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The CARES Act May Make A Housing Crash Imminent.

Posted by Jesus D. Gonzalez Jr. on April 18, 2020 at 3:34am

Last week, April 15th, I published a blog about titled, “The Impact of Not Paying Your Mortgage” where I focused almost exclusively on the direct impact to mortgage back securities and the widespread reach into each of our retirements. In that blog, I hinted at the fact that there was much more to be said on this topic yet, that would come at a later day and that day is now. Before I get started on the further impact of mass mortgage defaults, let me invite you to read my original blog, which you can find here: https://lhrllc.info/liberty-house-blog/f/the-impact-of-not-paying-your-mortgage

The Wuhan Chinese Coronavirus global pandemic has gripped our country into an economic stranglehold that will take generations to fully understand. To even come close to equating this time in our nation’s history, one must go all the way back to the Great Depression of the 1930’s. Even though most of us were born much later, the Great Recession of 2008 should still be in most people’s memory, I know it’s in mine. The Great Recession has never left my memory as it happens to be one area that I know a little about as a Real Estate Broker who has spent a career in the REO / Foreclosure niche during that time. If you would indulge me a little, let me share with you the wider spread impact of mortgage defaults that so many seem to forget but, before I do that, let’s spend a little time talking about the CARES Act. 

In a rushed a hurried effort to stay off any housing collapse due to the Wuhan Chinese Coronavirus, our well-meaning legislators passed legislation that all but handed a majority of homeowners a Willy Wonka golden ticket encouraging people to not pay their mortgage. As honorable as those intentions may be, it’s my belief they have just turned a bad situation worse. Of course, when talking about the CARES Act, one must not forget, we are in a Presidential election cycle and it’s shaping up to be an epic battle between socialism and capitalism.

The most important thing you need to know about real estate and more specifically that monthly mortgage payment is that it’s an interconnected web. You need to think of it as an ecosystem on its own right. An ecosystem of balance that is built on the homeowner’s monthly mortgage payment without which has the power to collapse the entire system. Let’s start at the beginning.

When a homeowner makes a monthly mortgage payment, I can think of at least 5 things he’s paying both directly and indirectly. First off is the mortgage principal. All the mortgage principal is the outstanding balance owed minus of course the interest to the lender. Secondly is the mortgage interest or the money charged by the bank on the loan. Thirdly are the property taxes. Fourthly is the hazard insurance protecting the asset from catastrophic loss. Finally, the dividends paid on behalf of the mortgage backed security. I’m sure we can think of more but, for the sake of time and ease of understanding, let’s just focus on these top 5, so to speak. All of this can account of tens of billions of dollars and cumulative, across the entire banking ecosystem, trillions of dollars. 

For most mortgages in this country, they are guaranteed by the U.S. Treasury. Let me say this again, it’s worth repeating. For most mortgages, they are guaranteed by the U.S. Treasury also known as the U.S. taxpayer. This means, if the banks don’t have enough money to pay the MBS dividend payment the U.S. taxpayer will. Some estimates are that in the federally issued mortgages, that accounts for about 2.2 trillion and in the conventional market, about 5.5 trillion. Now, I’ve covered MBS and CDO’s in my previous blog, which I linked up above so, let’s use this blog to focus on mortgage principal, interest, taxes and insurance. 

Mortgage principal and interest are more often tied together so, let’s treat those as one issue. The American people are under the illusion that banks are sitting on vast wealth deposits like hidden bunkers of cash however, that’s just not true. In fact, multiple times this year, the federal reserve has issued trillions in over night bank loans just to ensure the banks have enough operating cash to keep the lights on and meet minimum bank reserve deposits. Let me put this another way. Some of the largest banks in our country and, for that matter the world, go to the Federal Reserve every night and ask for billions in over night loans just because they won’t have enough cash on hand to not only pay their own bills but to have the minimum cash as required by bank reserve laws. They won’t have that money till they count the payments that come in the next day. That’s why we call those loans, “overnight” loans. They are literally short term, over night loans so that the bank can meet its financial requirements until the next day, when they start depositing payments, like, car loans, credit cards and mortgages. Just to be clear, this has been happening, long before the Wuhan Chinese Flu. Feel that cold chill up your spine yet? No…. well, it’s about to get worse. 

