Self-Directed IRAs for Note Buyers: Legal Strategy & Prohibited Transactions | Real Estate Notes Show

Episode: Does and Donts of Self Directed IRA for Note Buyers - Full Video Dave's Goals and Plans: - Plans to have a portfolio of notes as retirement strategy - Does not plan to slow down in retirement, will continue similar work - Currently managing email and business operations while dealing with allergies Nathan's Goals and Plans: - Listing house in Quebec (outside Montreal) on Monday to relocate - Moving to Alberta (outside Calgary) after 18 years in Quebec - Planning to relocate to be closer to Rocky Mountains and better ski hills - Will shift from Eastern to Mountain time zone but business operations remain unchanged - In a 50/50 business deal with Dave - Cannot use self-directed IRA funds for deals where he is a 50/50 business partner Key Recommendations: - Self-directed IRAs are legal and available to U.S.

persons with Social Security numbers and earned income - Avoid prohibited transactions with disallowed persons: ascendants, descendants, spouses, 50/50 business partners, and fiduciaries - Maintain arm's length distance from disallowed persons in note deals - All earnings in self-directed retirement accounts can be reinvested without tax diminishment (tax-deferred or tax-free) - Check with your attorney regarding concurrent funding exceptions for deals with disallowed parties - Talk to HR about self-directing existing 401k/403b options before leaving employment Topics Discussed: - Self-directed IRAs for note investing - Alternative assets: notes, real estate, precious metals - Prohibited transaction rules and disallowed persons - Types of self-directed accounts: Traditional IRA, Roth IRA, SEP, Solo 401k, HSA - Inherited IRAs and beneficiary rules - Tax advantages of self-directed retirement accounts - Note buying as retirement strategy Guest Insights: - Karen Hall background: property management, real estate licensing, mortgage loan servicing, origination - logical path to self-directed IRA expertise - Self-directed IRAs allow investment in alternative assets instead of traditional stock market vehicles - Prohibited transactions defined in IRC Section 4975 - Inherited IRAs bypass probate and transfer directly to beneficiary accounts with special rules - Tax-deferred/tax-free growth allows 100% of earned income to be reinvested into next deal - Self-directed accounts available: Traditional, Roth, SEP, Simple, Spousal, Inherited IRA, Solo 401k, and HSA retirement doesn't look much different than i'm doing now i don't see myself slowing down yeah yeah yeah my retirement plan is to have a portfolio of notes that's it that's really the same thing that i'm doing now but i enjoy it i can certainly do it uh as a retiree and and so looking forward to that so that's down the road but there's there's planning involved and there's things that you have to kind of consider and tax considerations and all those kinds of things come into play so gotcha so we've got our guests here today to help us figure some of that stuff out yes so we uh bring her in behold mrs karen hall how are you karen hey good it's karen it's character sorry i'm with an attitude so you're you're an experienced financial no know it all about money and everything else right you have a background in big bank stuff stuff you know but i'm not an advisor i know stuff but i'm like i'm not supposed to advise anybody but but we'll do our best today how did you get started in this space oh man i was a little girl and i just dreamt of self-directing iras i used to like journal about it you know i could hardly wait till i grow up i took a path that a lot of people did you know like working you know one job and then finding your way into real estate in some way so it started off with property management got a real estate license um you know years go by but i get into mortgage loan servicing right loan servicing getting it alone origination so you know the in the front and the back side of that elephant you know and from that i got into self-directed ira so i'd already in my career covered all the asset classes that our account holders invested uh so it was a real logical transition very interesting so so there it is so all right there we go hit the record button so everyone dave puts here again for jkp holdings alongside mr nathan turner hopefully everything goes well today my brain's a little foggy from allergies i'm sure my voice sounds very very attractive so not covet though right no thank god um you know we're we're getting through a lot of this stuff um it's just been a whirlwind of a a couple days uh in and out just what it is um trying to manage email at the same time um it's been difficult but uh i'll get through it and just take lots of advil right now and just yeah push through and get through it and eventually get through how you been how's how things been for you good we uh so it's interesting our so we live in quebec just outside of montreal we intended to move here for a year 18 years ago and uh so finally just a couple weeks ago we were like you know what i think now's the time kids are getting older so this is it so we're actually listing our house this coming monday so i've been burning both ends yeah burning the candle both ends we've got to repaint the basement and just a couple of little small things down there so it's been crazy busy trying to get all that done but it's all good i'm not jealous of you for moving i'm sorry to tell you i just don't think i'd ever do it um it's just amazing so is this because the kids are getting older and things are just adjusting or what's the biggest thing yeah yeah um we love where we live we love our little town just outside of montreal all that's great uh there are definitely challenges and living in a french community and so that's uh that's a thing so we're moving back out west uh back out to alberta where i'm from okay just outside of calgary so same kind of thing why do we care about what iras what difference does it make to the average joe's life and is it for just our average joes or is it for everybody is it for only the rich people or well it's not for canadians sorry i love you not doesn't it but it's yeah it's for americans anyways if you have a social security number so if that's you you're in business the only barrier to entry here is to have earned income from a job active income you know that's how the irs sees it that's the only barrier to entry but if you but does it make sense to self-direct well that's the thing it's like when you self-direct your ira it's not like we're putting it in some vehicle that's growing i mean it earns a teeny bit of interest but you self-direct your ira when you want to invest in alternative assets for example notes you know is a good one a lot of people invest in notes performing and non-performing debt secured and unsecured loans your ira can be the bank be the lender notes are a really big asset class but you know real estate precious metals are big right now whenever the economy goes a little haywire people love precious metals and we're doing a lot of that so just it's called alternative assets it's a really big space so let's let's clear up a few quick things