Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Self-employed investors have retirement account options that are FAR superior to conventionally employed people in the form of the SEP IRA and the Solo 401k.  One of them is clearly better than the other...

• IRA's are great, but you can't contribute more than $6,500 per year to them
• Self-employed investors may qualify for the SEP IRA or the Solo 401k, both of which have a much larger limit - up to $60,000 per year
• Solo 401k is practically always a far superior alternative to the SEP IRA because:
  • It's much easier to actually contribute to the solo 401k than to the SEP IRA
  • You can't have a SEP IRA that's taxed as a Roth account
  • The SEP IRA has all of the severe vulnerabilities to prohibited transactions that are present with all IRA's.  Solo 401k's are much safer and friendlier to the investor.
• If your advisor recommends a SEP IRA over a solo 401k, they're likely either ignorant or are being compensated to motivate you to open an IRA.

• Episode #245 (this show) of Self Directed Investor Talk
• Free Webinar that shows how many SDI Talk listeners are receiving very large credit lines at 0% interest for their real estate deals or businesses.  Check it out here.
• Warren Buffet admits that Diversification is for the Ignorant

Hosted on Acast. See acast.com/privacy for more information.

Want to know how to TRIPLE the returns Wall Street offers for that part of your portfolio that absolutely, positively must stay safe?  I’m Bryan Ellis.  I’ll tell you how to do that EASILY right now in Episode #244 of Self Directed Investor Talk.

-----

Hello, Self-Directed Investor Nation!  Welcome to the podcast of record for savvy self-directed investors like you, where each and every day, you learn how to DECLARE INDEPENDENCE from Wall Street as we teach you how to find, understand and PROFIT from exceptional ALTERNATIVE asset investment opportunities!

It’s Monday again and I don’t know about you… I love every moment of the weekend, but I definitely look forward to Monday morning, too… it’s good to be back at it with you today!

Ok, let’s jump right in.  I’m going to tell you how to TRIPLE what Wall Street offers for money you need to keep safe.  What’s more, you’re going to understand it perfectly and quite easily, before the end of this show.

So here’s the deal:  Sooner or later, everybody gets to a point or a life circumstance where you need to make sure that money you have now, you’ll definitely have later.  Yes, of course, we all expect to never lose on an investment, but I think you understand what I’m saying.  The way you invest when you’re well into retirement years, for example, could look very, very different from the way you invest in your 20’s and 30’s.

So how do you make THAT money – the “safe” money – continue to grow while minimizing risk?

And what would be even BETTER is to enjoy rates of return that are MULTIPLES of what Wall Street offers.

Turns out, we can do that.  So first, what does Wall Street recommend for low-risk investing?

The primary choices are:

1. Standard bank savings accounts & CD’s
2. Money market accounts
3. Treasuries

Historically, all of those are quite safe, and that’s a great thing.  But there are two additional things we need to consider about them:  Their RATES of RETURN and whether there are BETTER OPTIONS.

First:  Rates of Return.  I just looked at Wells Fargo’s CD rates, and right now, they range from an interest rate of ZERO up to a WHOPPING 0.55%.  That’s not 55%, that’s 55 one hundreds of ONE percent.  Savings account rates are even lower.

Then there’s Money Market Accounts, which are basically just a checking account where your money is invested into a collection of high-quality bonds, like government treasuries, municipal bonds, etc.  I stopped by BankRate.com to see what was available, and money market accounts reach into rare air… one of them reached as high as 1.15%  Big time!

And then there are bonds issued by Uncle Sam, aka Treasuries.  While most options are at or below 1%, BankRate tells us the ten-year constant maturity option reaches all the way to a bit over 2%.  Yowzha!

So now we know the rates of return.  Thus the question becomes:  Is there a better alternative?

Well, yes.

For context, understand this:  Every one of those 3 “safe” investments that the conventional financial world loves – CD’s, money market funds and treasuries – every single one of them is a “debt” investment.  In other words, they’re just loans that you’re making to somebody.  In the case of CD’s, you’re making an unsecured loan to a bank.  In the case of money market funds, you’re making unsecured loans to the underlying bond issuers.  And in the case of government treasuries, you’re making unsecured loans to the US federal government.

So let’s do better, shall we?

We’ll imagine you’ve got $100,000 to invest that you know you’re going to need in 5 years.  My humble, but entirely correct, opinion of what to do here is this:  Invest your money in DEBT… yes.  That makes sense because a smartly-structured debt investment can have one thing that makes your money very secure:  COLLATERAL.  Collateral is what you have to fall back on if the loan you make doesn’t get paid, so this is CENTRAL to keeping your money safe.

But what’s conveniently missing from CD’s, from Money Market funds and from Treasuries?  You guessed it… COLLATERAL.  Yes, your bank promises they’ll repay your CD.  Some local government is putting their name behind their muni bonds in your money market account.  And yes, Uncle Sam signs on the dotted line for treasuries.  But my friends… none of that is REAL.  It’s all fluff… hot air… nothing more.

So the way to do better is this:  Take that $100,000 and LOAN it to someone, just like we’ve already said.  But have them pledge COLLATERAL to make your loan safe.  What if you could get someone to pledge a $200,000 property as collateral for your $100,000 loan?  Well, the answer is:  Nothing is ever totally safe, but that’s pretty freaking safe.  If you made that loan even during the worst of times in the real estate crash of 2007/2008, you’d likely be JUST FINE.

What’s more, you’ll easily make a MULTIPLE of what you’ll make in CD’s, money market funds and treasuries.  It’s REALLY easy to get 5 or 6% interest on loans like this – which is clearly, double, triple, sometimes quadruple what you’d get by going the route of “conventional wisdom”.

And remember – if it turns out that your borrower doesn’t pay you… you’ve got collateral worth DOUBLE the money you put into the deal.  It’s a STRONG position for you to be in.  You’d be even wiser to take that $100K and split it up among 2-4 smaller deals as well, to further spread your already minimal risk.