Imagine, if you will, a historically unprecedented mass of non-payments. Let’s say, somewhere in the tune of 20 million people, all at once, refusing to pay their mortgage, car loan and or credit card statements because, they lost their job last month and have no prospect of getting a new one anytime soon. Folks, you aren’t going to have to imagine this scenario for too much longer, that’s about to happen May 1. 

That’s bad enough but now remember, insurance and taxes are in those payments as well, remember that ecosystem I was telling you about earlier, it’s all interconnected. Imagine May 1, millions, if not tens of millions not paying their homeowners insurance. Imagine the coverages that could lapse. Imagine the tragic “what if” scenario where a tornado rips through and destroys hundreds if not thousands of homes. Imagine the further burden on the American taxpayer. Here in Nashville, we have a economy that get’s a big chunk of it’s revenue from tourism, as you know, tourism has died so that revenue is gone and then, come May 1st, property taxes aren’t going to be getting paid. For a city that is required by our charter to have an annual balanced budget, we aren’t talking about cuts anymore, we are talking about austerity measures. 

Finally and maybe most importantly, that well-meaning, well-intentioned CARES Act. Now, with the CARES Act, federally insured loans like, FHA / HUD, VA, USDA, FDIC and even Fannie Mae or Feddie Mac can get 12-month forbearance. That’s 12 months with no mortgage payment. Do I need to elaborate on how this may have just thrown water onto Greek fire? 

We need to be coming up with a better solution here because, giving people a golden ticket to not pay their mortgage just isn’t going to work. In fact, it could very well lead to the country defaulting on its debt. I know none of this is fair. I understand we are at the mercy of the Wuhan Chinese Coronavirus pandemic. I understand millions of us are going to suffer and be irreparably harmed however, just as we prepared for triaging millions of people for the Wuhan Coronavirus, we need to start preparing our real estate industry similarly. Unfortunately, I’m not smart enough to know what the answer is but, what I do know is if we don’t start thinking of housing like a sick patient with millions of people at risk, we aren’t taking this issue seriously enough.

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The NRBA President’s Dire Prediction Of A Post-COVID Market Crash

Posted by Tim Ventura on April 12, 2020 at 11:52am
I was fortunate to have a call with Michael Krein the other day, and he echoed the same concern that I've felt - and he was willing to do an interview on the subject to help share his insights & opinions. I write a bit, so this was an opportunity to try and get his message out to all of you to help give you as much information as possible for planning your own business during the next few months.
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Educating The World Killing The Virus Blog

Posted by Scott Bawden on April 9, 2020 at 2:06pm

Good Reading from REO Pro Services, Inc Infection Control, Hospitals, Restaurants, Schools, and Institutions Educating The World Killing The Virus Documentation.

Firstly, we feel that it's important for you to be aware that the laws of the state of California require that a state licensed structural pest control company be present during work activities to post the proper signage at every entrance to your structures, supervision and chemical reporting over a project. 

Though the chemicals that we use are considered low toxic, this service is way beyond a normal cleaning. 

A state licensed extermination control operator must be present at the time to facilitate the service in order to assure compliance and safety. See the next paragraph definition copied from the California Structural Pest Control Board website.

What is Structural Pest Control.

Structural pest control is the control of household pests (including but not limited to rodents, vermin and insects) and wood-destroying pests and organisms or such other pests which may invade households or structures, including railroad cars, ships, docks, trucks, airplanes, or the contents thereof. The practice of structural pest control includes the engaging in, offering to engage in, advertising for, soliciting, or the performance of any of the following: identification of infestations or infections; the making of an inspection for the purpose of identifying or attempting to identify infestations or infections of household or other structures by such pests or organisms; the making of inspection reports; recommendations, estimates, and bids, whether oral or written, with respect to such infestation or infections; and the making of contracts, or the submitting of bids for, or the performance of any work including the making of structural repairs or replacements, or the use of pesticides, insecticides, rodenticides, fumigants, or allied chemicals or substances, or mechanical devices for the purpose of eliminating, exterminating, controlling or preventing infestations or infections of such pests, or organisms.