self-directing your ira is not illegal oh gosh no right you don't have to put your money in the stock market you know 401k 403b whatever your plan is you don't have to do that you can self-direct it you do but you don't write so you can also self-direct it's another option talk to your hr about it that's another option yeah a lot of times when you work for a company and you've got if like a 401k a 403b or 457 you may not have the option to self-direct them you might have to wait until you leave the service of your company and then you can like small businesses can have what's called a separate array which is a um small town just outside of big city so we're very much looking forward to that but it's it's busy busy busy for right now we'll list on monday so are you moving how far away from where you're at now are you moving so right now montreal is like right above uh burlington vermont okay and then calgary is right above um like billings montana okay so we're going we're going other side of the country uh back out to the rocky mountains will be will be less than an hour from the rockies uh which is fantastic very excited about that you can convince the kids yes i can't wait 40 minutes away from a much bigger ski hill with bigger runs and steeper runs and so i'm i'm very much looking forward to that who's more excited you're white for you that's a good question right now with everything going on both of us are just like let's just get it done okay we're busy trying to get that all set and ready but it's it's exciting it's fun cool nothing to do with notes at all but it's it's funny yeah and you could do the same thing where you're at right are you getting a smaller house or what i'd be maybe a little bit bigger about the same size uh we did that big renovation here a couple years ago and so it's it's roughly the same size and we'll be able to pretty much move straight across which is nice so we're wow that's exciting yeah new new stuff going on cool and that'll be with notes you can do it from anywhere i i'm still gonna be in canada um i'll be on mountain time zone instead of eastern and that's really the biggest difference okay okay otherwise you know nothing much changes so let's let's transition this right we're both getting much younger in our age here yeah um and one of the things we're looking forward to is this retirement word which i don't know about you but everyone i talked to you know a self-employed you know a pension and then there's also the solo 401k so there are other things you can do as a employer but most employers have um other accounts but with us it's a traditional roth sep simple spousal inherited ira solo 401k and also health savings account you can self-direct all those things cool so you said one thing that i just want to pick out there inherited iras can you inherit somebody else's ira yeah yeah so when you when you open an ira like hey you know today nathan opens an ira and you name a beneficiary so usually it's your spouse as a primary beneficiary your children as contingent beneficiaries but god forbid you pass so what happens next is your beneficiaries the money from your ira goes directly into the beneficiary iras and you know so so the beneficiaries will open new inherited ira accounts and there are special rules um a lot of special rules and they're changing regarding inherited iras i did not know that one that's an interesting one i hadn't heard of that yeah it doesn't go through probate or anything an ira in this sense is like a trust okay so it goes directly from the decedent's account to the beneficiaries account um basically it works like the little paperwork but that's how it goes very interesting i did not know that so when you talk about owning notes um are there any restrictions in owning notes like like for example if i bought a note in my own ira um can i then do everything that i would normally do i can talk to the borrowers if i choose to or have the services do that or set up attorneys all that kind of thing like i can i can manage that or how does that work yeah let's talk about it so with self-directed iras there are special rules for sure and it's like a game of keep away from these things called prohibited transactions so if some of the people listening today are rule book kind of people they can it's when i opened the company you direct but it's because banks weren't lending you know and so people investors are like where do i find the money to for my deals where do i find you know where's this money going to come from it's not the bank they won't even give me any money and so the realization that there is this huge pool of retirement money that may or may not be doing very well in the stock market let's move that over into alternative assets and help them do that help those people to build their retirement um using alternative assets so baby boomers could if they have a bunch of money seeing their 401ks and they retired and they want to control their money they could move the money over right yeah sometimes when you're 59 and a half and you have a 401k you automatically can do what's called an in-service transfer that's true but um but i mean you could be 25 and change jobs and have a 401k you could roll it over so it's not really about your age it's more about you know where's if you've got the retirement capital to debate you know to really do something it's like you're not going to you're not going to invest in a note typically for 10 000 right it's it's usually going to be a bigger deal so you just have to put that money away and of course we have um contribution caps so it takes a little while to build a retirement account up to the size where you want to uh you know invest in it you know in a note or sometimes you have to be an accredited investor right you know to do a deal to do a note deal because notes are securities so sometimes you have to be uh you have to be um you know right exactly you have to be accredited and that's for my funding it's only accredited investors however so the money that somebody has in their ira that would count towards their net worth is that right you know i believe it does but you want to ask your tax person there it doesn't count your house though i know that's for sure no not your primary residence but uh but it seems to me like your savings you know kind of yeah yeah certainly but we offer the traditional roth sep simple you know spousal and inherited um and k and the health savings account can be self-directed too so it's i'm just kind of comparing it to the canadian plans in my head so a roth ira trying to figure out which one is which if you're gonna put in um like pre-taxed dollars is that an ira or is that the 401k or or is there a difference in u.s right so pre-tax in other words the money has not yet been taxed right that money goes into anything but a roth you know the roth is after tax money got it the pretext goes in we have i would say 90 of what we have here is traditional iras and the reason for that is most of the accounts we have are rollovers from an employer plan so a pre-tax employer plan normally will roll over into a traditional ira same tax treatment okay yeah they can so the canadian version of the ira is called the tax