So how do you do it?  Easy answer… if that’s you, and you’ve got $100K or so and are looking for an extremely safe way to make 5-6% or so, reach out to me by email at [email protected] or by phone at 512-SDI-TALK.  Again, if you’ve got $100K or more and are looking for an extremely safe way to make 5-6% or so, just reach out to me by email at [email protected] or by phone at 512-SDI-TALK.

My friends, thank you for listening to Self Directed Investor Talk and remember:  Invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

I’m not a huge fan of using leverage in a retirement account.  But this time, it makes some sense.  I’m Bryan Ellis.  I’ll tell you about this special case right now in Episode #243 of Self Directed Investor Talk.

-----

Hello Self Directed Investor Nation!  Welcome back to the podcast of record for savvy self-directed investors like you… where all we ask of you is 7 minutes a day… and in return, we give you MASTERY as a self-directed investor.

Hey folks, I hope you’ve taken the time to check out the BRAND NEW website for this show, SDITalk.com.  It’s designed specifically to give you much easier access to all of the information you love, and it is, STILL, 100% free!  Check it out now… SDITalk.com.

Quick note, too… you’ve heard me say it before, and I’ll say it again:  If you need funding for your deals or your business, the best interest rate to pay is ZERO.  The best type of collateral to place is NONE.  And the best kind of credit to have is CASH credit.  So, if you’re interested in up to $250,000 of zero collateral, zero interest CASH CREDIT, stop by SDITalk.com/credit for a free webinar on that very topic.  SDITalk.com/credit.  You’ll be very glad you did!

Ok, here’s the deal:  I’m just not a big fan of using leverage in a retirement account.  By leverage, of course I mean getting a loan, usually to buy real estate.

It’s totally legal to do that in your IRA or 401k, you just have to make sure that the loan fits the right parameters.  Setting aside that issue, it’s really not a big issue anymore, as the number of IRA-compliant lenders is growing each year.

Having said that, I’m still just leary of leverage.  I’m a fan of the Dave Ramsey school of thought where debt is a bad idea period.  I actually don’t believe that, but frankly, that’s a mindset that will never steer you wrong.

But hey… sometimes, you do what you’ve got to do.

And one of those circumstances comes up for people who invest their IRA in real estate.

Actually, there are two situations.

One of them is this one:

You’ve done well, you’re in your retirement years, your account has about a million dollar’s worth of real estate in it, and that’s when you’re told you’ve got to pay out the dreaded RMD – required minimum distribution.  That’s the withdrawal the IRS forces you to take even if you don’t want it, just so that they can get some income taxes from you.

And with an account of that size, it’s totally plausible that a person in their 70’s will have an RMD of $40,000 to $50,000 per year.

Well what if you’re fully invested… maybe you own 3 or 4 properties and that’s all that’s in your account?

Well, you MUST pay the RMD… penalties for failure are rather severe… so I see 3 options here:

1. You pay the money with cash on hand outside your retirement account
2. You sell one of those properties to raise the cash, taking on the valuation discount that’ll likely be necessary if you have to do a quick sale to pay the RMD, or…
3. You get a small loan in your IRA against one of the properties, and pay the RMD with that!

Now obviously this is contingent on whether your properties generate sufficient cash flow to cover the payments, but they certainly should.

A similar strategy might be useful for that kind of circumstance where you just need a large chunk of cash from your IRA or 401k, and the only way to get it would be to sell a property.  In that case, it might be worth getting an equity loan against the property instead if you believe there’s still upside in that property.

I’m thinking specifically about college expenses.  I’m 42 years old, and while I have one child in college and one who is a junior in high school, I also have one who is 3 years old and one who is 2 years old.  That means that right about the time I start to be able to withdraw money from my IRA, I could use that money to pay for college.  But I just can’t imagine actually SELLING real estate for that reason.  Rather, I can totally envision getting a low LTV loan against those properties so I can pay those large college lump sum expenses without actually giving up my properties.

So I’m still not a big fan of using leverage in IRA’s or 401k’s, but when the alternative is to likely take a guaranteed loss due to the necessity of a quick sale, or holding on to a great asset at the expense of the risk posed by low-LTV leverage, I have to say:  I’d have to seriously consider taking on leverage.

So what do you YOU think?  Sound off, my friends, on today’s show notes page at SDITalk.com/243.

My friends, invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

Hey all of you private lenders out there, this episode is for you… and unfortunately, it involves your preferred asset type, and our friends at the IRS.  I’m Bryan Ellis.  I’ll tell you all about it right now in Episode #242 of Self Directed Investor Talk.

-----

Hello, Self Directed Investor Nation, welcome to the podcast of record for savvy self-directed investors like you!  This is the show where all you’ve got to is give us 7 minutes a day… and you get back MASTERY as a self-directed investor!

Good show for you today, folks, prompted by a telephone consultation I did yesterday for two attorneys who have a major private lending business OUTSIDE of their self-directed IRA… and are also doing MILLIONS in private lending business INSIDE of their IRAs.  These guys have a lot at stake… I did some research, and I’ll tell you what I found.

And as I do so, feel free to write to me with your questions and comments by email at [email protected], [email protected].  Or – and frankly, I’d really appreciate this – stop by our Facebook page and click the LIKE button.  You can get to it at SDITalk.com/facebook.  And while you’re there, ask any questions you have for me.

And a quick note:  If you’d like to learn how to have a cash credit line of up to $250,000 that’s both unsecured and charges absolutely ZERO interest, stop by SDITalk.com/credit where you can sign up for a free webinar we’re offering this week that will show you exactly how to do that.  We’ve helped clients to raise MILLIONS of dollars in just the past 90 days alone, so if you’re looking for some capital, stop by SDITalk.com/credit right now.

Ok folks, so here’s the deal:  Again, you people are providing the content of my show for me.  I had a consultation with a couple of your fellow listeners yesterday.  For their privacy, I won’t say their names, but all of the details I’ll share with you are accurate.

