in financial losses and disillusionment. 

Contrast this with Alex, an investor who rigorously vetted Sarah, a seasoned operator with an impressive track record. His meticulous due diligence encompassed assessing Sarah’s character, professional background, team, and past performance. Alex’s decision to invest was well-founded. Sarah’s transparent communication, adept management skills, and robust team guaranteed a successful investment. Property management was efficient, bills were paid on time, tenants were content, and returns exceeded expectations.

This juxtaposition highlights the power of due diligence. In the case of Alex, it led to financial gains, peace of mind, and a thriving partnership, emphasizing the critical role of selecting the right operator for a prosperous real estate syndication journey. 


Choosing the right operator for your syndicated real estate investment is not just a matter of chance; it’s a calculated process. By conducting due diligence, assessing an operator’s character, experience, team, and track record, you can significantly reduce the risks associated with your investment. In the world of real estate syndication, a strong operator-investor partnership is the key to unlocking success and ensuring a prosperous future. So, go out there, make informed decisions, and build a thriving real estate portfolio! Your financial future is in your hands. 


Whitney Elkins-Hutten is the co-author of the international #1 bestseller Resilient Women in Life and Business, host of the Passive Investing Made Simple and Multifamily Investor Nation YouTube shows and podcasts, and the Director of Investor Education at PassiveInvesting.com, a private equity firm with $1.4 billion in assets under management, including 3500 multifamily units, 6600 self-storage units, and 30 car washes. To date, PassiveInvesting.com has achieved an LP ARR of 29%, an LP IRR of over 26%, and a 56%+ increase in asset valuation in three years or less. 

Whitney will be joining us as an educator at Quest Con Live: Women in Alternative Investing on Nov. 17, 2023. To learn more about this event go to QCL Registration.

The Value of Gold Family

Estimated reading time: 3 minutes

Fees. It is never a fun subject to discuss, but it’s something you’ll run into with any investment. When you choose to self-direct your IRA into privately held assets, fees can range from the high to low end depending on the custodian. Understanding all your choices is important, so you can make the best decisions for your investment plan.

One fee plan that has provided the most value to our clients is Quest’s Gold Family plan. For the active investor that doesn’t want to deal with a fee for each transaction, the all-inclusive Gold Family plan is an attractive option. Encompassing nearly all transactional fees, the Gold Family plan makes it easy and cost effective for an active family of investors to self-direct their investments.

What is the Gold Family Plan?

At Quest, we offer different fee options for investors depending on the investments they plan to do. Some options work better than others, considering factors like the number of assets in the account or the value of an account.

The Gold Family plan allows up to 10 accounts to be covered by a flat annual fee. These accounts don’t have to be held by the same person, but can include immediate family. For example, your plan could include accounts from your spouse, children, grandchildren, parents, siblings, and in-laws. This can prove to be much more cost effective than each person opening their own account.

One of the great benefits of this option is that clients don’t have to worry about overhead fees that would be expected with most custodians. With the Gold Family plan, many of the fees are already included in the flat annual fee, including most maintenance and transaction fees. Not having to worry about which fees are associated with each transaction makes the Gold Family plan highly sought after for those who plan to be active investors with their SDIRAs.

The True Value of Gold Family

We all want to get the best deal, but there is more to “value” than just saving money. With the Gold Family plan, you also receive a special level of customer service designed specifically for our members.

The Gold Family Department was created to provide a “Gold Member Concierge Service.” Our experienced and knowledgeable professionals are here to help you with account management, general IRA questions, and complex investments. The Gold Family team provides the highest level of value and exceptional customer service to our members. Plus, Gold Family members are invited to exclusive events and networking opportunities.

As a Gold Family Member, you will receive:

  • Exclusive concierge service with our dedicated Gold Family team
  • All-inclusive fees for up to 10 accounts included for immediate family
  • Expedited processing for investments and payments
  • Exclusive events, promotions, and networking opportunities
  • Simplified, flat fee structure

Becoming Part of the Gold Family

Making the switch to the Gold Family option is quick and easy! If you would like to look over the fee structure in more detail to see the true value of this plan, you can access our Gold Family Fee Schedule by clicking here!

For more information about getting started, you can always reach out to a Quest Trust IRA Specialists by emailing IRASpecialists@QuestTrust.com. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.


Navigating Choppy Waters – 7 Principles to Invest By

7 Principles to Invest By
Estimated reading time: 6 minutes

It is impossible to escape the headlines.

Inflation is at a 40-year high. A recession is coming. A recession is here. What will America look like in the next year or two?

However, economic recessions are not new for the United States. Since World War II, the US has been through 12 recessions with an average economic contraction of 2.5%, an average unemployment rate increase of 3.8%, and an average duration of 10 months.

So where are we in the economic cycle right now?

In my search for the answer, I realized that even the brightest economists do not agree on where we are in this market cycle or when a recession will hit. This means to be a savvy investor, we must learn the guiding principles for investing so we can navigate any market cycle…even perilous ones.

