How To Invest Your Self-employment Retirement Plans Successfully

Many Solo 401k plan holders set up the plan as a way to save, and forget that it is also a way to invest. In fact, the main benefit of having a retirement plan is that it gives you tax-deferral benefits. The only way to take advantage of this tax benefit is to invest the money and let it grow as much as possible before taxes apply.

Real estate investment and other non-traditional investment options have now become one of the top choices for account holders of self-employment retirement plans, such as the Solo 401k. Choosing the right investment type is only the first step, however. To invest successfully, account holders need to do their homework. Here are a few tips to help account holders plan for better investments:

Start as early as possible

In order to invest in real estate or any other investments, we will first need to have capital. For a Solo 401k plan, account holders are allowed a very generous contribution limit of up to $52,000 per year in 2014. Therefore, investors need to know their contribution limit and maximize the amount they put into their Solo 401k per year. This way, they can grow the fund faster and have more capital available to invest.

Keep in mind that the IRS can change the contribution limit for the year to accommodate adjustment in living cost. Plan holders need to stay up to date with the newest change from the IRS. For example in 2015, the contribution limit will be raised to $53,000 per year, which is $1,000 higher than 2014 limit.

Think long term

For a retirement account, it is best to focus on long-term, passive investments. This way, plan holders can make the money work for them, while freeing themselves to focus on their main businesses or careers. Investing in rental properties or property notes, for example, are great ways to generate secure and passive income. Once the paperwork is signed, the rent or interest rate is fixed. Payments will be deposited directly into the Solo 401k account, with little to no work required from the plan holders after that.

Decide on the right asset allocation

With the variety of investment options available to self-employment retirement plans like a Solo 401k, there are endless possibilities to allocate the assets in the portfolio. Account holders who only have a few years until retirement may chose to add some target date funds into their portfolio because of the extremely low risk. Younger investors, on the other hand, may prioritize intangible assets that guard against inflation, such as precious metals. Therefore, account holders need to carefully consider their financial goals to decide on the right allocation.

Get educated

Self-employment retirement plans such as Solo 401k often comes with self-directed option. This means account holders can make all the investment decisions themselves. This can help them save on custodial fees and charges, however, they will be the sole decision maker. In order to invest successfully, account holders need to know their investments inside-and-out. Joining investment clubs and read more about the topics is a good start. Also, before choosing an investment provider, such as a precious metal dealer or a real estate agent, investors also need to do their due diligence to make sure they made the right choice.

How To Fix Up Properties For Maximum Curb Appeal And Resale Value – Part 3

By now, you already have an idea of what is a fix-up plan and how to deal with contractors from Parts 1 & Part 2 of “How To Fix Up Properties For Maximum Curb Appeal And Resale Value“.  So what’s next…..

Give The Property An Industrial Strength Cleaning

The first step in the property fix-up phase is to thoroughly clean the property’s exterior to include the roof and all walkways and parking areas.  You can apply an industrial strength cleaning to any type of property by using a pressure washer with a minimum capacity of 3500 PSI at 3.5 GPM.  Pressure washing will remove all dirt, grime, soot, oils, and other pollutants from all exterior surfaces.  I recommend that you hire the services of a competent professional pressure washing service that uses state-of-the-art equipment and the proper chemicals.  The main objective in having your property’s exterior thoroughly washed is to be able to see what is beneath the last five year’s worth of dirt, filth, and grime.  It’s really amazing what a professional pressure washing can do to a property’s appearance.  Plus, pressure washing eliminates a lot of labor-intensive work such as scraping paint.  In most cases, the only things necessary prior to applying the finishing coat of exterior paint will be caulking and priming the surfaces.  Lastly, a thorough pressure washing will expose any rotted wood and other building materials needing replacement.

Always Complete The Exterior Facelift First

Rule number one in the fix-up of any property is to always complete the exterior facelift first.  This way, the property looks enticing from the curb and helps to lure potential buyers inside for a further look.

Don’t Scrimp On Paint

Don’t scrimp on the quality of paint or the cost of a quality paint job.  An amateurish looking paint job done by an inexperienced painter with cheap paint, sticks out like a sore thumb, while a professional looking paint job will literally add thousands of dollars to a property’s resale value.  Fact is, there’s no greater return on investment than the increased value brought by a top quality, professional looking exterior and interior paint job.  I am constantly amazed at how a good quality paint job can drastically upgrade the appearance and resale value of any property.