The basic idea is this:  Both of these guys are lawyers up in Rhode Island, so they know more than enough to understand the need to be careful.  But their legal expertise is in real estate and title work, and not in retirement plan law.

Their concern is this:  Both of them have very large IRA’s, from which they do a lot of private lending.  They also have a very substantial private lending business OUTSIDE of their IRAs.

For those of you who may not be familiar, private lending is just lending your own money to some third party in such a way that you receive PLENTY of collateral and a relatively high interest rate.  Private loans can definitely be a great type of asset.

So your fellow listeners up in Rhode Island are concerned about this situation because it would be an absolute DISASTER if the IRS took a look at their IRA’s and decided that what they are doing is conducting an active business within their IRA’s. That would be a disaster because then their IRA’s would be liable to pay something called “unrelated business income tax” – or UBIT for short – on its earnings each year, as the IRS isn’t keen on people operating active businesses in their retirement accounts.

So is the concern of our lawyer friends justified about this?

There’s good reason, actually.  The comparable issue that many of you folks in SDI Nation may be familiar with is the one where you do a lot of real estate flipping BOTH OUTSIDE and INSIDE of your self directed IRA.  In that case, there’s plenty of precedent that the IRS could, in fact, conclude that your active business is real estate flipping, and that the activity in your IRA is just an extension of your business and is thus subject to UBIT.

Obviously, that’s a very bad thing.

So if the IRS can take that position with house flipping, do our lawyer friends in Rhode Island… and do YOU, my dear listeners… face the same risk if you do private lending both IN and OUT of your self directed IRA?

I’ve certainly got the answer for you, but before I give it to you:  People, I’m not a lawyer.  I’m not giving you legal advice.  If you need legal advice – and you do if you’re using a self directed IRA – then you should talk to a lawyer, period.

And as it turns out, the very best one in the country for this type of thing is THE GREAT ONE, Mr. Tim Berry – and YES, his contact info is linked on today’s show notes page at SDITalk.com/242.

And Tim is who I asked to help me clarify this issue.

You see, I suspected that our private lending pals might have a better time of it than if they were flipping houses because, frankly, it’s pretty hard to argue that collecting INTEREST on a LOAN is anything but passive.

And this is yet another case of being glad I asked for Tim’s advice, because he both confirmed and obliterated my assumption using case law.

Bottom line, in general:  Yes, the lending activity inside of the IRA is an active business activity, and any fees earned from those activities – such as maybe document preparation – would likely be subject to UBIT.  But the LION’S SHARE of income comes from earning interest from a loan.  And THAT type of income – interest, specifically – is statutorily exempt from UBIT.

And yes, for you legal beagles, both the revenue ruling where this happened and the original code citations are available for you on today’s show notes page at SDITalk.com/242.

Folks, who else in the entire US of A is providing self-directed investors like you with ABSOLUTE GOLD like this?  NOBODY… that’s who!  Nevertheless, I’m SO GRATEFUL that you’re listening to ME right here on Self Directed Investor Talk.

SDI Nation, you long-time listeners know that I’m very, very leary of the use of debt in any way.  But one REALLY brilliant use of debt in your IRA specifically hit me between the eyes this week, and I’d like to share it with you…

…And that’s exactly what I’ll do in TOMORROW’s edition – Episode #243 –  of Self Directed Investor Talk, so be sure to SUBSCRIBE to this show by visiting SDITalk.com or if you’re on an Apple device, subscribe on iTunes.  Either way it’s free for your benefit!

That’s all for today but a quick request… if you enjoyed this show, would you stop by iTunes right now and give us a nice 5-star rating, maybe even write a comment? That would REALLY help us out a lot.  Thanks!

My friends, invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

How will Trump policies affect real estate investors specifically?  I’m Bryan Ellis.  I’ll give you the answer right now in Episode #241 of Self Directed Investor Talk.

-----

Hello, Self Directed Investor Nation.  Welcome to the show of record for savvy self-directed investors like you, where for just 7 minutes of your time per day, we give you MASTERY as a self-directed investor.

Welcome to another week, folks.  I’ll be honest with you, I’ve had a pretty awful last 24 hours and don’t even feel like doing this show right now.  Am I allowed to admit that to you?  Well of course I am.  It’s my show, I can say whatever I want.  I suspect that’s part of why you continue to listen, frankly.

But I have some important things to say today and it might take just a minute or 2 longer than the 7 minute standard we have around here.

Ok, let’s talk about Trump and how I expect his policy proposals to affect real estate as an investment.

Look, I think overall, the outlook is extremely positive, but with one rather large question mark I’d like to explain to you, and I need for you to listen to every word of this brief show so you can hear that.

First, the good news:

If Trump is even only partially successful at cutting both personal and corporate income tax rates as he’s pledged to do, then I can tell you with utmost certainty what will happen:  The economy will BOOM, absolutely BOOM.

Let me tell you something… I’ve already told you I’m feeling a little foul this morning so I’m not going to hold back on you, and while I hope I don’t offend any of you, the fact is I’m far less concerned with your sensibilities than your portfolio value.

So here’s the deal:  In the history of the United States – over 240 years – EVERY SINGLE PRESIDENT has produced one particular economic result, so common, so baseline is this result.  That result is that each president has seen at least one year of GDP growth of 3% or more.

All presidents – every single one of them – except, that is, Barrack Hussein Obama, who also holds the distinction of being the fourth-worst presidency on record for GDP growth, clocking in at an anemic 1.45%... and those stats are per Obama’s own Department of Commerce, the link to which you can find on today’s show notes page at SDITalk.com/241.

Curiously, even JIMMY CARTER had a better average GDP.

