Do you remember that historic day, October 5, 2007? Probably not. Let me refresh your memory, that was the first time the stock market hit 14,000. You may have an easier time remembering March 6, 2009….come on….think hard! YES! That was the day the market closed at 6,626! The market lost over half of its value in less than 18 months!
Your broker told you that you were diversified to protect yourself from these situations. You were thinking you would never retire! Diversification my ass!
Time to cash out and protect what was left. You call your banker and ask what you can get on a 12 month cd.
“Mike, we must have a bad connection…you keep cutting out….all i hear is .25%. What is the number to the left of the decimal point? There is NO number to the left of the decimal point? Geez, what the hell am i supposed to do?
Take it from a former Enron stock holder (thanks a alot Karen!!), we have all been there. Sometimes more than once. So now what?
The dirty little secret that your stock broker won’t tell you is that you REALLY could diversify your portfolio in more ways, they just don’t want to tell you about it because that can’t make any commi$$ions on it, nor do they have the license to sell it!
How about adding real estate to your IRA? Yes, real estate! You can actually have a self directed IRA that owns real estate! Owning real estate with all of the tax advantages of an IRA! Pretty cool huh? Oh, but wait…you don’t want to be a landlord! You once had a rental house! Oh what a pain it was to collect the rent, spend a weekend fixing holes in the walls and painting. When you sold it you proclaimed to your spouse, “NEVER AGAIN!”
Well, there are some great alternatives in commercial real estate. That Walgreen’s you go to twice a week, I’m going to let you in on little secret. Walgreen’s doesn’t own it! No, they really don’t! So who does own it?
The large pharmacy chains, dollar stores, most fast food restaurant locations are owned by investors just like you. They sign a lease referred to in the industry as a triple net lease (NNN lease). Yes, is has about 80 more pages than the one you used on your former rental house, but the provisions are pretty cool!
A NNN lease is one in which the owner..landlord..YOU have no responsibility! Really! NONE! Too good to be true? Let me explain.
In a NNN lease you , as the landlord, have no maintenance responsibilities. That includes paint, HVAC, plumbing, parking lot repairs, snow removal, mowing, roof repairs, etc. Want to know something else? They even pay your property taxes and insurance! Oh, by the way, they also sign leases for between 10 and 25 years and are backed by companies like CVS, McDonald’s, Dollar General, etc. Some even have built in rent increases!
Ok, I know what you are thinking. What’s the catch? Too good to be true? Must be, right?
You are right, there is a catch. Once a month you will have to walk to your mailbox and pick up a check or, if your a “techie”, log on to your bank account and see that $7,000.00 rent check has hit your account. That’s it. REALLY!
Call a commercial (note I said COMMERCIAL) real estate broker (not your friend who sold your house) to find out more details on how this works. Oh, also look for a broker who has the initials CCIM after their name http://www.ccim.com/whatisaccim
Don Sebastian, CCIM 