Choose A Color Scheme That Enhances Your Property’s Curb Appeal

It’s extremely important that you choose an exterior paint color scheme that will enhance your property’s curb appeal.  I use a three-color exterior paint scheme that my wife, Barbara, came up with in 1995.  It incorporates three tropical colors that people generally associate with Florida.  For example, I paint the body of the building one color, the fascia and exterior doors one color and the drip edge around the roof and window shutters one color.  Go to paint related Web sites online or visit your local paint store for suggestions on the exterior color schemes that will best accentuate your property’s character and charm.

Select An Interior Color Scheme That Uses Neutral Colors

The interior walls and ceilings should be painted in light neutral colors, using quality interior flat latex paint.  The interior trim and doors should be painted with latex semi-gloss enamel paint.  For example, I use a two-color interior color scheme: flat white paint on walls and ceilings and antique white semi-gloss on trim and doors.  Please keep in mind that a professional interior paint job using quality paint will enhance a rental unit’s appearance and increase the property’s resale value, while a shoddy paint job using cheap paint will detract from a rental unit’s appearance and do nothing to contribute to the property’s resale value!

Apply Textured Coatings To Rough Interior Wall And Ceiling Surfaces

You can avoid the cost of replacing interior walls and ceilings that have rough surfaces by applying a textured coating to them.  A professional looking texture job will greatly enhance the appearance of your problem walls and ceilings.  In most cases, the best and least expensive texture to use is premixed joint compound.  Joint compound will bond to most wall and ceiling surfaces such as drywall, lath and plaster.  And, pre-mixed joint compound is less expensive and easier to apply than conventional plaster mixes.

My Property Fix-Up Motto Is Clean, Repair Or Replace As Needed

Being a parsimonious Yankee from New Hampshire, my property fix-up motto has always been clean, repair or replace as needed.  In other words, first try cleaning it, and if that doesn’t do the trick, try repairing, and if that doesn’t work, replace it with a pre-owned replacement from a reputable source.  The following is a listing of items that must be cleaned, patched, repaired or replaced when fixing up a property:

1. Walkways and parking areas. Clean, repair, patch and seal all walkways and parking areas as needed.
2. Mailboxes. Clean, repair or replace all mailboxes as needed.
3. Exterior doors. Clean, repair or replace all exterior doors, hardware and locksets as needed.
4. Windows. Clean, repair or replace window frames, glass and locks as needed.
5. Exterior lighting. Clean, repair or replace all exterior light fixtures and bulbs as needed.
6. Interior doors. Clean, repair or replace all interior doors, hardware and locksets as needed.
7. Kitchen cabinets. Clean, repair or replace all cabinet doors, hardware and countertops as needed.
8. Interior lighting. Clean, repair or replace all interior light fixtures and bulbs as needed.
9. Plumbing fixtures. Clean, repair, or replace all sinks, tubs, showers, faucets, commodes and vanities as needed.

10.  Heating and cooling systems. Clean, repair or replace all heating and cooling systems as needed.

11.  Floor coverings: Clean, repair or replace all carpets and floor coverings as needed.

12.  Exterior and interior paint. Clean, prepare and paint all exterior and interior surfaces.

13.  Landscaping. Prune, cut, trim and mow the property”s landscaping and lawn as needed.

14.  Gutters and downspouts. Clean, repair or replace all gutters and downspouts as needed.

15.  Roofs. Clean, repair or replace as needed.

Conduct Final Walk-Through Inspections Before Making The Final Payments

Lastly, prior to making any final payments to tradesmen and contractors, do a walk-through inspection of the property to determine if all work has been satisfactorily completed.  When doing your walk-through, check the quality of the materials and workmanship.  Make lists of all the discrepancies you find during your walk-through and give them to each applicable contractor or tradesmen to correct.  In doing this, be fair and realistic, but don’t let anyone take unfair advantage of you.  When making your final payments, be certain you get a release of lien form signed by each contractor or tradesmen which states that they’ve been paid in full for all labor and materials used on your property.

Don’t Get Carried Away During The Fix-Up

Lastly, please don’t get carried away during the fix-up and do foolish things like putting up expensive vertical blinds, installing expensive floor coverings, or mirroring bedroom ceilings.  When doing a cosmetic facelift on a property, never lose sight of your fix-up objective, which should always be to maximize the property’s curb appeal and resale by giving it an industrial cleaning and cosmetic facelift.