7 Principles to Invest By

When you study the greatest financial minds, you find that they rarely time the market. Rather they subscribe to a set of investing principles to allow them to make money in almost any market and spend as much time in the market as possible.

Capital Preservation

Most investors have heard of Warren Buffett and his two rules of investing.

“Rule #1: never lose money. Rule #2: Don’t forget rule #1.”

The first step to investing in any market conditions is to invest in hard assets where your capital invested cannot go to zero. (This is THE main reason I love real estate investments.) As an extension of this principle, you want to invest in asset classes where you can control the value of the asset. This means investing in assets that are their value on net operating income or expected gross income not on the whims of the stock market. Additionally, any asset that you invest in must be well capitalized with capital expenditure and operational reserves to mitigate loss and to keep the need from selling in a down market unnecessarily.

Cash Flow

Another principle of conservative investing is to invest in assets that have multiple streams of income that begin from day one of owning the asset rather than waiting for cashflow to kick in months later. When an asset has immediate cashflow, like rental income, this indicates that the asset has an element of stability in today’s market. Another way to protect the cashflow is to ensure that there are several rental comps in the area that are higher than the subject rental property so you can be competitive in the market should you need to adjust rents. And like rule #1, around capital preservation, you want to ensure that the asset is well capitalized from day one to mitigate any sort of loss and to protect the current cash flow on the asset.

Equity Growth

There are two types of equity growth: natural market growth and forced equity growth. Ideally, you want to invest in assets that takes advantage of both levers if possible. To tap into market growth potential, and since you personally cannot control it, you need to invest in real estate properties that are in areas of the United States where the population is growing, jobs are growing, incomes are growing, jobs are diversified, poverty is coming down, and crime is coming down. You want to stack the investing cards in your favor. To take advantage of forced equity growth, you need to look for assets where you can raise the income on the asset, decrease the expenses associated with the asset, or add additional streams of passive income to the asset. The real power is when you can pull all three of those net operating income levers at the same time!

Tax Benefits

One pillar of conservative investing is to invest in assets that have tax benefits associated with them (the IRS is incentivizing investment to solve a problem). Again, this is another reason I love being a real estate investor. When you invest in real estate you can create paper losses through depreciation, including accelerated depreciation and bonus depreciation. These losses can help shelter taxation on income the asset generates.

Another tax benefit of investing in real estate is the 1031 exchange, also called a like-kind exchange. One of the major benefits of doing the 1031 exchange is the ability to defer the tax on capital gains and to avoid depreciation recapture. The tax benefits of real estate are one of the most powerful builders of wealth.

However, how important are the tax benefits if you are investing in alternative assets through a Self-Directed IRA (SDIRA)? Glad you asked!  The SDIRA account itself already has tax advantages built in, so any depreciation will remain in the account itself and not pass through to you as the individual. Additionally, SDIRAs cannot participate in a 1031 exchange (they don’t need to save on tax). When you invest in real estate through an SDIRA, you really do not need the tax benefits anyway!

Inflation Hedge

An inflation hedge is an investment where the decreased purchasing power of a currency results from the loss of its value due to rising prices either macro-economically or due to inflation. When you invest in a real estate asset, you can periodically increase your income that you are earning and pass through your expense increases to the end customer. For example, with multifamily properties, such as apartment buildings, you can adjust your income annually at lease renewal. With self-storage property, you can adjust your income monthly. For express car washes and hotels, you could adjust your income daily if you like. Being able to respond to the market to protect your purchasing power is one of the most powerful aspects of any commercial real estate business.


Another pillar of conservative investing is understanding how to safely arbitrage the interest rate environment to use leverage safely to amplify wealth. In today’s rising interest rate environment, we are in the cycle where fixed rate debt that covers the term of the hold on any project is KING and short-term floating rate debt should be used with immense caution. If you come across an operator using floating rate debt, ensure that the debt has a cap and that the project has been underwritten to that cap for the duration of the hold. Since this type of debt is short-term, ensure the operator has also purchased extensions to the debt term upfront to cover the hold period, and has multiple avenues for a successful exit should their debt strategy fail.

Invest with Experts

Without a doubt, the most important conservative passive investing pillar in this market or any market is to invest with experts that you know, love, and trust. While most investors are drawn to deals with high returns, the success of any deal hinges on the operator’s execution. So be sure to invest with a team that has knowledge of the investment strategy, a track record of positive performance, the ability to secure credit and lending for high quality assets, the ability to reliably pool investor capital to close and manage the asset, and a professional team to source, acquire, operate, and reposition any deal in their portfolio on your behalf. Finding such an operator makes you not only feel confident that they can preserve your initial investment and execute their business plan, but you also get your time back… your most nonrenewable resource.

Is a Recession in the Future?

Some economists predicted that a recession would begin in Q4 2022 and last through 2023 and be a shallow yet prolonged contraction. Other economists challenged that the real recession would not realize for another 18-24 months.

So, what does 2024 and beyond hold for us? I truly do not know.

As a student of history, I believe that success leaves clues. And successful investors made money through all 12 modern recessions… and these seven principles of building wealth were the key to their investing confidence.