free savings account tfsa the advantage of the tfsa is there's no age limit on when i can start taking that money out the disadvantage is i can only put it into publicly traded assets oh so yeah but it's an interesting uh differentiation because it's i you know that not having that age limit i think is great um but i'm limited like i can't buy excuse me i can't buy notes with my tfsa well i i think that has to do with risk i think that maybe the regulators think there's too much risk in alternative assets but i mean tell me is there risk in the stock market absolutely there's some risk you know so that's investing right am i right yeah so with with iras um there's no cap where you can invest in um you can do any almost any deal you choose to do that's legal right um cash um so you're not at risk in the market and and that's a good thing and then you do earn a little percent on on an uninvested cash so one of the english okay go ahead again we'll say can you move over any time of the year or is there a certain period of time like tax day they get then you can move it is it open window well since it's april we're getting hammered right now because people remember oh my gosh i gotta make my prior year contribution and by the way this year you can make a prior year contribution up until april 18th so you can make a contribution for 2021 up until april 18th that has to be postmarked by that date or wired on that date right um but yeah no there's no any any day of the any day of the year your ira can be you know could be created funded invested as long as it's a the banks are open we can move money that's really cool and then how is how the income that you make inside your ira is that reported anywhere how is that yeah yeah that's a great question so if you take a withdrawal we report it on what's called a 1099 right and we tell the irs hey this person had a taxable event and then every year the ira holder since these are alternative assets we reach out to our account holders and say what is your what are your alternative assets worth tell us the value give us a valuation so it could be like a broker opinion of value um a lot of times with a note it's pretty clear how much you know the the face value and what's owed i mean it's really easy usually to determine the value of a note um you know precious metals that's a market value you can just google that um but then we report that value on a form called a 5498 to the irs okay and we do the tax reporting and record keeping on the ira accounts the solo case you're the trustee of your plan so you and your tax person are filing if you need a 5500 easy or something so lots of lots of options of different read about prohibited transactions in the internal revenue tax code how fun does that sound awesome but if you want to it's irc internal revenue code 49.75 you can go ahead and read that talks about but i'm just going gonna distill it in about like one minute so people can be disallowed to your ira your ascendants and descendants right your parents and grandparents and their spouse you and your spouse children grandchildren their spouses disallowed a 50 50 business partner is disallowed and a fiduciary like your realtor or uh your cpa a fiduciary your attorney could be disallowed all right so there you go that's who can play the game so your ira can buy a note but it can't be um it can't be a note that was made to say for example your spouse a disallowed person and so you just have to it's keep away it's arm's length from these people you know so that's one thing to consider no personal benefit one thing i learned too over the years and i didn't notice a couple years ago was that any deal that i'm 50 50 with an individual not related to immediately becomes a non-qualified participant right right me and nathan are in a deal 50 50.

i can't use my self-directed money to invest in something with him you guys it it if you have a company and you're 50 50 business partners then you're disallowed to each other but if but if you're but if that's not the case and you say hey i want to get in this deal nathan you want to go 50 50 with me that's different but if you already have incorporated as 50 50 business partners then you're disallowed to each other what if i did a deal with nathan privately and then i wanted my ira money to do another deal with him could i do that are you 50 50 well i'll tell you what there is uh there is yes is the answer because there's an exception that you can as long as you fund concurrently you can do deals with disallowed parties and remember everyone check your attorney on everything please right um so we have a bunch of people commenting in here uh cindy said hi robin said i um yes you counted and your other assets right yes yeah and and i think we'll be seeing the sec getting a little stronger on that accredited thing i mean i think being accredited sort of means that if you lost the money you could still you know feed your family yeah and they just don't because these deals uh can be risky so you really need to of course understand the risk unless it's cured by real estate and it's by done by somebody that's been doing this for years and years hey you know there's i list that yeah hey and there's risk in any investing but without risk there's no rewards so yeah i think investors are people that are looking for you know to take risks and make investments yeah absolutely i've got a question here this is a great question um yvonne is saying uh i guess she's got her iras with fidelity she says fidelity won't let me have a self-directed ira they said that it's self-directed in the stocks that i choose [Music] right so they kind of jumped on the self-doubt directed bandwagon saying you can choose any stock you want but a truly self-directed ira that's what we provided you direct ira services you know one that you can invest outside of the stock market so if if yvonne wanted to move you know transfer her fidelity ira to you drug to a self-directed ira that's a pretty simple process we do that if you know many times a day what is the difference between you guys and a fidelity kind of it's well think of this like the typical ira versus a self-directed ira is because an ira is an ira it's just the same rules but the difference between self-directed and a typical ira is is like what assets you could put in this ira bucket right so for somebody who's working at fidelity they have licenses like maybe a 6 or 63 or 7 or something like this and they're not allowed to deal in the real estate environment but so now we've got the alternative asset pool and so that's different so so they end up being two different things same rules for iras it's still an ira but a self-directed ira is a bucket for alternative assets any deal you want to do with someone else lend money on deals lend money on apart buildings or even start your own kind of business right you can do any of those things well no it's not going to be your own business because you're disallowed to your ira and you're not allowed to have you know present benefit it's all it's all about saving for retirement so you can have it later but you're not going to take your ira invest in your own business but yeah everything else is right