The key words that cause this service to be considered pest control are, controlling and or killing infections and organisms. 

In addition to a CA licensed pest control company, our experienced environmental cleanup company will be staffing the project with the proper mechanical equipment and personal protection equipment such as bio suits, eye protection and respirators. 

 A disinfectant labeled as RMR-141 for your project that is produced by RMR BRANDS.  

RMR-141 is an EPA–registered fungicide, mildew stat, virucide, disinfectant broad-spectrum formula kills 141+ different microorganisms. For use in hospitals, restaurants, schools, and institutions.

RMR-141 is designed for cleaning, sanitizing and fogging.

  • Removing germs, dirt, and impurities from surfaces or objects through CDC sanitizing procedures and recommended sanitizing agents. • Cleaning highly visible stains on walls around trashcans and high traffic areas. • Cleaning uncluttered flat surfaces included but not limited to kitchen counters, sitting benches, workspaces, and counters through CDC sanitizing procedures and recommended sanitizing agents. • Providing high dusting and cobweb removal. • Doors and doorknobs shall be disinfected and sanitized. • All touch points need to be disinfected (e.g. tables, chairs, pencil sharpeners, phones, switches/buttons, doors, handles, sinks, drinking faucets, dispensers, blinds (handles, cords), all areas that could have been touched in a particular space.)  • Disinfect and sanitize all glass/mirrors, sinks, fixtures, toilets, urinals, handles, switches, buttons, dispensers etc. (all areas that could have been touched in a particular space). • Common area handrails shall be disinfected and sanitized. • Keyboards shall be dusted, disinfected and sanitized. • Vacuum and Disinfect carpets.
  • Wipe all fixtures and disinfect • Wipe all partitions and disinfect (all uncluttered flat surfaces) • Wipe and disinfect all walls in RRs  • Clean (disinfect) all glass/mirrors, sinks, fixtures, toilets, urinals, handles, switches, buttons, dispensers etc. (all areas that could have been touched in a particular space) • Replenish all dispensers and empty all trash/feminine receptacles as needed. • Disinfect all horizontal surfaces (sweep/mop flooring) • High dusting performed • Vacuum/wipe down all air vents.

 

Scott Bawden

VP Client Services

REO Pro Services, Inc.

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Five Star

Posted by Brenda Ames on December 10, 2019 at 9:49am

Has anyone ever received business from the Five Start Institute?  I was with them years ago and in REO redbook.  They are offering 99.00 per month for a one year contract.  They said they had a lot of new clients.  I just don't really believe it.  There aren't many REO properties right now.

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Turbo BPO | Outsource & Automate Broker Price Opinions

Posted by John Gattinger on October 15, 2019 at 7:18am

The end of the year is near and we can see some light at the end of the tunnel.  Our Pipeline software is relied upon by hundreds of Agents nationwide for outsourcing or automating Broker Price Opinions.

Any Agents currently rendering our services have been made aware that our software is being rebuilt as I speak.  Current progress stands at 60% and estimated delivery is Jan. 1st, 2020.  In recent years our software has slowed as we continued to build out customizations.  The framework ultimately lagged and caused delays in most key functions.  

The new approach was to build a modular design so we can simplify the codebase and customize with add-ons which can be added/removed with much less coding.  As an example our image uploader is currently clocking in approximately 50X faster for image uploads.  This is critical for everyone who uses our services as much time will be saved!

