Have you ever thought about investing in a rock-and-roll fantasy camp, dressage horses or an office building in Shanghai? Well, some investors are doing these things and saving on taxes at the same time.
These intrepid souls are venturing far off the trodden path through self-directed IRAs. Of the $7.6 trillion that Americans have invested in IRAs, $152 billion is in that segment.
Many people’s IRAs own notes. For information on how to do this, see https://store.papersourceonline.com/tax-free-note-real-estate-investing/ and https://store.papersourceonline.com/your-ira-can-buy-notes-more/
Joseph Mara, 64, a retired financial adviser in Boynton Beach, Florida, has learned the music business pretty well over the years through his passion for the arts.
“I’m into heavy metal” among other areas, he says. Frustrated with sagging returns for stocks and bonds, he jumped into Rock ‘n’ Roll Fantasy Camp, based in Las Vegas, with a $200,000 investment about 5 years ago.
“It’s going very well,” he says. About 80 campers recently showed up for a metal camp that included famous guitarists Steve Vai and Tony Iommi. “The company continues to grow, and it is exciting to be able to watch it mature and develop,” Mara says. He reinvests his income back into the company and expects it will be able to sell itself to a larger entity within the next 5 years. Mara anticipates his final annualized return will total between 12% and 15%.
Goat farms can provide income through goat’s milk for infants and goat cheese for adults. The alpaca, a long-haired South American mammal related to the llama, is valued for its wool. Tree farms can provide lumber and trees for landscaping.
Rajeev Kotyan, co-founder and principal of Innovative Advisory Group, a wealth management firm in Lexington, Massachusetts, invested in cattle in the late 1990s and dressage horses in 2008 to 2009. A farmer introduced him to the idea of investing in cattle, and a colleague of his was a horse trader.
One interesting issue with the animals is whether to invest in them directly or through a corporation. Setting up and maintaining a corporation costs money, but some of the horses he bought were from overseas and thus required passports.
“The owner of the horse controls the passport, and they won’t relinquish it until they receive the money,” Kotyan says. “But the trustee of the IRA won’t issue cash if there is no documentation for the horse. So having an entity becomes more of a requirement to enable the transaction.”
READ MORE: http://www.bankrate.com/finance/retirement/unique-self-directed-ira-investments-1.aspx