What are yours?


About the Author:

Whitney Elkins-Hutten is the Director of Investor Education at PassiveInvesting.com, a private equity firm with $1.4 billion in assets under management, including 3500 multifamily units, 6600 self-storage units, and 30 car washes. To date, PassiveInvesting.com has achieved an LP ARR of 29%, an LP IRR of over 26%, and a 56%+ increase in asset valuation in three years or less.

This guest article was originally published Nov. 18, 2022. Whitney Elkins-Hutten will be joining us as an educator at Quest Con Live: Women in Alternative Investing on Nov. 17, 2023. To learn more about this event go to QCL Registration.


Does a Qualified Charitable Distribution Make Sense for You?

Estimated reading time: 4 minutes

Did you know you can support your favorite charity and satisfy your required minimum distribution (RMD) for the year? A qualified charitable distribution (QCD) allows individuals who are age 70½ or older to make charitable donations directly from their individual retirement accounts (IRAs). The funds will never pass through the hands of the account holder, offering a seamless and efficient way to make charitable contributions. This type of distribution has gained popularity among retirees and offers several tax advantages.

Advantages of QCDs

One key advantage of a QCD is that it satisfies the required minimum distribution (RMD) rules. Typically, you are required to take an annual minimum distribution from your Traditional IRA starting at age 73. (Prior to January 1, 2020, it was 70½, which is why the QCD minimum age was set at 70½.) This distribution is required, whether or not you need or want the funds. Failing to do so can result in hefty penalties. By making a QCD, you can satisfy your RMD obligation while also benefiting a charitable cause.

Another advantage of a QCD is that it can reduce your taxable income. Since the distribution is excluded from the taxpayer’s income, it can help lower your overall tax liability. This exclusion provides significant tax benefits, especially for individuals who don’t itemize their deductions or have already reached their maximum limit for deducting charitable contributions.

It is worth noting that a QCD cannot be claimed as an itemized deduction on an individual’s tax return. However, the tax benefits are realized by excluding the distribution from taxable income, resulting in potentially lower overall tax liability.

As with any financial or tax-related decision, it’s recommended to consult with a tax professional or financial advisor before making a qualified charitable distribution. They can help ensure that all eligibility requirements are met, and that the donation strategy aligns with your overall financial goals.

How does it work?

To be considered a QCD, certain criteria need to be met.

  • The individual must be 70½ years of age or older and required to take an RMD.
  • The QCD requires a direct transfer to a qualified charity.
  • The total QCD cannot exceed the annual limit of $100,000 per taxpayer. Married couples can each make a charitable contribution up to the $100,000 limit for a maximum of $200,000.
  • The individual cannot receive a benefit from the QCD, i.e., use the funds to purchase an item at an auction for charity.

The distribution can be made from several types of IRAs, including traditional, inherited, or an inactive SEP or SIMPLE IRA. You can contribute to more than one charity, and you can make several smaller contributions throughout the year up to the limit. The QCD can also be larger than your RMD, but the excess cannot carry over to fulfill future RMD obligations.

QCDs are not reflected as tax-free on the IRS form 1099-R and will appear as a normal distribution. It is up to the client to notify their tax preparer that some or all of that distribution was a QCD. Individuals should receive acknowledgement of the donation to claim a deduction.

What is considered a qualified charity?

Eligible charities must be 501(c)(3) organizations. Public charities have the necessary tax-exempt status to receive these distributions and are the primary type of charitable organization that can receive QCDs. This includes religious organizations, educational institutions, and government entities. Check the IRS website to verify if your charity is a tax-exempt organization.

It’s important to note that while public charities are eligible to receive QCDs, other types of charitable entities do not qualify. You cannot make a contribution to private foundations, donor advised funds, supporting organizations, charitable remainder trusts, or charitable annuity trusts.

Is a qualified charitable distribution the best choice for me?

If you are over 70½ and do not need your RMD as income, QCDs are a great way to satisfy your RMD obligation while supporting a cause you care about. Also, if you’re in a situation where taking an RMD would push you into a higher tax bracket, a QCD can help keep your taxable income lower. However, since QCDs can only be used to satisfy your RMD obligation, if you have already satisfied it through other means, making a QCD may not provide any additional benefits.

QCDs can have an indirect impact on other aspects of your taxes, as well. By lowering your taxable income, you may also lower your overall tax liability and potentially increase your eligibility for certain tax deductions or credits. However, it’s essential to consult with a tax professional or financial advisor to fully understand the tax implications and benefits specific to your situation.

In conclusion, qualified charitable distributions are a generous and tax-efficient way for you to support your favorite charities. By making direct donations from your IRA to qualified charitable organizations, you can enjoy tax benefits, satisfy your RMD obligations, and make a positive impact in your community. As always, Quest is here to answer questions about distributions and your retirement account, so feel free to give us a call or schedule a 1 on 1 with one of Quest’s IRA Specialists.