Keeping with recent minimum wage hikes and inflation we will be increasing our Outsourcing prices on Jan. 1st 2020 by about 10% for Exterior BPO's & Interior BPO's.  We urge all Agents/Brokers who are interested in rendering services now or in the future to lock in and get registered a FREE account before Jan. 1st, 2020.  All Agents who lock in before this time will receive our 2019 rates for as many years as they use our services.  It could literally save you thousands!

First and foremost we thank all of our current Agents/Brokers who have trusted us throughout the years.  We could never be able to offer our manpower and software without your unwavering support!

Regards,
John Gattinger
Turbo-BPO.com

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WHY HIRE A REAL ESTATE VIRTUAL ASSISTANT?

Posted by BPOREO Expert on September 9, 2019 at 4:36pm
 In today’s competitive real estate market, agents have to work harder than ever to make their presence known in the marketplace. It is easy to become so overwhelmed with the every-day tasks associated with running your business that you lose sight of your ultimate goals and vision for the future. The problem for many agents is that they do not have the support needed to grow their business while at the same time focusing on their existing business. A real estate virtual assistant is a cost-effective way to add support to your team wherever and whenever you need it most – whether it is marketing, listing coordination, or lead generation and follow-up – giving you the time to focus on assisting your clients and achieve your goals.

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Pay rates and counter offers to Asset Management Companies

Posted by Richard F. McAllister on October 19, 2017 at 6:30am

Fellow REOPros.  If you complete BPOs, I offer a way to calculate what your minimum fee should be instead of just taking low ball offers for your hardwork.  Here is the spreadsheet I use below.  This is for residential properties only.  I have attached the spreadsheet to this post.  Download it if you like.  And if the spreadsheet comes out less than $50.  I use $50 as my rate for exterior drive by.  For interiors my minimum is $75.  Thanks.

1)  Open a spreadsheet.

2)  In cell A1, type in Minimum hourly rate, in cell C1, place your minimum hourly rate, say $25 or $30 or whatever rate use so choose.

3)  Now take the address of the offered BPO location and go to Google Maps and look up the distance and time from your base location(Office, Home).  Write them down.

4)  In cell A2, type in Travel time, enter the travel time from Google Maps cell B2.

5)  In cell A3, type in Round trip, enter the number 2 in cell B3.

6)  In cell A4, type in Total travel time, enter the following formula in B4.  Formula  =B2*B3

7)  In cell A5, type in Desk time, in B5 enter (with 2 decimal places, x.xx), Say for this example this is 1.25.

8)  In cell A6, type in Total BPO time, in C6, put the following formula, Formula =B4+B5

9)  In cell A7, Dollars for travel time and desk time, In cell C7 put the following formula,     

Formula =C1+C6

10) In cell A8, type Mileage from Google Maps, enter travel distance from Google Maps in cell B8.

11)  In cell A9, type in Round trip, enter the number 2 in B9

12)  In cell A10, type in Total mileage roundtrip, enter the following formula in B10, Formula =B8*B9.

13)  In cell A11, type in IRS current mileage rate, in B11 enter the current rate, 2017 rate is 0.535

14) In cell A12, type in Total mileage dollars, in cell B11 enter the following formula, Formula =B10*B11

15) In cell A13, type in BPO compensation, in cell C13 enter the following formula, Formula =C7+C12

BPO%20Compensation%20Calculator.xlsx

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Renting to Students in Santa Cruz, Ca: Pro's and Cons

Posted by Marcy Moyer on October 1, 2017 at 8:09am
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I am a realtor and a Santa Cruz rental property investor since 2000. There are many reasons to invest in Santa Cruz rental properties, some of which I have discussed in this article. Today I want to talk about what the pros and cons are in renting to UCSC students. 

 

Here are the pros that I have experienced.

1. Vacancies are virtually non existent: There are almost $18,000 UCSC students and in any given year there is only room to house about 8,000 of them on campus. There are always many thousands of students looking for a place to rent, so the potential pool leaves no vacancies in your Santa Cruz investment rental properties.