so whenever an ira is investing it's always in either a debt or an equity position you know could you get into like a checkbook ira where sure sure so a checkbook ira isn't a special kind of ira what it is is an asset that the account buys the retirement account will invest in a special purpose llc so the ira is open with money you have a third party create the llc your ira you know buys the 100 of the initial units of that account and then we fund the money you put the money into the checking account now you've got your ira money you know as the is the umbrella and the llc under that retirement account umbrella so it's it's um an ira owned llc is also called a checkbook ira and it's not a gift with purchase a lot of people where's my checkbook it's like well you have to have a third party create this and it has to have special language uh that's what it is stock market i can move money like quickly how long does it take for you guys to fund a deal typically 24 to 48 hours usually yeah yeah typically 24 to 48 hours we're pretty quick um and yeah so it's really good i mean as long as everything's all queued up and the money is is cleared and and then you're good to go and and dave asked and you know this but but dave asked that because in the note world it moves quickly like once once you've got an accepted bid usually you know you might have a week to do your final due diligence um but there are then those other times where okay i need you to fund tomorrow where due diligence is already done and fee uh annual fee of 375 and that's regardless of the number of assets in your account and regardless of their value it's not on a sliding scale so it's a great it's a great fee we have a fifty dollar setup fee it's a one-time setup fee when your account opens you know that flat fee per year um and then uh the first 10 checks that come in per year are have no cost after 10 it's uh or after yeah after 10 it's a 10 fee so it's extremely reasonable our fees are very low for the industry a 15 wire fee it's like half of what most other companies charge so you know we're not going to fee you to death right because you guys make money how do you make money how does an iron company make money yeah i mean it's obviously not on the fees right we make money like bank like all banks and trust companies make money and that's on you know on the deposits that are you know the money that's on deposit not on people's assets we don't make money on if your ira invests in a house we're not making anything on that house but just like banks you know how they they've got the fed funds right they earn interest overnight so we earn money the same way any bank would okay okay so it's to your advantage to have people have a larger ira is that accurate yes but i mean it's nothing i have control over people have the size ira that they have they're going to invest what they want to invest you know we can't say you know we're not going to do an ad campaign that says put all your money here but don't invest it i mean that's not and that's not in our account holders best interest it just works out it works out so that everybody wins yeah and and as an ira company you can't recommend any specific investments or even vendors necessarily but but you can say you know invest it go go out and do something with it make your account bigger because we all win you know you're so right that is a real uh sticking point right now um with the department of labor and just the the lawmakers they're they just want to make sure that we're not and i know bruce said hi as well so i'm glad timing in here throughout the time i'm gonna stay low my voice um feel free to ask questions and i'll forward them to nathan to ask can you share a little bit about um what are the benefits of using self-directed money yeah i mean the main benefit is that you can compound your earnings faster don't you love that and the reason you can is because when you have earnings and it could be you know it could be from a liquidity event could be from just monthly cash flow whatever that income is not diminished by tax so any kind of retirement account is tax deferred or in a roth tax-free so you get to so all the money that your ira earns can go back out into the next deal 100 of it it's not there are a couple exceptions there is this like two taxes where ira can be taxed uh but that's you know kind of going into the weeds but for the most part yes that's how it works to compound faster oh that's great and then uh you mentioned earlier we said you know as a canadian i can't have an eye area of my own however i can use other people's iras i go and invest and i do that all the time people use their ira money to invest with me so that we can go both make money together which is fantastic it's so smart you know i think what a lot of people don't realize is that there's a 39 trillion dollar pool of retirement funds that invest that people like you who are you know asset sponsors can tap into for your deals and so your qualifying question for that would be to say hey do you have an ira right now or do you have like a previous employer plan like something from your old employer a lot of people do and they just haven't rolled it over yet and so then they can take that money and invest with you so i think this really became apparent around 2008 2009 is when we really had a boom in our industry and your company is designed for that alternative assets versus and they could take it and put in stocks they want to but you guys have the availability to do anything that's legally bound right right well we have the ability to help them invest outside the stock market that's we're all about outside the stock market can you give advice on it's not what you should buy but what things you can't buy so if someone's about to make a bad transaction that's illegal can you advise them hey listen you can't go out and buy cars with us exactly exactly you know people think they can um so right yes we do we offer a free consultation for anybody who wants to talk to us and say someone is already an account holder their account is open it's funded they found an asset they want to invest we're going to review those investment documents and we're going to look and see hey wait a minute it looks like this you and the seller have have the same name the same last name are you related are you disallowed to each other you know we're looking for things like that um you know and so there are times when we're able to catch things but the responsibility not to commit a prohibited transaction is always on the investor uh the ira holder because it's self-directed you know it's it's sort of like when you go buy a house i mean when you go to closing closing doesn't tell you if it's a good or bad deal they're not going to tell you how to write it off on your tax return they're just going to help you complete that transaction so that now you own that house right nathan i don't think it matters where you're at that's how it works yeah they didn't tell you okay well here's how you you know take your tax benefits yeah because that's not that's not their thing and we're like that we're administrative and we help you you know get it to the right place but we definitely