Doing Your Due Diligence to Protect Your IRA

Estimated reading time: 4 minutes

Investing comes with countless benefits, many of which we have discussed in previous blogs, but it also comes with risks. Being able to understand what to look for before entering into a new investment can save you a lot of time and money when it comes to those investing risks. One of the best things anyone can do is perform proper due diligence on their new potential investment.

What is Due Diligence?

Due diligence is the step-by-step process an investor takes to help protect their IRA from fraud and to determine if it is the right investment for their retirement funds. Due diligence is what forces you to uncover the facts about the investment and any potential risks, so you can make an informed decision. There are two types of due diligence: that which is done on the investment itself and the other which involves thoroughly vetting the one offering the investment.

It’s crucial to not only look at the investment itself and determine if it is worth it, but to also consider who you may be entering into business with, as well. Sometimes you may be confident in the investment, but still have hesitations about the investor. If you are ever nervous, you should always investigate further.

Why is Due Diligence Important?

It is important to be more cautious when you are investing your IRA funds. Doing due diligence ensures that you don’t make the wrong decision and jeopardize your future retirement. One bad investment could greatly affect your retirement savings.

With self-directed IRAs, you can invest in real estate, notes, private placements and more, so it is even more important to perform due diligence on these types of alternative investments. When you invest in a mutual fund, you can look at the prospectus and view the fund’s history. When you invest in alternative assets, you are in the driver’s seat. The IRA custodian is not allowed to provide tax, legal, or investment advice. You find the deal, usually through networking, and it’s up to you to thoroughly vet the investment. You may be approached with an investment opportunity that sounds amazing, but what do you really know about this potential real estate investment or the sponsor that is pitching the deal to you?

The reason investment fraud succeeds is because people are lured into emotional decisions by the scammer without first completing their due diligence. Investing in things you are familiar with and know very well can help lessen the risk of fraud, since you will be very aware of what to look out for. For example, if you are a real estate professional, you can use your experience to invest in rental properties.

Doing Due Diligence

The due diligence process begins with asking yourself broad general questions. It then narrows down to specific questions about the investment depending on the type. Asking yourself questions like, “does the investment offer make good business common sense?” or “how exactly does this investment strategy create above market returns?” If you can’t explain it, there’s a risk of fraud.

Top 10 warning signs of investment fraud:

1. It promises “guaranteed” returns;
2. It promises high returns for little or no risk;
3. It’s being pitched by a leader in your community or a fellow group member, such as ethnic, racial, religious, or other groups;
4. It involves a reverse merger stock or your money has to be sent overseas;
5. It involves “break-through” technology;
6. It’s tied to a current natural disaster;
7. It’s unregistered, or it’s being pitched by an unregistered adviser or salesperson;
8. It lacks documentation, such as prospectuses, offering statements, or financial reports;
9. It’s difficult to understand; and/or
10. The pitch comes with high-pressure sales tactics that push you to purchase immediately.

Ask all of your questions and expect straightforward answers. Review financial records if applicable. If you are buying real estate, go to site and view it yourself. Do not let trust, friendship, or emotion get in the way. When you do not understand the investment, continue to ask questions until you do. This is your money, and you should feel comfortable with your investment decision.

Once you have evaluated the investment, it is then time to evaluate who you are entering business with. What is the track record of the person pitching the investment? Look into the performance of their other investments? Have they been honest and upfront about the risks of this investment. Have they thoroughly answered your questions, or tried to pressure you to act quickly? Look for any red flags and then take the time to investigate them thoroughly. If something sounds too good to be true, it probably is.

It’s true that all investments have risk and there is always a constant battle between risk and reward. If at any point during the process you find that the investment has too great a risk for the amount of return or has a high probability of fraud, then you should stop the process and move on to another investment. Prepare a due diligence checklist to ensure that you did not miss asking any important questions.

The more you know about the investment the better you will be able to judge whether the risks are balanced by the reward and whether investment fraud could be possible. If you ever have questions about doing your due diligence or investing in your self-directed IRA, give a Quest Trust Company a call at 855-FUN-IRAS. To learn more about how to get started investing with a self-directed account, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Investing Through the Ages – Investment Considerations in your 20s, 30s, and Beyond!

Estimated reading time: 6 minutes

When is the right time to start saving? Is it when you are young or when you’re a bit older? Is there even a right time? No one’s situation is the same, and when it comes to your investment journey, each investor’s path will look different. For some, investing in a retirement vehicle like an IRA in your 20s can be a smart move for building long-term wealth and securing a comfortable retirement. For others, it might make more sense to wait until they’ve established themselves and have a solid footing with the means to be able to invest comfortably. But, for those ready to take the leap in their young years, saving early can provide more financial freedom during your retirement.  