So why does this matter?  Here’s why:  The American economy is nothing more than a real-world demonstration of the prevailing psyche of the American public.  That’s it.  And for the last 8 years… and frankly, longer than that… because George W. Bush was certainly no great champion of economic growth… but PARTICULARLY for the past 8 years, Americans have operated under an explicit admission from our leaders that there’s a “NEW NORMAL” in effect, which includes things like lower job growth, decreased national security and reduced prominence of America on the world stage.  If you think Obama didn’t actually say that, check out the show notes page on SDITalk.com/241.

Why does it matter?  Well that sort of talk is bother a damper on the psyche of Americans, and is totally ANTITHETICAL to the very fundamental nature of who Americans are.  We are optimists.  We are opportunists.  We are lovers of freedom.  We are seekers of wealth and greatness.

And suddenly, we have a President who – love him or hate him – TOTALLY agrees with all of that… and has made the GREATNESS of America the central theme of his campaign and his Presidency.  So he’s looking to  do the things that ALWAYS spur economic growth, which are to reduce the punishment of taxation so there’s MORE MONEY in the pockets of people and companies; and he’s looking to substantially cut back the complexity of regulation and the costs those regulations create, which also directly contributes to MORE MONEY in the pockets of people and companies.

And it doesn’t take a rocket scientist to figure out that MORE MONEY in the hands of people and companies means more spending which leads to more economic growth which leads to higher incomes.  These are all VERY GOOD THINGS… notwithstanding the concoctions of propeller-headed intellectuals.  I, for one, am sick of hearing from academics or ANYONE who has never owned or run a business where it comes to what’s necessary for our economy.

And that’s why, frankly, there’s a broad and growing very POSITIVE CONSENSUS about Trump’s policies.  You’ve got well known and highly regarded people and organizations – nearly all of them diametrically opposed to Trump politically – coming out and making positive pronouncements about Trump’s proposals and their effects on the economy – including investment superstar Mohammed El-Erian and none other than the World Bank itself.

You might not like his politics, but his economics – at least, his proposals – absolutely work towards a stronger economy.  And a strong economy, simply put, means more money for people to spend on buying homes, renovating homes, renting homes… and of course all of the other investment opportunities under the real estate umbrella.

Folks, put your politics aside.  You know what I’m telling you is true.  These kinds of policies will be VERY GOOD for the US economy.

BUT… there is a point of concern for me, which is that Trump’s people are proposing to eliminate the mortgage interest deduction in favor of increasing the standard deduction.  The idea is that you’ll still get the same tax break, but that tax break will no longer be tied to real estate in any way.

Look, I get what they’re saying, but that’s a horrible idea.  There are MANY reasons for that, but the biggest one is this:  I believe that eliminating the mortgage interest deduction will actually directly hurt home values… the value of YOUR real estate investments.  One study from the Federal Reserve – linked for you at SDITalk.com/241 – predicts homeowners will lose an average of 11.5% of their property value as a function of eliminating the mortgage interest deduction.

That’s a lot.

Here’s the bright side of that:  I don’t think it will happen.  The mortgage interest deduction is one of the most popular deductions of all, and I suspect it won’t be particularly expedient for this particular item to be attacked.

One more thing:  I suspect those of you who were Obama supporters are already frustrated with me and those of you who are Trump supporters are basically giving me high 5’s.  Well, you’re both responding the wrong way, here’s why:

It’s easy for us to assume something like “hey – Trump is a real estate guy, and I’m a real estate investor… he’s not going to do anything that will hurt the real estate investing business.”

That, my friends, is plausible but not rational.  Remember:  Trump is a real estate DEVELOPER, not a real estate INVESTOR.  You and I are, by and large, PASSIVE investors in real estate… we want to make acquisitions that will pay us over time and will require as little direct involvement as possible.  For Trump, real estate is a BUSINESS, not an investment… and so the vantage point is RADICALLY different and thus, there’s just not room to assume that what’s good for the individual investor is also good for Trump’s investment interests.  It’s an irrational stretch.

Having said that, it’s definitely my belief that Trump’s proposed policies, taken as a whole, will be PROFOUNDLY positive for our economy generally, and for real estate specifically.

The future is bright, my friends.  So invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

The Trump era dawns today, amidst a storm of both honest disagreement and an overwhelming degree of infantile protest.  What will Trump mean for the retirement account of the self-directed investor?  I’m Bryan Ellis.  I’ll break it down for you right now in Special Episode #240 of Self Directed Investor Talk

-----

Happy Inauguration Day, self-directed investor nation!  Welcome to the podcast of record for savvy self-directed investors like YOU, where if you give us just 7 minutes a day… we give you back MASTERY as a self-directed investor!

Ahhh yes… pomp and circumstance.  I really enjoy it, honestly.  I’ve watched all of the inaugurations, and the day’s events leading up to them during my adult lifetime, and it’s really so fascinating to me.  You can frequently tell a WHOLE LOT about how the President will behave in office solely on the basis of how they behave during inauguration.  In fact, that was more true of Obama than for anyone else, but that’s old news, because there’s a new sheriff in town.

His name is Donald Trump, and he’s a billionaire real estate developer… and he’s already changed the political landscape of America in a way that nobody every predicted… I mean, NOBODY AT ALL… except, for Donald Trump.

That’s kind of an interesting thing, isn’t it?  I’ll bet it’s safe to say that when Trump announced his candidacy on June 14 of 2016, I think there was probably one and only one person in the entire country… the entire WORLD… who believed he’d be the next president, and that was Trump.

He was right.  The entire rest of the world – including me, by the way – was wrong.

But what will this mean for you and me as Self-Directed Investors?  I’ll tell you, right now, my friends.

But first, two things:

Number One:  More than any other day, I’d REALLY love to get your feedback about what I have to say.  Just go to today’s show notes page at SDITalk.com/240 to leave your comments.

Number Two:  Remember – always and forever – if you need some funding for your business or real estate deal, and ZERO PERCENT sounds like the kind of interest rate you’d like to pay to borrow that capital, then stop by SDITalk.com/credit.  We have a great FREE WEBINAR there that will tell you exactly how that can be done.  And it’s the best kind of credit, too… totally unsecured, and not connected to your personal credit report.  Doesn’t get better than that, so visit SDITalk.com/credit.

