Contact Info

Address:

10811 Washington Blvd, Suite 370
Culver City, CA 90232

Phone:

(310) 280-9173

Email:

Chris@CoastalCapital.com
Scott@CoastalCapital.com

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Self-Directed IRA Investments Can Truly Diversify Your Portfolio

Looking for a way to get more bang for your investment in your retirement savings? A self-directed IRA (SDIRA) could be the answer to diversify your investments.

What is a Self-Directed IRA?

Self-Directed IRA (SDIRA) is quite simply, an IRA. All IRAs abide by the same laws and possess the same capabilities. Unlike other IRAs held at banks, brokerage firms and other institutions, with a SDIRA, you’re not limited to stocks, bonds, or mutual funds. This means you can invest in virtually any asset including private funds, trustee notes and even crypto.

What are the benefits?

A Self-Directed IRA gives you the opportunity to build a more diversified and resilient portfolio. It allows you to take advantage of alternative investments such as real estate, precious metals, private equity, notes, and more. A custodian/administrator is required to do the record keeping for the assets in your account, but nothing moves in or out of it without your direction. You decide how much, when, and most of all, what to invest in, giving you the freedom to invest in what you know best.

Investing in Real Estate With a Self-Directed IRA

Real Estate is a popular investment among SDIRA holders because it is a tangible asset that people know and trust. With a SDIRA, you can invest in a wide range of real estate assets: residential or commercial properties, developed or undeveloped land, condos, hotels, mortgage notes, and more. Depending on what type of account you choose, earnings can continue to be either tax-free or tax-deferred.

How does investing a SDIRA in real estate work? Imagine you purchased a single-family property through your SDIRA. If you chose to sell it, your profits would go directly to your IRA. Alternatively, were you to rent out that same house, your income would go back into your IRA and any related expenses would be paid from your IRA. For more information about how to use your SDIRA to purchase a rental property, go here.

The level of control and flexibility associated with a SDIRA does come with its own set of responsibilities. For example, investments made with your SDIRA are owned by your SDIRA, not by you personally, making self-dealing prohibited. Click here for more information on SDIRA rules.

Getting Started With Investing In A Self-Directed IRA

The first step is to decide what type of account you want to open. Then, establish how you’ll fund it, and decide what your investment strategy will be. Speaking with a legal and/or tax advisor before you begin can help you to answer these questions.If a SDIRA sounds like it could be the answer to your retirement questions, get your copy of The Entrust Group’s Self-Directed IRAs Basics Guide today.

Many of our investors at Coastal Capital utilize this Self-Directed IRA Investments option with The Entrust Group to build safe, above average returns for their nest egg. To learn more about the fund please visit us here.

February 1, 2021 by Scott Griest 0 Comments

Pros & Cons of Owning Multi-Family Real Estate

The Pros of Multi-Unit Dwellings As An Investment

Economies of scale is one of the big advantages of owning multi-family real estate. Time identifying a property, crunching the numbers and performing due diligence is leveraged with multiple units. Each renter generates a separate cash flow providing diversity in the income stream. In a similar fashion, repairs costs are leveraged by spreading costs over a larger asset base. While the cost of a new roof or other major repair is greater for an apartment building, it is less than the costs associated with replacing the roofs of multiple single-family homes.

Another advantage of multi-unit dwellings is the simplicity of dealing with multiple tenants at one location. Versus lots of tenants spread across multiple properties. Landlords also gain better negotiating power with property managers and other service providers when multiple units are at the same site. More efficiency means a higher return on investment.

More Income Equals A Better Investment

More reliable monthly income is another benefit of multi-unit dwellings. Instead of one rent payment there will be multiple rent payments coming in to offset monthly expenses. Risk is generally lower with multi-unit dwellings since odds are good that some apartments will be generating rent even if other units are vacant or under construction. It’s rare for a multi-unit building to ever be entirely empty.