want to talk to our account holders and any you know anybody that's got a transaction that says hey is this is this prohibited can you do roth and traditional with your company yeah traditional difference yeah well the difference is a tax treatment so roth iras are the only kind of ira that can be tax free for life that's pretty sweet all right we need to fund tomorrow tomorrow with the subjected ira if you want to talk about how long it takes you know it it you know it's not going to happen tomorrow you're not going to give us stocks today and get it funded tomorrow typically um i mean it happens but i mean we're not going to we're going to under promise and over deliver on that one sure and just say you gotta give it a couple of days but be coming from the real estate world myself and really having ingrained in my body that sense of urgency you know um that you have and especially in residential real estate it's crazy people everything is now now now yeah um so that's what i hire when i hire people for you know on staff they have real estate experience they understand the sense of urgency um and you know then all of a sudden we're gonna you know we're gonna do what we can to make things happen yeah that's that's a huge huge plus i i know they're and and not all ira companies are created equal in that sense where some will take like a full week to get the money turned back out and that that can be a long long time in a transaction setting lose a deal and you could lose the deal and then there's others if you can do it in 24 or 48 hours man that's a that's a huge plus well we're going to talk to you about the deal and there are things that can hold up a deal for a week that have nothing to do with us you know so we're you know we'll try to set your expectations up front the best you know the best that we know how uh given the information we have available but sometimes there are outside reasons that a deal could get held up too and then for for anybody who's watching where if you're doing a deal and the money is coming from whether it's your own or somebody else's ira and the seller says okay we're going to close friday i let them know the money's coming from an ira and just make sure that's up front so that there's an understanding that you know what it might take an extra day or two and then the seller understands that but you don't say anything the seller doesn't know right but if you say it and then they know that there's a potential delay there it's fine no big deal it's recommending any investments to our account holders because we're not advisory and the minute we do that we become what's called a fiduciary and if you have that label on you as being a fiduciary it comes with a lot of rules so we stay out of that ballpark entirely um right and so it's up to the account holder it's self-directed the account holders choosing their own asset doing their own due diligence and then so then that that comes back to that's where i'm at is i'm trying to get it in front of ira holders and say listen you need to use and make money yeah i'm one option i have many but i'm i'm an option and i think i'm a pretty good one how many people with iras have money sitting as cash in a bank account like you know we're not person is that there's a lot of money sitting there on the sideline just not doing well almost every account has some idle cash in it in fact you need to leave a little pad because a hundred percent of the expenses of an ira owned asset have to be paid for by the ira so with a note maybe you need somebody because you're asking earlier nathan like can you do the servicing on your account well you have to stay arm's length from that you certainly couldn't get paid for it um you can do the cert you know certain minor things but if say for example you need someone to collect that debt well you'd have to your ira would pay a third-party debt collector to handle that you know so you need to leave idle cash in your account for expenses almost every account has some idle cash in it at some point we have thousands you know thousands and thousands of accounts so it works out so so if you're prohibited from from actively managing it it would make sense to give that money to somebody else who can actually manage it for you i mean that is an asset oh i see like like for example you okay as an example yes yeah yeah one of them aesthetically speaking yeah but also too like it's also good to have like like a loan service or i'm sure you have like if your ira is is lending money you know you want someone to service that note for you right um so you need or if you have a if your ira not a problem let me make a suggestion to you to your listeners that you're a node investor you need something happening like you know time is of the essence always request a wire never never you know mark the box that says you want to check because that check's going in the mail unless you ask for overnight delivery there's a fee for that you know we pass a little pass on the fee that we're we get but never check the box that you want to check if you're in a hurry that's going to take longer all right so so we're kind of with the new kind of the the beginner advice type stuff um any ideas like anything you can share about biggest mistakes that you've seen for like newer investors a couple of common mistakes it's kind of it's kind of funny actually i mean since you know knowing the industry as well as we do but we saw somebody um uh by the way who uh they what did they they wanted their ira to buy a property a property so they went to their bank to get a loan so they're they're telling some mortgage loan officer hey i'm buying this house so the loan officer's got this deal all queued up ready to fund and then no no no an ira doesn't take on regular fannie freddie conforming fha va funding so the whole so the poor loan officer who thought he had a deal that was going to close didn't close because now this ira account holder had to get a non-recourse loan and by the way if your listeners want a list of non-recourse lenders we do have a list i mean it's not necessarily a list of people we recommend but it's like for your convenience so you can check them all out and see what you think um because it has to be non-recourse money so that is a real rookie mistake to think that your ira could go to your regular bank just like when you got the mortgage on your house uh and and get that kind of a loan for an ira it you can't because you because it's discipline got it all right uh so and then another another area where uh different library companies differ is on their fees can you tell us about your fees yeah our fees i mean i think everybody really loves our fees um we have a flat has a piece of property having a property manager having a third party in there doing you know doing the sweat equity is is always a great idea yeah you definitely need to need a third party looking out for stuff right right i've got a question here from john anthony he's asking can you open a self-directed ira at 59 and a half yes yes you can you in fact there's no age limit to having an ira once once you hit the rmd age it's called required minimum distribution age which is recently changed to 72.