What will Trump mean for Self-Directed Investors?

All in all, I think that Trump could prove to be OVERWHELMINGLY GOOD for those of us who take care of our own investment decisions.  I mean, stratospherically excellent.  And understand… while I did vote for Trump in the general election, I did not vote for him in the primary, so it can’t be said that I’m a Trump fanboy.

So here’s what I’m expecting:

The most immediate impact on you as a user of retirement accounts – self-directed or otherwise – is that TRADITIONAL accounts will become a bit less valuable and ROTH accounts will become a bit more valuable.  That’s under the assumption that Trump succeeds in reducing personal income tax rates, which is a great thing, but also means that the tax deduction you’d receive for contributions to a Traditional IRA or 401k would inherently result in less real dollar savings for you.  So that’s the first real, tangible effect.

Second, if Trump succeeds – in part or in whole – in two of his stated objectives, the economy will simply explode to the upside and the stock market would have some serious upside pressure.  Those two objectives are:

Number 1:  Reduction of CORPORATE income tax rates to 15%.  Now just understand… that is HUGE.  Or maybe it’s YUGE.  Currently, that rate is 35%... so Trump is proposing to slash corporate rates by well over half.  What does that mean?  The Tax Policy Center estimates that $473.3 BILLION dollars was collected in 2016 in corporate taxes.  A very crude calculation would suggest that this change alone would leave over $200 BILLION dollars in the coffers of corporations, and that nearly always means one or more 3 things:  (1) more dividends for owners; (2) more jobs; and/or (3) investment in infrastructure for future growth.  All three of those things are very, very good for an economy.

But yes, this is a huge TAX CUT… and some of you think that’s a bad thing.  Sound off about it!  Leave your comments at in the comments area below!

And the second big objective that could rock the economy in a big way is Trump’s proposed tax holiday on repatriating offshore profits.  This is a big deal, folks… and you folks out in Silicon Valley and up in Redmond, Washington are, I’m sure, particularly interested in this one.  You see, a lot of Fortune 500 companies – most notably Apple and Microsoft – have hundreds of billions of dollars stashed offshore.  The moment they bring that money back to the US, they’ve got to pay that horrendous 35% tax rate.  But Trump is proposing a bit of a tax holiday on repatriating that capital… a massive holiday, actually, down to 10% for a time.  According to one estimate, Apple alone would save over $48 billion in taxes and Microsoft would save about $24 billion in taxes.  Now folks, I don’t care who you are… even if you’re Warren Buffett… those are MASSIVE MASSIVE numbers, and have the potential to be GAME CHANGERS… again, with likely results being one or more of:  increased dividends, more hiring and/or more business growth infrastructure.  All very, very good for the economy, but not so good – at least when judged in vaccum – for US tax revenues.

I’m not one to cry over reduced tax revenues.  Unlike the government, I don’t see my money as the government’s first, and then mine if and only if I can manage to keep it from them.  What do you think?  Let me know at SDITalk.com/240.

I’ve got more to say about the expected Trump effect for investors like you and me, but we’re just about out of time today, so I’ll revisit this in our next episode, and in that episode, we’ll look more into the specific effect on real estate and other alternative assets, because I think we can make some reasonably well educated predictions on that.

And look… I REALLY want to hear from you folks about this, and right away!  The inauguration happens in about 2 hours from now, so there’s no time to lose!  Jump on over to SDITalk.com/240 right now and let me know what you think!

My friends… invest wisely today, and live well forever!

Listen in to the NEXT EPISODE now - Click Here

The PREVIOUS Episode was great, too... Listen Here!

Hosted on Acast. See acast.com/privacy for more information.

Can you buy an OFFICE BUILDING in your self directed IRA or 401k?  I’ll bet you think the answer is YES, don’t you?  Actually, it’s only MAYBE.  I’m Bryan Ellis.  I’ll tell you why right now in Episode #239 of Self Directed Investor Talk…

----

Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you where all we ask is 7 minutes a day… and what you get in return is self-directed investing MASTERY!

A great show is in store for you today and I’d like to remind you that you can ALWAYS get to the show notes for any show by putting the episode number after the domain name SDITalk.com.  For today, the show notes page is SDITalk.com/239… and you really should check it out.  You doubtlessly hear me referring to articles, studies and links from time to time in this show, and all you’ve got to do to get access to all of that EXTRA SDI-goodness is to visit the show notes page where you’ll find the show itself, a full transcript, and all of the resources I just mentioned.  Again, today’s show notes page is SDITalk.com/239.

There’s one more link you should be aware of.  It’s SDITalk.com/credit.  I’ll make this short:  If you have any need for investment or even business funding, and you’d like to get up to $250,000 at a ZERO interest rate, then go to SDITalk.com/credit, sign up for the free webinar that’s offered there, and learn how to do it.  The guys behind that – Ari and Mike at Fund & Grow – are REAL pros, and they’ve provided over $4 MILLION in zero interest credit to your fellow members of SDI Nation in the past 12 months alone.  Check them out at SDITalk.com/credit.

Ok, so can you buy an office building in your IRA?

This question was prompted by an article I saw where a rather conventional financial advisor struggled to answer this question correctly, so I’ve decided to grace you with the actual CORRECT version of things.

The simple answer?  YES.  Your IRA can own an office building.  There’s nothing in the law governing IRA’s – unless it’s changed dramatically in the last 24 hours – that prohibits your IRA from owning real estate, commercial buildings included.  Same for 401k’s – they are absolutely allowed to own real estate.

But there’s a BIG BUT – that sounded a little vile, hmmph – there’s a big EXCEPTION to consider, which is:

Many commercial properties are owned by a business entity of some sort – such as a corporation or LLC.  And it’s that entity which owns the real estate, and all of the accoutrements necessary to make that building a productive asset, like office equipment and such.