 

2. Students pay more money:  They frequently will pay more per bedroom and sleep 2-3 in a room just to have a place to stay. Here is a link to what students expect to pay from the UCSC community housing page. https://communityrentals.ucsc.edu/cost/index.html

 

3. The rent money is very secure: The students get financial aid and/or are supported by their parents. In 17 years and 4 rental properties as a Santa Cruz rental home investor I have only had a problem getting paid once.

 

4. UCSC makes the rental process very easy for a Santa Cruz rental investor: They give workshops to the students on what they need to do to look attractive to a Santa Cruz rental investor. They come to you with complete rental applications, credit reports, references, and certificates saying they understand what it takes to be a good renter. The university posts your rental for free so you have a large pool of possible renters.

 

5. Students replicate themselves making the rental process even easier: My experience has been when one student moves out they have another take their place making the process seamless for the Santa Cruz rental investor.

 

6. Santa Cruz students are often long term renter: If you get the students early, in their sophomore or junior year they often stay for 3-4 years or more. making the cost of turnover very low.

 

7. Santa Cruz students can vacate in the summer if you want a summer beach home that is rented for 9 or 10 months: If you are a Santa Cruz rental property investor who wants a place in the summer for yourself you can rent to students during the school year and keep it for yourself in the summers. Many students go home in the summers, and the ones who don't can always find a sublet from another student who is going home. It is a way to have a vacation home that more than pays for itself.

 

Cons of renting to UCSC students:

 

1. Insurance on the house can be tricky: Recently many insurance companies, including the one I have always used, State Farm have decided they do not want to insure homes that are filled to the brim with students in college towns. They see them as Frat houses and won't write new policies. You can get commercial insurance, which is more expensive than residential or find the rare insurer who will do it. I found that CIG insurance out of Monterrey was willing to write a residential policy at competitive prices.

 

2. Large homes can be a hot bed of petty emotional issues for the Santa Cruz rental property investor.: If you are the owner of a large home with 6-10 students they may turn to you when there is a spat between the tenants. It is a time and emotional drain. I put one person in charge and have that person deal with issues like who is going to clean the house, noise complaints, bullying, etc. They have the final say. It works pretty well.

 

3. Students are often unaware of what it takes to take care of a house: Students do not always understand what it takes to care of a home and things can be damaged by mistake, even without large parties or Frat behavior. The way to ameliorate this is to buy a house that does not have delicate finishes and educate the students on basic home maintenance. My tenants know they need to call me right away if something is wrong and not let a small problem get out of hand. I would rather be over called than under called, and they know it.

So as a long time owner of Santa Cruz rental property I can enthusiastically say that renting to Santa Cruz students is a good thing from an investor perspective and not something to be afraid of.

 

If you have any questions about becoming a Santa Cruz rental property investor please feel free to contact me.

Marcy Moyer

eXp Realty of California

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

Specializing in Probate, Trust, and Investment Properties

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Santa Cruz, Ca. Is A Great Place For Real Estate Investors

Posted by Marcy Moyer on October 1, 2017 at 8:07am

Featured Image

Santa Cruz, known for the beach, the boardwalk, Pacific Ave, hippies, and organic food, along with University of California Santa Cruz is also probably the best place for investors looking for rental properties right now. Here are some reasons why.

 

  • 62% of Santa Cruz residents live in rentals, compared to a ntional average of 43%
  • Average sale price of Santa Cruz homes has doubled in the last 5 years
  • Cap rates for Santa Cruz rental properties are between 3.5-4% very easy to obtain, as opposed to 2.5-3% in The Silicon Valley
  • No rent control but there is a one year moratorium on Santa Cruz short term rental permits so Air B&B investments not the way to go now.
  • While the market is apprectiating the competition for investment homes in Santa Cruz is not as great as in Silicon Valley
  • There are still Santa Cruz home sales contingent on the sale of another property, making 1031 exchanges much easier.
  • Accepted offers almost always have contingnecies so you have time to figure out if the property makes sense for your portfolio.
  • Would you rather visit your rental property in Santa Cruz or Milpitas? I would pick Santa Cruz any day.
  • UCSC only guarentees housing for students for 2 years. They have over 18,000 students. The housing shortage is so acute that students are living 3 to a room or in their cars, not because they don't have the money for housing, but because there is such a shortage.