Investing in your 20s 

Investing in your 20s can set the foundation for your financial future and starting in your 20’s provides an extended time horizon before retirement that others may not get by starting later in life. By saving in your 20s, you allow your investments more time to grow through compounding. Compounding means that your investment gains generate their gains, creating a snowball effect that can significantly increase your wealth over time. Starting early allows you to contribute smaller amounts over a more extended period to reach your retirement goals. As you have more time for your investments to grow, you can take advantage of smaller, consistent contributions rather than having to contribute larger sums later in life. Here’s a tip! Set up automatic contributions to your IRA. Regular, consistent contributions make it easier to save consistently and take advantage of dollar-cost averaging, which can help mitigate the impact of market fluctuations. Here’s what you can do with a small-dollar IRA! 

Younger individuals generally have a higher risk tolerance, which is your ability and willingness to handle fluctuations in the value of your investments, because they have more time to recover from any potential market downturns. Embracing a slightly riskier investment strategy in your 20s can potentially lead to higher returns over the long run. Assess your risk tolerance level. Since young investors have more time to recover from losses, they can afford to take on higher risk investments that have the potential for higher returns. Even if the market experiences significant downturns, you have decades to make up for those losses through subsequent growth. Of course, while having a higher risk tolerance is advantageous for young investors, it’s essential to strike a balance and not be overly aggressive in investment choices. Diversification is key. Read more about how you can make sure you’re doing all you can to diversify your nest egg HERE! 

Investing in your 30s 

As you get older, your goals may start to shift a little and you’ll begin thinking about different considerations. Investing in your 30s presents a unique set of considerations as your financial situation and responsibilities may have evolved since your 20s. Your 30s offer a pivotal time to build on the foundation set in your 20s and make significant strides towards achieving your financial goals. As you get older, life events may come into play, making it challenging to allocate funds towards retirement.  

Similar to starting in your 20s, those investing in your 30s still typically have lower financial commitments, fewer dependents, and may not have substantial liabilities like mortgages or significant debt. This financial flexibility allows them to give more of their income to investing, just as someone in their 20s. But as they turn the corner into their 30s, financial goals may have shifted. They may be thinking about buying a house, starting a family, or advancing a career. They may also be thinking more about long-term financial objectives rather than just short-term and have more flexibility to adjust their investment strategy accordingly. 

Someone in their 30s may consider increasing the rate at which they invest, aiming to save a higher percentage of income to accelerate their progress toward financial independence and retirement goals. Retirement goals might now include additional family members, like spouses and children, and thinking about the new financial responsibilities that came come along with a family to support is extremely important. They may also open education accounts for their children if they’ve started families.

But for those investing in their 30s, one of the biggest things that can hold an investor back is not ensuring that they have an adequate emergency fund to cover unexpected scenarios that might require a hefty amount of living expenses. An emergency fund can provide a safety net during unforeseen circumstances which can not only help prevent you from having to dip into long-term investments, but also the money you’ve set aside for retirement investing. 

Investing in your 40s and 50s 

Advancing to your 40s and 50s brings new considerations, such as retirement readiness and estate planning, urging investors to really think about their financial strategy if they haven’t yet. For investors that are just starting in their 40s, they might have more money to work with to allow them to invest more, and for those that have been investing for years, most are generally at a point where they are investing comfortably. These investors may be conducting regular reviews of their retirement portfolio to ensure it aligns with those goals and changing financial circumstances. For those in their 40s and 50s that are really looking to get the most of a retirement account, they should be optimizing their tax strategy – passive investing works great for those that are busy with their day to day, busy lives. 

Remember that certain IRAs have catch up contributions that allow for additional IRA contributions if you are over a certain age. They vary from account to account, but individuals aged 50 and above can make catch-up contributions to retirement accounts, taking advantage of new ways to optimize their retirement savings that weren’t possible before, like understanding the tax implications of various retirement accounts and what could be expected in the next years to come. Investing in your 40s and 50s requires careful planning, but even if you haven’t taken that leap, it’s not too late to secure a comfortable retirement. 

Investing in your 60s and beyond 

Lastly, investing in your 60s once again introduces new considerations, opportunities and sometimes challenges, too. Since you are past the age of 59 1/2, you can take distributions all through your 60s! This provides a great opportunity for those who have been waiting to get their tax-deferred or tax-free money. But at this age, scammers love to come out of the woodworks and take advantage of those getting older that might not be as aware of the latest tactics used for fraud. Common tactics can include spam emails, phishing, and even just being pushy with their requests can sometimes be cause for alarm. At this time, you might be thinking about setting up your estate plan and revisiting your beneficiaries. Make sure you have exit strategies for investments in place, too! 

Investing at different stages of life is a journey that offers distinct challenges and opportunities. Starting in your 20s provides the advantage of time, enabling the power of compounding to work in your favor. As you move through your 30s, 40s, and 50s, reassessing goals, increasing contributions, and adjusting risk tolerance become crucial to stay on track for a secure retirement. Finally, in your 60s, the focus shifts to capital preservation, generating reliable income, and planning for potential healthcare expenses.

Throughout life’s various stages, seeking professional guidance, staying informed, and adapting your investment approach can ensure a successful financial future, allowing you to enjoy the fruits of your diligent and strategic investing efforts in the golden years of retirement. Remember, each phase is an opportunity to build a strong financial foundation and create a legacy that will benefit you and your loved ones for generations to come. To learn more, be sure to schedule a free consultation or open your account today!