So the real question to ask yourself is:  Am I buying real estate, or am I buying a business entity that owns real estate.

Still, one would think that there’s no problem, because just as the tax code governing your IRA doesn’t prevent your IRA from owning real estate, it also doesn’t prohibit your IRA from owning business entities.

So we’re good, right?  If the building is owned by an entity, just buy the entity, and it’s all good… right?  Your IRA can just buy the entity that owns the building and you’re all set… right?

You’d certainly think so since neither real estate nor business entities are on the short list of totally prohibited asset types.  (Incidentally… do you know the things that ARE on the totally prohibited list of asset types?  You can find out on the show notes page at SDITalk.com/239.  Yes, that’s a shameless plug to get you to visit the website.)

PROHIBITED ASSSETS go here in the fancy box https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-investments

So can your IRA buy the entity that owns that building?

Well… maybe.  Probably, even.

But if the entity that owns the building happens to be an S corporation, then your IRA is kind of out of luck, even though the Employee Retirement Income Security Act of 1974 - better known as ERISA – the law which created the IRA, certainly doesn’t prohibit it.

But it’s prohibited nevertheless.  Under the law that created S corporations on the federal level, there are some limits to who can own shares in S corporations.  I’ll link to the relevant materials for you on SDITalk.com/239 but bottom line:  IRA’s are excluded from that list.

So, in this, as in everything where rules and regulations are concerned… reality is a bit more nuanced than any of us would like it to be.

But there is a type of real estate I know you CAN own in your IRA… and that is TURNKEY RENTAL PROPERTY!  You can learn more about that by calling my 24-hour free recorded info line at 773-TURNKEY, 773-TURNKEY.

And a quick note – for any of you out in the Bay Area of California, well into Silicon Valley and surrounding areas… be sure to listen to the RADIO version of Self Directed Investor Talk every day at 3:00 pacific on KDOW 1220, the Wall Street Business Network!  Those of you NOT in the Bay Area can listen in very easily too, through iHeartRadio… just stop by the show notes page at SDITalk.com/239 for a link to KDOW’s live feed on iHeartRadio.

And YES… we’ll likely be in more markets very soon, like as in the first quarter of 2017, so very soon.

My friends… thanks for joining me and remember:  Invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

Here’s a GREAT case study that will show you just what’s possible with a little bit of creative thinking, some great real estate deals and a little bit of capital.  I’m Bryan Ellis.  This is Episode #238 of Self Directed Investor Talk…

----

Hello, Self Directed Investor Nation!  Welcome to the podcast of record for savvy, self-directed investors like you, where we show you how to DECLARE INDEPENDENCE from Wall Street and build wealth for generations!

My friends, I had a really enjoyable consultation with one of your fellow listeners today, and while I’m not going to share his name to maintain his privacy, I think the other details of his circumstance will be very, very instructional to you, so we’re going to dig into that in today’s episode.

But first… don’t forget:  Fund and Grow.  Fund and Grow.  Fund and Grow.  Those are the guys who are essentially – not exactly, but in effect – able to get you a CREDIT CARD at a zero percent interest rate, and a limit of up to $250,000.  That’s not exactly what they’re doing, but it’s pretty close. They’ve got a great FREE WEBINAR up at SDITalk.com/credit that you should check out… you’ll see what they do, and your mind will be blown… that is, if no-interest financing of up to $250,000 interests you.  Check them out at SDITalk.com/credit…

Ok, today I had a call with one of your fellow members of SDI Nation.  His name’s not actually Rick, but I’ll call him Rick for simplicity.  All the other details I’ll share are correct.

Rick is conventionally employed and has a 401k worth about $500,000.  He turns 59 ½ in March, and at that time, he can transfer as much of that money out of his 401k as he wants.  His money is currently in the stock market but he’s very ready to get off of that train.

Oh… and one other important fact.  Rick and his wife own, outside of their retirement accounts, 5 turnkey rental properties spread across 2 different states.  He likes the concept of turnkey rental property investing, but he’s been stung a bit by the company he’s worked with, because 2 of the 5 properties have been – shall I say – an unfortunate experience for Rick.

Nevertheless, he’s gotten enough of a taste of the good side of that asset class that he wants to do more.  That’s what we discussed today.

Rick told me he wants to roll his 401k over into a self-directed IRA and buy more turnkey houses.  And there was the first place we were able to optimize his plan.  With a tiny bit of effort, Rick will be able to qualify to have a self-directed 401k rather than a self-directed IRA.  Why does that matter?  Two reasons:  First, the IRS is far more forgiving if you commit a booboo in a 401k versus an IRA.  And Second… and this is the big one for Rick… he’s thinking about leveraging his savings in order to buy MORE properties than he has cash to buy.  Bottom line on this is if he does so in an IRA, he’ll have to pay income taxes every year – regardless of withdrawals.  But if he does the same deal in every way, but with a self-directed 401k instead, then that tax liability simply disappears.  So right there, he’s going to save a big chunk of cash.

Next, we have to figure out what to do to generate income for Rick… and income is what he’s after, specifically.

I mentioned to him some of the work we do with turnkey rental properties down in Birmingham, Alabama, where it’s rather common for our clients to pay only $55,000 for a newly renovated property that yields a reliable – and government-guaranteed - $750 per month rental income.  In these properties, it’s a rather frequent occurrence for clients to NET 8 to 10% after ALL expenses… including a nice-sized rainy-day fund for those “just in case” kinds of situations.

We envisioned a simple scenario in which Rick deployed his retirement funds into a collection of such properties. Bottom line:  Rick ends up with a net cash flow of, conservatively, $40,000 to $50,000 per year, immediately.

And remember – he doesn’t have to do any of the dirty work.  He’s not a landlord, he’s not a property manager, he doesn’t have to be directly involved in any way.