More income per square foot is often possible with multi-unit buildings.  A single-family home in a desirable LA neighborhood may fetch rents of $3,000 a month or higher, but a multi-unit building at the same location could easily command rents of $2,000 or more per unit. In this scenario, a six-unit apartment building could generate north of $12,000 in monthly rent.

Investment Appreciation Is Higher With Multi-Family Real Estate

Appreciation potential is usually greater for multi-unit dwellings. Regardless of upgrades that have been made, the value of most single-family homes is closely tied to surrounding properties. Different methods are used to value multi-unit dwellings and building owners also have more options for maximizing the value of the property. For example, a landlord could increase the value of an apartment building by making upgrades that support higher rents or adding revenue generators such as on-site dry cleaning or day care.

The Cons of Multi-Family Real Estate As An Investment

Tenant turnover is one of the biggest hassles of owning a multi-unit building. Tenants leave for all kinds of reasons and even properties that are well-managed and maintained experience turnover. There is also risk from tenants who stop paying and must be evicted. Some risk can be mitigated by good tenant screening, but landlords must plan for some tenant turnover in the building budget.

Acquisition prices are often higher for multi-unit buildings and purchaser usually must come up with a larger down payment, sometimes as much as 25% of property value.  Lenders often demand more cash upfront from landlords who don’t plan to live at the property. Renovation and maintenance costs also run higher as well, requiring landlords to maintain significant cash reserves. On the other hand, it is sometimes easier to secure financing on multi-unit apartment building since lenders usually attach more weight to the property’s cash flows and are less interested in the borrower’s credit history.

Multi-Family Real Estate Investing Takes A Larger Investment

Larger investments carry greater risks. Delays in completing renovations or difficulties in securing tenants can result in massive losses for apartment landlords. Cash burn rates may also be higher due to more spending on debt servicing and maintenance. Experience in owning multi-unit buildings greatly helps mitigate these risks. Hence the popularity we are seeing from our clients who graduate up from single family home rental properties to multi-family.

Here at Coastal Capital we understand the challenges facing buy & hold real estate investors. Most of our clients are repeat because they value time and how fast we close on multi-family buildings so they can maximize their investment. To learn more about us please visit our Borrower Page.

November 8, 2020 by Scott Griest 0 Comments

Advantages of Investing In Trust Deeds

Why Trust Deeds?

Learn why savvy investors love investing in Trust Deeds for the consistent returns. First off a Trust Deed, also known as a Deed of Trust, transfers legal title in a property to a trustee, which hold it a security for a debt. This is very similar to a mortgage, but the main difference is the number of parties involved. With a Trust Deed there are three: Trustee, Borrower and Lender. With a Mortgage just two parties are involved: Borrower and Lender. This is the single most popular question we get. For more detail please check out Wikipedia‘s page on Deed of Trust

Recording Security For Debt

Trust Deeds are recorded in the county where the property is located as evidence of the security for the loan, just like a mortgage is. Hence the closing process is nearly identical to that of a conventional mortgage. When the debt is fully paid the lender must promptly direct the trustee to transfer the proper back and release release the security for the debt. So investors in Trust Deeds have the same security in a piece of real estate that a bank does when making a loan.

Consistent Cash Flow Every Month

Each time a borrower makes a monthly interest payment that puts money in investors pockets. In addition the return on Trust Deeds will range from 8% to 14%, creating significant cash flow with low risk. Now, if you invest in just one or a few Trust Deeds and one stops paying this can significantly decease the monthly revenue. At Coastal Capital we pool investors monies together and invest in 60 or more Trust Deeds to diversify. If a one or a few borrowers stop paying then cash flow is only minimally effected. There is definitely safety in numbers when it comes to investing in trust deeds!

Faster Foreclosure With Trust Deeds

Foreclosure is often much faster and less expensive with Trust Deeds than Mortgages. When a borrowers fails to pay a quick foreclosure process often motivates the debtor to make their payments! No one likes to foreclose on a property but when its required a quick and inexpensive process is appreciative. For investors this means that their cash is not sitting idle in a long, drawn out process and is earning interest in a performing loan. In addition, investors have to outlay on a minimal amount of legal expenses to complete the foreclosure process.