once you hit 72 you can only contribute to a roth but as long as you have active income from a job or maybe house flipping or anything else that's considered active income you can still contribute 59 and a half is that magic age where you can take the money out without a penalty okay you still pay tax but at 59 and a half you can take the money out without penalty okay and what what is the penalty if you're 57 50 it'd be 10 so it's some expensive money that's 10 plus your tax rate right yeah hello yeah yes yeah so it could be 10 10 plus if you're a 30 tax or you could be a 40 hit yeah i sure could so you always want to have a great tax advisor you know as part of your you know your tree of advisors you've got to have your insurance your tax advisor your realtor perhaps your note specialist you know you've got to have all these people in your in your tree of advisors to be able to be a successful investor i believe so just let everyone know that we actually have um all the ira comparison chart uh huge wreck is on our comparison chart on our due diligence portal with the fee schedule as well but you can also reach out the carriage direct uh karen can you just tell them what your website is sure it's easy yeah it's you direct ira.com uh the letter u and so you can just info is generally info at udirectio.com that's easy to remember and if you want we'll send you the list things you can do with your area somebody asked you mentioned about working income um they want to know does that include a w-2 income it does w-2 is money from an active active job would passive income is the opposite so passive income would be you know um you know even note income is passive income because you're not you know you're not out there sweating for sweat equity um flipping houses is active income i mean your tax person can really break it down for you but like social security income retirement income is not active income so active income from a job you can google it what's active income what's passive income yeah and arrive at that and you have to have some active income in order to contribute yes you can't contribute more than you earn through active income oh really okay right and then every single ira type has you know has uh has a contribution limit the most you can put in now the amount of money you can earn from investing that's unlimited you know um so you know ask peter thiel right yeah but if you don't know who pure2 is yeah google them you'll find they're like p-h-e-i-l yeah so but as far as like writing a check from your checkbook and putting the money you've got a cap and it depends upon your age your account type in your income how much you can put in and also you know the tax deductibility is in question too so depends on how much you make so there are rules some of it is covered on our website but again this is when you need your advisors to really um be telling you hey this is what you can and can't do this is or you know this your advisors will tell you hey this one is best for you and then go for that all right we've got a question here from robin jackson she's saying if you're a licensed real estate professional and actively manage your notes isn't that income ask your tax person how do you how do didn't use the tickets himself and then sold those tickets at a profit huh wow yeah that's an interesting repeat yeah well it's not an asset class we take you know i think because there can be abuse and we want to make sure we stay in business but i mean i've seen it happen there may be you know another more expensive ira company that will take the risk but yeah you know there you go so does somebody have to have a certain amount of money to start an ira can they start with 500 bucks and be ready to go yes yes you can but the thing of it is do you want to do that i mean obviously i want to open ira accounts but i also want to do what's in the best interest of our account holders so if you only have 500 don't open a self-directed ira because every year you're going to get that fee right and then two years later boom you have no money and you didn't invest and you didn't prosper we want you to prosper so um when you self-direct your ira have an asset in mind or like i'm going to put this money here and it's going to be in this ira then i'm going to go then i'm going to shop for an asset that's that's the way to do it open the account fund it then go look for your asset so the money's there and you're ready to pull the trigger you're not waiting for the money to come over because we could wait two weeks or more for money to come over from another another custodian into the ira so if you've got your account open and funded you know it's loaded ready to go you find your asset boom pull the trigger we review your docs and get your deal funded just trying to see if any more questions we have from other investors and just make sure and then we'll get to our so when did you start you direct in 2009 2009 oh man that's a good time yeah it was it was just perfect you know and i just bootstrapped the whole thing and it was all because of the vast number of real estate investors and remember being able to buy houses on tape you know you're lucky if you can find a right because ira is a very great vehicle yeah but it can be disastrous if you don't treat it right it is it's super easy to avoid prohibited transactions like like land mines but that's why you talk to us hey this is what i want to do we say okay here's the path to get there without stepping on it yeah yeah yeah cool that's great well thank you so much you youdirect.com take a look at it our correct ira.com you yourdreckhirey.com their fee schedule is actually on our portal as well so if you want to see that anytime you can go log in look at that reach out okay right the company has been around for a long time right they know those people you guys have been at conferences you've been around for a while take a look at it i know it's cheaper than what i'm paying um so something i definitely gotta look into um i'm paying over a thousand dollars a year so it's definitely something i should look into so there you go we'll talk yes very good well thanks so much karen thank you gentlemen thanks of non-recourse lenders uh you can you ask us for a consultation hey this is what i'm thinking of doing does this sound right for an ira how do i make that happen or hey i'm ready to open an account right now let's get this done you know we can we're we're here to help it's it's what we do all day so you need active income and a social security number and 50 bucks to get started yeah can you open one for your kids even if you can yeah as yes you can yeah as long as your kids have active income so your children have to have active income to contribute yeah so they can work for your company um i went through this it wasn't easy to do um they have to be a certain age in our state and everything else um but it's just difficult but yeah i mean how great is that if you can get a self-directed ira for a kid who's younger it's awesome yeah or any ira even if it's in the stock market you definitely you know i got my kids started really young with it with a with a roth um and so their money will grow tax-free and later on when they're my age they'll thank me you know yeah i think that's what a fantastic way to set them up for later in life that's great and what else that's what we want for our kids right we just we want them to do well so yeah absolutely yeah oh that's fantastic so one of the questions was you know um what's the interest potential instead of you so i'm presuming interest means that could you put this money in an interest-bearing account while you're waiting for a deal well if you're while you're waiting for a deal it's going to earn a front you know kind of what the market rates are you know a fraction of a percent on the idle cash does um you know pay the account holder a fraction of a percent but no it's really sitting there otherwise is idle cash but the other thing is it's not at risk in the market and that's great you know uh there have been times we've had really big drops and our self-directed ira account holders didn't experience a you know one-time 40 percent drop in in the market back in the you know back in uh was it 2008 it dropped 40 percent so all the self-directed irp ira people are like yay i have all the value of my of my my you file it on your