Making Connections: Are You Networking the Right Way?

Estimated reading time: 5 minutes

Networking plays a vital role in the world of investing. It not only helps you expand your professional circle but also opens doors to potential investment partners, valuable insights, and exciting opportunities. However, it’s essential to approach networking strategically to maximize the benefits of networking! With events in full swing and webinars on the rise after COVID, face-to-face interaction is slowly becoming an art in itself. Making sure you know all the key tips and guidelines to ensure you’re networking the right way with other investors is crucial, enabling you to forge meaningful connections and meet potential investment partners.

Whether you are a new investor that is trying to build a fresh network, or you have been investing for years with a large circle of financial friends, there are always ways to improve how you connect with others in the investment world. In the past few years, there has been an influx of online events where investors don’t have the opportunity they once had to shake hands and talk in-person. Instead, there are new opportunities online events present, like the chance to connect with others that are not joining locally, and much more. But the most important thing to remember before you start networking is that you must define your goals before diving into networking activities. What do you hope to achieve through networking? Is your goal to find potential partners, gain market insights, or establish yourself as a thought leader? Always clarify your objectives as this will help you focus your efforts and make the most of your networking opportunities.

 6 Tips to Network the Right Way

Once you have a clear goal, make sure you come prepared to network! Although it’s where most deals start, it’s not always just about the conversation. We’ve created a helpful checklist to ensure you’re networking the right way.

  1. Look the Part. When networking with other investors, it’s important to present yourself professionally. Dress appropriately for the occasion, whether it’s a formal event or a casual meetup. Your attire should reflect your industry and convey confidence. Remember, first impressions matter, so pay attention to grooming, body language, and overall demeanor!
  1. Know Who You’re Talking To. Before attending networking events or engaging in conversations, research the individuals or companies you are likely to meet. Familiarize yourself with their background, investment interests, and recent activities. This knowledge will enable you to tailor your conversations, ask relevant questions, and demonstrate your genuine interest in their work. Prepare a few thoughtful and open-ended questions to initiate discussions. These questions can revolve around the other person’s investment philosophy, recent challenges, or their perspective on industry trends. Actively listen and show genuine interest in their responses.

Here are some example questions you can use to get a conversation started!

  • “What kind of real estate investing strategies or niches are you currently focused on?”
  • “How long have you been an investor?”
  • “Have you attended any real estate investment seminars or conferences recently?”
  • “Are you actively seeking new investment opportunities?”
  1. Have a Track Record of Examples, if possible, or a “Look Book”. Having a portfolio or a look book showcasing your successful investments or previous projects can be a powerful tool during networking. Be prepared to present your portfolio or look book in a concise and compelling manner, highlighting key results and demonstrating your expertise.
  1. Conduct Due Diligence. Networking is not just about making connections; it’s also about ensuring that you align with trustworthy and reliable partners. Familiarize yourself with the due diligence process, including conducting background checks, analyzing financials, assessing market potential, and verifying references. Demonstrating your due diligence skills will give others confidence in your decision-making abilities.
  1. Come Prepared with Contact Information. Bring business cards with your contact information and any relevant professional marketing material. These materials will help you leave a lasting impression and provide a convenient way for others to recall your discussion afterward.
  1. Leverage Online Platforms. Utilize professional social media platforms like LinkedIn to connect with investors, join relevant groups, and engage in industry-related discussions. Create a compelling profile highlighting your investment expertise and actively share valuable content to showcase your knowledge. Online forums and communities focused on investing can also be great platforms for networking and knowledge sharing.

Finding Networking Events

Once you have defined your alternative investment goals and have the proper understanding of what is needed to network to the best of your ability, now you can begin finding places to put your knowledge into action. And where can you do that? Industry events and conferences are excellent opportunities to connect with fellow investors.

Research and identify relevant events related to your investment interests or industry by either searching on the internet or asking your financial friends about potential events. Sites like Meetup, Eventbrite, BiggerPockets, and even individual company websites can provide a multitude of events that are often tailored to specific investor needs. Additionally, custodians like Quest Trust Company often offer free events, online and in-person, to encourage networking, too. These gatherings can feature panel discussions, keynote speeches, and networking sessions, offering you a chance to engage with like-minded professionals and meet potential investing partners. As mentioned in our top 5 tips though, be proactive, approachable, and prepared with business cards or contact information to exchange if you attend them!

Lastly, joining investor associations and organizations can provide access to a vast network of individuals with similar investment interests and events, private and open to others not in the network. Look for local or national groups that cater to your investment niche or goals. These associations often host meetups, seminars, and online forums where you can interact with fellow investors, share experiences, and build relationships. Active participation and contributions within these communities will help you establish credibility and expand your network.