That’s what turnkey rental property investing is all about:  The benefits of real estate ownership without the hassles.

But that assumes we’re doing all-cash transactions, and Rick was specifically interested in using leverage.  Look… leverage makes me nervous, but done conservatively, it can work out very nicely.  I advised Rick to not seek more than 50% loans for his properties, just to keep stress levels low.  How does that affect the financial picture?

Well, instead of buying 9 houses, he now gets to buy 18.  And his income increases, too.  After paying his mortgage note, he’d likely be looking at a net income of around $60,000 per year or so.  But really… that’s only about $10 grand per year more, because his mortgage payment would take up a big chunk of it.

Is it worth it?  Man that’s tough… I’d like to sell Rick 18 houses instead of 9 but I’ve got to tell you… I just don’t know if I’d be able to recommend the leverage angle in good conscience.  Now if we’re able to find him some really great financing rates, that’s a different thing… but at the prevailing rates today for investment properties… particularly for non-recourse loans… I’d have a hard time recommending that he does that.

Actually… now that I think of it, there might be an incredibly cool play that combines the zero-interest financing that my friends over at FUND and GROW provide.  We’ll have to be creative and careful to avoid prohibited transactions, but that would change the game ENTIRELY.

But short of working some absolute magic like that – and I’m nothing, if not a magician when it comes to self-directed retirement accounts – then Rick is going to get to enjoy a VERY strong income of around $50,000 a year NET… without taking on any debt, without being a landlord or property manager, and… best of all… WITHOUT facing another night of worrying about the stock market.

And that, my friends, is why I LOVE turnkey rental property investing.  Want to know more?  I have a great new ebook called Building Legacy Wealth with Turnkey Income Properties, and if you’re interested in turnkey rental investing and you’d like a free copy of this ebook, just call my 24-hour free recorded message line at 773-TURNKEY.  Nobody will answer the phone… it’s just a 2 minute recording that gives you the basics on turnkey rental investing so you’ll know whether it’s the right thing for you to do… or to do again!

My friends, invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

Want to contribute to a Roth IRA, but your income is too high?  Never fear, my friends… a solution is here!  I’m Bryan Ellis.  I’ll give you that solution right now in Episode #237 of Self Directed Investor Talk.

----

Hello, SDI Nation!  Welcome to the broadcast of record for savvy self-directed investors like you, where each day we educate, entertain and INSPIRE you to DECLARE INDEPENDENCE from Wall Street… and in the place of simply DEFAULTING to stocks, bonds and mutual funds, you open your mind and portfolio to alternative assets that are SIMPLE, SAFE and STRONG!

Glad to be with you again today, my friends.  To participate in the show, just drop me an email at [email protected] or reach out on Twitter or Facebook where our handle is @SDITalk in both places.  And… BE SURE that in this NEW YEAR you’re on the SDI Private Update list, which you can join by texting the word SDITALK with no spaces or periods to 44222.

Hey I’ve told you a few times about my friends Ari & Mike over at Fund & Grow… they’re the people who, in effect, make it possible for you to have a 0% interest rate credit card with credit limits totaling up to $250,000 or more.  Their info that you should check out is over at SDITalk.com/credit but here’s something really cool I just learned:  In the last 90 days, they’ve helped a few of your fellow listeners to acquire a bit over $2 million in zero-interest rate credit.  Yep.  Pretty cool.  If you need some capital for your investments or your business, check them out at SDITalk.com/credit now.

You want to contribute to an IRA, and you want the best tax benefits possible, which arguably come from the Roth IRA.  Problem is, you make too much money.  That’s right… the US congress, in its constant state of trying to punish the successful, instituted an income limitation such that you can’t even contribute to a Roth IRA if you make somewhere around $118,000 per year if you’re single or about $186,000 per year if you’re married.

But fear not, SDI Nation!  There is a solution!

It’s called the Backdoor Roth IRA, and the basic idea is that:

While there’s an income limit for CONTRIBUTING to a Roth IRA, there’s no income limit for CONVERTING to a Roth IRA.  So here’s how we take advantage of this loophole in a most advantageous of manners to give you, my high-income-earning listener, the ability to contribute to a Roth just like your lower-income brethren.

STEP 1:  Open a TRADITIONAL IRA – yes, I said “traditional”, not Roth – and make your deposit into that account.  But here’s the thing:  You can’t take a tax deduction for that contribution.  You’ll be doing what’s called a non-deductible contribution.  And that’s important in…

STEP 2:  This is where you convert that Traditional IRA into a Roth IRA.  Voila!  Now you’ve got a Roth IRA, just as if you’d put money there in the first place.

Yes, that’s all there is to it, conceptually.  It’s a simple 2-step maneuver that effectively eliminates the income limits for Roth IRA contributions.

Now I’ll go ahead and warn you:  There are some people out there who criticize this strategy, even suggesting that it’s illegal.  That’s a hard case to make since Congress actually REMOVED the income limits for Roth conversions back in 2010, so from the vantage point of this incredibly well-informed layman who is still, in the interest of full disclosure, NOT a lawyer, I think it’s darn near impossible to argue that this is illegal.

But there are 2 red flags to keep your eye on:

Red Flag #1:  If you have any money in a traditional IRA at the present time, you might have a bit of a hiccup using this back-door Roth IRA strategy due to something called the IRS Aggregation Rule.  I won’t weigh you down with the details right now, but if you’re interested, check them out on today’s show notes page at SDITalk.com/237.

And Red Flag #2 is something called the Step Transaction Doctrine.  In a nutshell, this is a legal doctrine that says if it’s against the law for you to do a certain thing, then it’s still against the law for you to accomplish that thing even if you can get there by taking intermediate steps that are entirely within the law.  The fear is that the IRS may apply that doctrine to the backdoor Roth IRA strategy.