tax return you know i'm not that's not my call right okay um so you mentioned uh when someone opens an ira it's not just an account you have to create either trust or llc associate with that ira you can okay yeah so when you create it is it just an account that opens up and you guys do the paperwork and we can start investing next month yeah boom you are the next week you know or the next day once the money's there you can invest straight away so so right now you an ira is like a trust you don't need a trust in your ira in fact we won't we we won't accept a trust as an asset you know so um like like a land trust or something we don't accept those as assets you don't need an llc at all um if you live in california like i do i mean it's you've got to pay 800 a year to the franchise tax board just to have for the privilege of an llc anyway you know you're gonna pay somebody some attorney a thousand two thousand dollars to set it up for you and so it's an expense and it's an ongoing maintenance to have an ira owned llc so just make sure you really need that and make sure it makes sense because once the irs finally gets some capital they start doing audits you know like as frequently as they used to they're going to be looking at these ira owned llcs sure it's low hanging fruit for them so if you have an ira owned llc make sure you're all buttoned up that your accounting is beautiful you've never spent a single penny on anything that isn't asset related and that you followed all the prohibited transaction rules and not broken any and then you'll be okay so just to make sure we're clear on what you can't do can somebody the most famous question i've ever heard can i paint a house that i own my array okay well today the irs isn't out there inspecting house painters okay as far as i know i don't think they have the budget for that so if you did it i don't know but if but if your ira paid house for sale right now you know um it's the market's tight so obviously there are market cycles but it was a really good market cycle for sure for investors wow that's great that's great all right so then we're always trying to to hypothecate we're always looking towards the future and looking to see so you've got your real estate background and now you've got the ira present what do you see for the future are we heading towards more real estate becoming available because of certain circumstances or what do you see some coming down the pipe okay well you know also not an economist but what i hear the conventional wisdom is don't be wait don't be looking for another housing crisis and the reason yeah the reason for that is that we've just under built right during that recession we had like a decade of nobody building houses and what do we have you know like like i have kids and now they they're at the age they want to go buy a house so there's one now i have a house but now there's two more houses that we need we need two more you know in the supply chain um are those houses there were they built in california they passed a law here or whatever maybe was an edict from our governor that you can only build multi-family you can only get multi-family permits unless of course your house burns down then you can get a single family permit but right in california we're only building multi-family now so do i think that we're going to have this major you know glut of available houses i don't see that if there aren't we just have more people so i it's just a numbers game supply and demand interesting interesting also rates are going up right six more rate increases they said this year and the fed said that this year yeah and so that may make it less attractive to buy a house because the houses are going to be more expensive it might slow it down but as far as the number of people that need to live in somewhere you know need to form a household i think that number will increase faster than the number of available dwellings to put them in unless people just buy houses on metaverse they'll be fine for house paint and they would say well who painted your house you know what i mean so they would want to probably see an invoice for that house paint how about retirement houses can i buy a retirement house for my ira and you mean can you live in it later on so here's the thing when you buy an asset with your ira like a house or any asset it's it's supposed to be that you have no intention of ever using it personally so usually when you buy a house you buy it as an investment and that's what you're supposed to do in an ira so just keep records you know love like every time you solicit for renters every time you know you hire a vendor just kind of keep a diary like dear diary today i you know rented my place to this person and then later on now boom you're 65 you think you know what i really like i like that little house you know i think i'm just what i'm gonna do is i'm going to go get an appraisal i'm going to give it to my ira company my ira company is going to disperse that house to me and i'm going to get 10.99 for that market value and then i'm just going to go live there because i'm going to own that property i'm going to pay the tax on the market value i'm going to take the hit but then i've got that house and that's what i'm going to do so you can do that later but really your intention for buying a house needs to be investment purposes okay huh very interesting keep good records yeah what are some tricks you've seen people use iras and that were very creative and you've you have a good story that someone says wow that was pretty cool uh yeah well i mean we don't want you know you don't want to be too creative um i mean i mean you do but you don't because you want to follow the rules and the irs kind of figured out the creative stuff already but um back in the day i saw somebody who took their ira their roth ira and bought tickets you know uh sporting sporting event tickets a ticket is literally real estate did you know that the seat is like renting real estate it is considered part of real estate no way yeah so then and then he sold it never right live in someone's garage and live in the better person and you could buy you could buy crypto with your ira yes you can yes you can is it the wild west just saying can you yes you know yeah so mario yeah one more question marco has a question go ahead sure so marco mario's got a question he says um could you talk about partnering with my solo 401k so he says so me personally partnering yeah 401k i'm i'm saying don't do it okay that's what i'm saying i'm there is a special a dol ruling dol 2000-10 okay there that's the sighting if you want to look it up that means in the year 2000 the 10th dol ruling said something about investing together with your ira but how do you prove to the irs agent who audits you that you receive no personal benefit from your ira investing it's tough so i recommend i wouldn't do it i wouldn't do it um there's that fine line that maybe you could um so i'm just saying uh you know really consider that before you do it because you could run it and so what happens when you commit a prohibited transaction we didn't even talk about that oh yeah your ira is like this tax protected bubble right well you commit your ira commits a prohibited transaction boom that bubble bursts and now all that money becomes taxable to you with possible excise taxes and penalties right so you run that risk you know with um with especially with ira money i'm super risk adverse in that regard it's precious money my opinion maybe somebody else has a different opinion and they can you know invest according to their risk tolerance but i'm just saying if you want to know what i think that's what i think all right very good is that all of our questions dave that doesn't think so discussion on that that's good it was awesome i was informative very educational it's one thing you have to think about constantly so are you moving how far away from where you're at now are you moving so right now montreal is like right above uh burlington vermont okay and then calgary is right above um like billings montana okay so we're going we're going other side of the country uh back out to the rocky mountains will be will be less than an hour from the rockies uh which is fantastic very excited about that you can convince the kids yes i can't wait 40 minutes away from a much bigger ski hill with bigger