 

Smart Silicon Valley investors should look at Santa Cruz as a place where your money goes further and the cash flow is so much better. 

I have put my money where my mouth is and own 3 Santa Cruz rental properties myself.

I encourage you to contact me if you have any questions about how and why to buy a rental property in Santa Cruz.

Marcy Moyer

eXp Realty of California

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

Specializing in Probate, Trust, and Investment Properties

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BPO Automation Group Starting Work on New BPO AutoFill Software!!!!!!!

Posted by Nicole Ocean on September 28, 2017 at 11:00am
BPOA LogoThe Leader in BPO Automation
Software Since 2009 

HUGE News About Our New BPO AutoFill Software!!!!!!!

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We are a technology company that strives to be on the cutting-edge of all that we do and with the products that we offer. Since we invented BPO AutoFill software in 2009, we have learned a whole heck of a lot about our business, our subscribers needs, changes in the industy and have taken it all to heart.

We are SUPER proud to announce that we are starting to work on a new version of our BPO AutoFill software product. Although, we officially start work on October, 2nd 2017, this project is something that I have been working towards for years.

We anticipate releasing it very soon as we are currently in beta testing of the new, improved BPO AutoFill software and can't wait to see this dream come true!

More news to follow and we can't tell you all of the exact details just yet but know that this is going to be HUGE!!!!!!

Sincerely,

Nicole Ocean

  

BPO AUTOMATION GROUP-CLEARLY THE LEADER IN THE BPO SOFTWARE INDUSTRY!

Finish Your BPO Orders Faster With The Industry Leader Since 2009.

  

 BPO Automation Group

Phone: (360) 223-2482
E-mail: sales@bpo-automation.com
495 Grand Boulevard Suite #206

Miramar Beach, FL 32550
www.bpo-automation.com

iconiconiconiconicon
 

 

 All Rights Reserved, BPO Automation Group LLC, © 2009-2018

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Secrets to Real Estate Success for Newbies

Posted by Nicole Ocean on September 21, 2017 at 8:25am

Secrets to Real Estate Success for Newbies

4359200250?profile=original

Getting started in real estate can be tough is almost like trying to learn a brand, new game. It comes with its very own set of special rules, laws, systems, standards and guidelines that you must learn. While you are trying to become more competitive in an already over-saturated field where everyone knows someone who is a real estate agent or broker, you must be able to figure out a way to hustle and be different than your competition.

As you try to balance your new career and all the responsibilities that come with us, the real test of success is seeing if you can really juggle everything in the air at once, keep it moving smoothly so you don’t drop any balls and come out making enough money to maintain the lifestyle that you desire.

All of this is possible and I know because I’ve “been there, done that” myself. I’ve been a new real estate agent and quickly learned how to carve out a niche for myself so that I could not only stay in real estate and keep practicing it but also to see to it that I was thriving in my career. The same is possible for you, even though nothing is promised to you, you have the same opportunities to succeed as everyone else, IF you are willing to work for it, learn how to play the game and keep up with your duties on a daily basis.

For me, I found out about a way to make supplemental my income by doing CMA types of reports for banks called, broker price opinions. It saved me in more ways than one, in fact it helped pull me out of poverty as a single Mom to a young, bright-eyed and very loveable boy. And I’ve never looked back!

I’m very vocal about the BPO industry and I’m in love with it. I live to help real estate professionals around this great nation of ours that want to also carve out a niche for themselves in their real estate business by doing BPO’s. I also live for coaching and teaching, it’s what makes me happiest at my core on a professional level.

If you are curious to learn more about anything related to BPO’s, I’d love to be your guide, your coach and hopefully someone that you look up to.