How do you address that risk?  My gut sense, as a non-lawyer who is wholly unqualified to give legal advice, is that it’s wildly improbable that the IRS would pursue that path.  Attacking retirement accounts en masse is a real hot button issue for them… there was a situation that arose a few years ago where the IRS could have EASILY pursued tens of millions of IRA’s of all types – not just self-directed IRA’s – for a particular kind of prohibited transaction, and they simply passed on the chance to do it… I think because it would never fly politically.  But that’s just my opinion of course, incredibly insightful though it is.

So my advice:  Yes, you should seriously consider the backdoor Roth IRA if you want to contribute to a Roth but your income is too high.  But before you do that, be sure to talk to an attorney who is an expert in the area of self directed IRA’s.  If you don’t have such an attorney, there’s one I recommend highly, and you can get his information on today’s show notes page at SDITalk.com/237.

And a quick parting note, my friends… We have some EXTRAORDINARY turnkey rental property investment opportunities available RIGHT NOW, the opportunity has never been better.  If you’re looking for some great real estate investments, whether inside your retirement account or outside of it – including for 1031 exchanges – then just call my 24 hour free information line at 773-TURNKEY and listen to my 2 minute recording to see if turnkey investing is right for you.

My friends… invest wisely today, and live well forever!

Hosted on Acast. See acast.com/privacy for more information.

Want a quick tip for saving a TON of taxes if you own real estate in a traditional self-directed IRA?   I’ve got just the thing for you now.  I’m Bryan Ellis.  This is Episode #236.

----

Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like YOU where you are educated, entertained and even INSPIRED to DECLARE INDEPENDENCE from Wall Street… Our goal here is to help you find, understand and PROFIT from the very best alternative assets that money can buy.

I’ve got some more tax-saving goodness for you real estate investors who use your Traditional IRA to own real estate.

But before we go there… have you checked out SDITalk.com/credit?  That’s where you’re going to learn how to get up to around $250,000 of ZERO-INTEREST capital for your investments or your business.  You know those credit cards that offer a zero percent introductory offer?  Well imagine you could do that… but you could extend the “introductory” period out indefinitely.  That’s what you’ll learn how to do at SDITalk.com/credit.  They’ve set up over $2 million of zero-interest funding for your fellow listeners just since October – you know, during the past 3 months – and more than $4.1 Million in the past year, so this is for real.  Check them out at SDITalk.com/credit.

Now onward, my friends…

So, let’s just imagine you’re one of the MANY folks who owns real estate in your IRA.  Actually… I’ve got the perfect context for a story to explain this to you.

We’re currently doing some research to check out the background of a company who has a unique angle on the turnkey rental property business.  What these people do is work with investors who want to buy a RETIREMENT HOME for themselves in their IRA in a nice location.  So what this company does is basically puts all of that together for the investor, and then monetizes the property for the owner in the form of corporate rentals.  So what you have is high quality tenants who are paying a premium rental rate, and who are likely to take really good care of the property… and then when the time comes for your retirement, you’ve got a home that you can live in, paid for by your IRA!

Well, there’s just one little hitch with that.

You can’t live in that house until it’s not in your IRA any more.  For it not to be in your IRA any more, it has to be distributed to you, in other words, removed from your IRA.

And as soon as that happens, guess what?  You guessed it:  Taxes.  You get to pay income tax rates on the ENTIRE value of the house.  So if it’s worth $200,000 and you’re in the 30% effective tax bracket, you’ll have to come up with $60,000 just to cover the income tax due to you.

Ouch.  Hey… that’s the reality… the traditional IRA is just a tool for tax deferral, not a tool for tax elimination.

HOWEVER… there is something that can be done quite easily to substantially reduce that tax burden, and I will, of course, share this bit of tax brilliance with you… originally taught to me by the great one, Tim Berry, America’s top self-directed IRA attorney.

So we’ve already agreed this house is worth $200,000, right?

What is half of that house worth?  $100,000?

Well… no, it’s not.  What can you do with ½ ownership of a house?  Maybe you’re entitled to half of the income it generates.  You’re entitled to half of the income if it’s sold.  But do you actually own the house if you o nly own half the house?  No, you don’t.  You can’t independently decide to rent it or to renovate it or the sell it or anything else like that.  You’ve got to get the OK of the other owner, too.

So it’s safe to say – and is an accepted truth in tax law that our friends at the IRS would agree with – the value of half (or any proportion) of an asset is LESS than the value of half of the whole thing… and that makes perfect sense.

So here’s the play:

Instead of distributing the house to yourself from your IRA, distribute HALF of the house to yourself from your IRA, and then the other half at some time in the future… maybe the next day, maybe the next tax year, that’s a question for your tax advisor.

But the net effect is this:  You’re ultimately receiving 100% ownership of the property, but you’re doing it in such a way that the value of the property is reduced by some factor – probably around 25% - because you’re taking it out in PIECES, which are each inherently less valuable than the whole.

So that means your $60,000 tax bill just dropped by 25%... or $15,000.

There, you just save $15,000 by listening to Self Directed Investor Talk.  You’re welcome! 

Actually, THANK YOU!  Thank you for listening to SDI Talk.  I really appreciate you.

Remember – today’s show notes page is at SDITalk.com/236.  You might check it out… it’s a totally new format that I think you’re going to find incredibly helpful.

And before I let you go… We’ve got some GREAT turnkey rental property investment opportunities in several cities throughout the country, and I know MANY of you are interested in that asset class, as well you should be.  BUT…

There are 7 key questions you need to make sure that you answer before you buy your first (or your next) turnkey rental property, and after you answer them, you’ve basically assured yourself of an excellent transaction.  To learn more just call my free recorded message line at (773) TURNKEY.  It’s only 2 minutes long, and nobody will answer the phone, it’s just a recording, but I think you’ll really benefit from the information.  That’s (773) TURNKEY.

My friends, thank you for listening in today!  Please, spread the word about SDI Talk and remember:  Invest wisely today and live well forever!

Hosted on Acast. See acast.com/privacy for more information.