Remember that successful networking requires a genuine interest in others and consistent effort. By networking the right way, you can enhance your investing journey and open doors to exciting opportunities in the future. If you ever have a conversation about Self-Directed IRAs and don’t know how to answer all the questions, not a problem! Send them our way. When networking at events and investors association, it’s helpful to have the contact information for a Quest Trust IRA Specialist easily accessible in case you are talking to those who may want more information than you can provide. If you ever have questions, you can always contact an IRA Specialist by calling our office at 855-FUN-IRAs, so get out there and network!


Compound Interest: How It Works In Building Wealth

Estimated reading time: 5 minutes

Compound interest is a fundamental concept in personal finance that can be utilized to generate long-term wealth through the ability to let your money work for you. Compound interest allows for exponential growth of investments, hence the phrase “the power of compound interest.” The more frequently the interest is compounded, the faster the investment will grow. This is because with more frequent compounding, there will be more added interest to the principal amount, which leads to more interest being earned on that interest. As a result, the investment grows faster over time helping you reach your financial goals.

Understanding How Compound Interest Works

It is important to first understand the difference between simple and compound interest. Simple interest is calculated only on the principal amount, whereas compound interest is calculated on both the principal and the interest earned. One of the key differences between compound interest and simple interest is the time period. Simple interest is usually calculated based on a fixed period, regardless of the amount of time the money has been invested. In contrast, compound interest is based on the amount of time the money is invested. The longer the investment period, the higher the returns from compound interest.

Compound interest is an essential concept for investors to grasp as it allows for exponential growth of investments over time. Understanding how compound interest works can help in making informed investment choices. To start becoming familiar with how compound interest works, one must first understand the variables in the compound interest formula. This formula involves four main variables: the starting principal amount, the interest rate, the frequency of compounding, and the duration of the investment. It’s important to understand how each of these variables affects the overall outcome of an investment. By doing so, they can gain the maximum advantage from compound interest and achieve their financial goals.

The principal amount refers to the initial sum of money invested. The interest rate is a percentage of the principal amount that is added to the investment each year. The frequency of compounding refers to how often the interest is added to the investment, which can be daily, monthly, quarterly, or annually. The more frequent the compounding, the faster the investment will grow resulting in higher returns. For instance, an investment with monthly compounding will yield faster growth than an investment with quarterly compounding.

Starting with a larger principal can have many benefits when it comes to building wealth with compound interest. A larger principal means that the potential earnings will be higher, resulting in greater wealth accumulation over time. For instance, if two individuals invest in the same investment vehicle, but one starts with a higher principal, they will earn more interest than the individual with a smaller starting principal. Additionally, a larger principal can help individuals reach their short-term financial goals faster, as they have more money available for investment.

Lastly, the duration refers to the time frame for which the investment will grow. Investments need time to compound in order for the returns to grow. For example, consider a self-directed IRA account with an investment that has an interest rate of 5%. If an individual opens the account with a $10,000 initial investment and leaves it untouched for 10 years, they will earn approximately $6,386 in compound interest on that investment. However, if they hold that investment in the account for 20 years, they will earn approximately $16,386 in compound interest. Add the fact that these investments are being conducting inside of a retirement account, those profits are also growing either tax-deferred or potentially tax-free. This illustrates how the duration of an investment can greatly impact the power of compound interest and help you achieve your long-term financial goals.

How It’s Calculated

The most important aspect of understanding compound interest is the compound interest formula. Each component of the formula plays an important role in calculating the future value of investments. To calculate how much compound interest you would receive over time, you can use this compound interest calculator from investor.gov. This is a great tool to help you with your financial planning.

Creating Generational Wealth with Compound Interest

While compound growth can benefit anyone who starts early and holds quality investments for a long period of time, it can also be used to create generational wealth that can benefit not just the current investor, but also their children and grandchildren. Using the concept of compound interest to create generational wealth is a smart strategy that can help individuals and families build long-term wealth that can benefit future generations by being passed down.

For example, if you start with $10,000 and add a $300 monthly deposit, you’ll have contributed $82,000 in 20 years, but with an estimated 5% interest rate compounded annually, your money will have grown to over $145,500. If you increase your contribution to $500 per month with the same interest rate and the same duration, your investment will now be worth $241,197! Small changes in contributions, interest rates and duration can make a huge impact on the long-term growth of your investments and the ability to reach your savings goals.

One way to take advantage of compound growth is through tax-advantaged retirement accounts, such as self-directed IRAs, Health Savings Accounts (HSA), Coverdell Education Savings Accounts (ESA) and 401(k)s. These accounts allow investors to contribute pre-tax dollars, which can reduce their taxable income and potentially save them thousands of dollars in taxes over the course of their career. In addition, gains in these accounts are tax-deferred until they are withdrawn, which can further boost investment returns. Some accounts, like the Roth IRA, even grow profits tax-free!

To maximize investment returns and create generational wealth, investors should diversify their investments across a range of asset classes, private and public, and custodians like Quest offer alternative investment solutions. By starting early, investing in quality companies, taking advantage of tax-advantaged retirement accounts and employer-provided plans, diversifying investments, and utilizing dollar-cost averaging, investors can maximize returns and create a legacy of wealth for their loved ones.