Learn more about my newly updated “Broker Price Opinion Basics 101” video course here:

http://bpo-university.com/courses.html

If you already know the basics about BPO’s then I’d like to invite you to learn more about how to double and triple your BPO income by using BPO AutoFill software here:

http://bpo-automation.com

Your BPO Coach,

Nicole Ocean

  

BPO AUTOMATION GROUP-CLEARLY THE LEADER IN THE BPO SOFTWARE INDUSTRY!

Finish Your BPO Orders Faster With The Industry Leader Since 2009.

  

 BPO Automation Group

Phone: (360) 223-2482
E-mail: sales@bpo-automation.com
495 Grand Boulevard Suite #206

Miramar Beach, FL 32550
www.bpo-automation.com

iconiconiconiconicon
 
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Broker Price Opinion Needs

Posted by Linda Samer on July 14, 2017 at 7:45pm

WePro BPO has been established as a Broker Price Opinion outsourcing company which caters all types of Residential and Commercial properties throughout United States.

Our company started as a small business partnership in 2008. 
With the perseverance, commitment and continuously delivering high quality reports of the people behind, the business started to grow and created a team of highly skilled real estate analyst who are best experienced in processing and formulating standard quality, error-free, quick turn around time and cost effective broker price opinions.

Please visit our website at https://weprobpo.com/

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4 Perks of Solo 401k for Business Owners and Freelancers

Posted by Dmitriy Fomichenko on April 26, 2017 at 12:28am

Solo 401k for business owners

“Save your money. You’re going to need twice as much money in your old age as you think.” — Michael Caine

If you’re self-employed and trying to boost your retirement savings, Solo 401(k) plans are a potential option.

Solo 401(k) plans are qualified retirement plans for self-employed professionals and business owners with no employees other than a spouse. These plans have gained popularity because of investor-friendly features and higher contribution limits than traditional retirement accounts.

The biggest limitation on a Solo 401(k) plan is its eligibility criteria. You must have some sort of partial or full-time self-employment, and you can’t have any full-time employees — except your spouse — working in the business. Having such eligibility criteria rules it out for business owners with employees.

Solo 401k for Business Owners: What are the plan benefits?

For an owner-only business, it presents an option for ensuring your savings are sufficient to fund your retirement years.

Is a Solo 401(k) is right for you? Here are four reasons to consider Solo 401k for business owners.

1. High contribution limits

Unlike individual retirement accounts, which limit contributions to $5,500 (or $6,500 for those age 50 and older), you can contribute up to $54,000 to a Solo 401(k) account in 2017 ($60,000 for 50 and older).

Related article:  How to achieve financial independence with your small business

2. More investment options

Relying on the stock market for retirement, as many retirement plans do, may not sit well with investors who prefer to have more flexibility and freedom to choose different types of investments. With a specific kind of Solo 401(k) called a self-directed Solo 401(k), you can invest in alternative assets including real estate, tax deeds, tax liens, mortgage notes, private equity, personal lending, precious metals and even regular stock-bond investments. Make sure to ask your Solo 401(k) provider about the availability of these investment options upfront.

3. Roth, minus the income limits

According to the current IRS regulations, if you’re a single filer earning more than $132,000 in a calendar year, you’re not eligible for Roth IRA contributions. The phasing out starts at $117,000, limiting your options for after-tax contributions. A Roth Solo 401(k), which doesn’t have income limits, allows you to make annual after-tax contributions of up to $18,000, or $24,000 if you’re over 50, giving your money an opportunity to grow tax-free.

Related article:  How to choose a self-directed retirement plan for your future?

4. Ability to borrow

The IRS allows borrowing from a Solo 401(k) plan, just as it allows borrowing from 401(k) plans. This means no one can turn you down and you can spend the money the way you want. Just make sure you follow IRS rules about repayment to avoid taxes and penalties. And loans from a Solo 401(k) hold one advantage over loans from a regular 401(k). With a 401(k), if you leave your current employment, the loan will become due in full. That kind of job change is not a factor with a Solo 401(k) loan.

This article was originally published on NerdWallet.com

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