Ready To Start Investing In Trust Deeds?

If you’re ready to start enjoying way above average returns on your investments that are all backed by real property pease reach out to us. We always enjoy educating our investors on our specific investing strategies. Or for more detail on Coastal Capital check out or Investor page.

November 1, 2020 by Scott Griest 0 Comments

Want A Safe Investment With Stable Returns?

Consider These Low Risk Options For Investing

Between FDIC-insured deposit accounts and a few conservative investments, you’ve got options.

When the markets turn volatile, safe investments providing stable returns get their moment in the sun, and for good reason. FDIC-insured deposit accounts and other low-risk investments help investors grow their wealth. At the same time erring towards caution to keep their savings secure. Remember, though: Low risk generally means low return. Which means most make sense when you’re investing for the short term.

If you’re investing for the long term (think more than a year) low-cost equity investments in some index funds and alternative investments such as Coastal Capital’s trust deed (mortgage) fund are often a better choice.

Lowest-risk ways to grow money

The investments below all come with insurance. Which makes their risks practically nonexistent. But their yields are also very low compared with the long-term returns you can get elsewhere. So while they offer stable returns, the returns are just a penny or less on the dollar currently.

  • Money Market Accounts – Currently pay 1% or less but come with FDIC insurance guaranteeing the first $250,000
  • Online High-Yield Savings Accounts – Currently pay 0.75% or less and are also insured by the Federal Deposit Insurance Corporation
  • Certificate of Deposits (CDs)/Treasure Notes, Bills & Bonds – Basically depositing money with a Federally insured account or with the government. These are locked up for a certain period of 6 months or more that pays less than 0.5% currently.

While all the above are insured they pay returns that do not even keep up with the pace of inflation. Which means when you need to spend funds you invested they will actually buy less goods than when you first invested!

Low Risk Ways To Grow Money

Traditionally, low risk investments are backed by hard assets that tend to slightly appreciated over time. Generally they are not subject to wild valuation fluctuations. The time tested asset that the wealthy prefer to invest in is good, old fashioned real estate. It provides the stable returns everyone is seeking. At Coastal Capital this is our preferred vehicle for creating wealth as well, thanks to its consistent returns that are produced month after month will virtually zero risk.

Don’t think that you have to buy rental properties and then deal with tenants and trying to collect rents. There are quite a few ways to invest in real estate directly and indirectly to enjoy above average returns. All without being large swings in value.

  • Buy & Hold Rental Property – Rental income provides two great benefits of monthly rents and depreciation for tax purposes. If purchased correctly one should enjoy returns of 10% or more. And then also get the added tax savings which can be significant according to Investopedia. The only issue is a large down payment is needed to start investing
  • Real Estate Investment Trusts – These are traded funds that pool investors monies and invest in all types of real estate. The fund charges a fee to manage everything, so it’s almost like buying a stock. Therefore the value of the fund can change quickly depending on the fund’s results. 10.5% annual return can be expected for low risk options. Great option for those with a few thousand dollars to invest
  • Trust Deed Investment Funds – Such as Coastal Capital, loan mortgages to property owners and then collect the rents and other profits and distribute to investors monthly or quarterly. To limit risk we suggest sticking with funds that have zero or low leverage and do not lend to borrowers at higher than a 75% loan-to-value ratio. In general returns will be between 12 to 15% annually. Generally need $25,000 or more to start investing.

The stock market has been generating amazing returns for the last few years, however that will not always be the case moving forward. If you’re seeking consistent & reliable returns check out one of the low risk suggestions above.

Coastal Capital delivers these consistent returns for over a decade at 14% or more historically. We welcome the opportunity to partner with you start growing your wealth! Give us a call at 310-280-7223 or click here to learn more.

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