Understanding how compound interest works is extremely important when devising a financial plan to work toward financial freedom. Small differences in interest rates, compounding frequency, and investment duration can have a big impact on the final value of an investment. By understanding the compound interest formula and how it’s calculated, individuals can make informed decisions and maximize the power of compound interest. When investing, careful consideration should be taken, but if you ever have questions about self-directed IRAs or setting up a retirement plan, reach out to an IRA Specialist and schedule a 1 on 1 consultation today.


Getting Started with a Self-Directed IRA When Your Nest Egg is Small

Estimated reading time: 5 minutes

Investing can be a tough proposition for many, especially those who are just starting out and only have a small amount of money. It can feel like investing such a tiny amount of money will never help us meet our investment goals or have enough in our retirement fund. However, investing small amounts of money now can lead to healthy returns later on down the road. You might have initially been drawn to a self-directed individual retirement account (IRA) because of the flexibility that this account type offers by allowing you to invest in alternative investments like real estate, promissory notes, and private entities. However, it can be hard to know how to get started, so we are offering a few tips to help you get on your way to successful investing.

Does Small Mean Less Experienced?

If your nest egg is relatively small because you’re just starting out with your retirement savings and don’t have a lot of investing experience, then don’t feel pressured to start investing in the most complicated and advanced investment types right away. Even though the self-directed IRA structure permits investments in a wide range of alternative assets, you’re still free to choose ones that you have more experience and familiarity and are comfortable with the level of risk.

Maximize Your Contributions Every Year

When your self-directed IRA balance is relatively small, it’s vital that you make the maximum contributions to your account each and every year. If you fail to make the maximum contribution in any given tax year (the contribution limit for the 2023 filing period is $6,500, with an additional $1,000 allowed for taxpayers ages 50 and over), you won’t be able to make up for that lost opportunity in later years. If you can maximize your contribution every year, it will help your nest egg grow that much faster.

Consider Maintaining Two Accounts

It’s a common misconception, but taxpayers are not limited to having a single IRA. In fact, it can be good practice to maintain both a traditional self-directed IRA (which grows tax deferred) as well as a Roth (which grows tax free), and then decide where to make your deposits each year based on the tax deduction advantages you might be able to get from contributing to the traditional account. The key is to deposit the maximum each year, regardless of the self-directed IRA you choose, and remember that it’s always possible to convert a traditional self-directed IRA to a Roth account whenever you decide that you only want or need a single account.

Rollover Your 401k

Another way to grow your self-directed IRA is through the use of rollovers. Whenever you leave an employer, you’re permitted to roll over the funds you’ve accumulated in your 401k to an IRA, and there is no limit to the amount you can rollover. This can be a great technique to increase the amount of money in your IRA and open you up to more investment options. Another benefit of a rollover is you can maintain tax-deferred status of your retirement assets without having to pay current taxes or early withdrawal penalties.

Invest in a Real Estate Investment Trust (REIT)

REITs can be a great option because they allow investors to invest a small amount of capital in pooled real estate projects and housing developments. REITs provide an attractive alternative for those looking to diversify their investments without directly investing in real estate. Also, because they distribute a large portion of its rental income to shareholders in the form of dividends, they can provide a steady cash flow to investors as a source of passive income. Since REITs are professionally managed by experienced real estate professionals, they are responsible for acquiring, managing, and disposing of properties in the portfolio, which help provide comfort to you knowing that you are minimizing risk with a more secure investment opportunity.

Partner with Other Accounts or Investors

Another great option when you don’t have a lot of funds to invest on your own is partnering. Self-directed IRAs can be used in partnership with other entities for investment opportunities. This strategy involves splitting ownership percentages between the IRA and the other party/parties involved. Each party has a percentage of ownership in the investments which is set at the beginning and remains the same throughout the investment. Profits are distributed based on the ownership percentage, and expenses are split accordingly. We go into more detail on the topic in our article Maximize Your Investments Funds With Partnering – Quest Trust (questtrustcompany.com)

Learn the Power of Real Estate Options

This is one of the most powerful tools for real estate investors. An option is basically a contract between the buyer and seller giving the buyer the option to purchase the property for a fixed price within a certain timeframe. The buyer has the right, but not the obligation, to buy. Property owners agree to options for several reasons, including timing income for tax purposes, obtaining non-repayable money, and negotiating flexible options. This is especially true for owners in pre-foreclosure situations.

Quest Founder H. Quincy Long goes into much more detail about real estate options in this video Real Estate Options: Learn About This Creative Investment “Option” for Small IRAs – YouTube.

There are so many choices available that it can be overwhelming when you are getting started developing your investment strategy. That’s why at Quest, we believe in providing free education to encourage more investors to take control of their retirement and achieve their financial goals. We offer 2-3 educational events per week to help investors learn more about their options with self-directed accounts. For more information about our events and how to register, go to Self Directed IRA Live Events & Webinars | Quest Trust Company. If you have any questions about your options, you can schedule a free 1 on 1 consultation with one of our IRA specialists.