runs and steeper runs and so i'm i'm very much looking forward to that who's more excited you're white for you that's a good question right now with everything going on both of us are just like let's just get it done okay we're busy trying to get that all set and ready but it's it's exciting it's fun cool nothing to do with notes at all but it's it's funny yeah and you could do the same thing where you're at right are you getting a smaller house or what i'd be maybe a little bit bigger about the same size uh we did that big renovation here a couple years ago and so it's it's roughly the same size and we'll be able to pretty much move straight across which is nice so we're wow that's exciting yeah new new stuff going on cool and that'll be with notes you can do it from anywhere i i'm still gonna be in canada um i'll be on mountain time zone instead of eastern and that's really the biggest difference okay okay otherwise you know nothing much changes so let's let's transition this right we're both getting much younger in our age here yeah um and one of the things we're looking forward to is this retirement word which i don't know about you but everyone i talked to retirement doesn't look much different than i'm doing now i don't see myself slowing down yeah yeah yeah my retirement plan is to have a portfolio of notes that's it that's really the same thing that i'm doing now but i enjoy it i can certainly do it uh as a retiree and and so looking forward to that so that's down the road but there's there's planning involved and there's things that you have to kind of consider and tax considerations and all those kinds of things come into play so gotcha so we've got our guests here today to help us figure some of that stuff out yes so we uh bring her in behold mrs karen hall how are you karen hey good it's karen it's character sorry i'm with an attitude so you're you're an experienced financial no know it all about money and everything else right you have a background in big bank stuff stuff you know but i'm not an advisor i know stuff but i'm like i'm not supposed to advise anybody but but we'll do our best today how did you get started in this space oh man i was a little girl and i just dreamt of self-directing iras i used to like journal about it you know i could hardly wait till i grow up i took a path that a lot of people did you know like working you know one job and then finding your way into real estate in some way so it started off with property management got a real estate license um you know years go by but i get into mortgage loan servicing right loan servicing getting it alone origination so you know the in the front and the back side of that elephant you know and from that i got into self-directed ira so i'd already in my career covered all the asset classes that our account holders invested uh so it was a real logical transition very interesting so so why do we care about what iras what difference does it make to the average joe's life and is it for just our average joes or is it for everybody is it for only the rich people or well it's not for canadians sorry i love you not doesn't it but it's yeah it's for americans anyways if you have a social security number so if that's you you're in business the only barrier to entry here is to have earned income from a job active income you know that's how the irs sees it that's the only barrier to entry but if you but does it make sense to self-direct well that's the thing it's like when you self-direct your ira it's not like we're putting it in some vehicle that's growing i mean it earns a teeny bit of interest but you self-direct your ira when you want to invest in alternative assets for example notes you know is a good one a lot of people invest in notes performing and non-performing debt secured and unsecured loans your ira can be the bank be the lender notes are a really big asset class but you know real estate precious metals are big right now whenever the economy goes a little haywire people love precious metals and we're doing a lot of that so just it's called alternative assets it's a really big space so let's let's clear up a few quick things self-directing your ira is not illegal oh gosh no right you don't have to put your money in the stock market you know 401k 403b whatever your plan is you don't have to do that you can self-direct it you do but you don't write so you can also self-direct it's another option talk to your hr about it that's another option yeah a lot of times when you work for a company and you've got if like a 401k a 403b or 457 you may not have the option to self-direct them you might have to wait until you leave the service of your company and then you can like small businesses can have what's called a separate array which is a um you know a self-employed you know a pension and then there's also the solo 401k so there are other things you can do as a employer but most employers have um other accounts but with us it's a traditional roth sep simple spousal inherited ira solo 401k and also health savings account you can self-direct all those things cool so you said one thing that i just want to pick out there inherited iras can you inherit somebody else's ira yeah yeah so when you when you open an ira like hey you know today nathan opens an ira and you name a beneficiary so usually it's your spouse as a primary beneficiary your children as contingent beneficiaries but god forbid you pass so what happens next is your beneficiaries the money from your ira goes directly into the beneficiary iras and you know so so the beneficiaries will open new inherited ira accounts and there are special rules um a lot of special rules and they're changing regarding inherited iras i did not know that one that's an interesting one i hadn't heard of that yeah it doesn't go through probate or anything an ira in this sense is like a trust okay so it goes directly from the decedent's account to the beneficiaries account um basically it works like the little paperwork but that's how it goes very interesting i did not know that so when you talk about owning notes um are there any restrictions in owning notes like like for example if i bought a note in my own ira um can i then do everything that i would normally do i can talk to the borrowers if i choose to or have the services do that or set up attorneys all that kind of thing like i can i can manage that or how does that work yeah let's talk about it so with self-directed iras there are special rules for sure and it's like a game of keep away from these things called prohibited transactions so if some of the people listening today are rule book kind of people they can read about prohibited transactions in the internal revenue tax code how fun does that sound awesome but if you want to it's irc internal revenue code 49.75 you can go ahead and read that talks about but i'm just going gonna distill it in about like one minute so people can be disallowed to your ira your ascendants and descendants right your parents and grandparents and their spouse you and your spouse children grandchildren their spouses disallowed a 50 50 business partner is disallowed and a fiduciary like your realtor or uh your cpa a fiduciary your attorney could be disallowed all right so there you go that's who can play the game so your ira can buy a note but it can't be um it can't be a note that was made to say for example your spouse a disallowed person and so you just have to it's keep away it's arm's length from these people you know so that's one thing to consider no personal benefit one thing i learned too over the years and i didn't notice a couple years ago was that any deal that i'm 50 50 with an individual not related to immediately becomes a non-qualified participant right right me and nathan are in a deal 50 50.

i can't use my self-directed money to invest in something with him you guys it it if you have a company and you're 50 50 business partners then you're disallowed to each other but if but if you're but if that's not the case and you say hey i want to get in this deal nathan you want to go 50 50 with me that's different but if you already have incorporated as 50 50 business partners then you're disallowed to each other what if i did a deal with nathan privately and then i wanted my ira money to do another deal with him could i do that are you 50 50 well i'll tell you what there is uh there is yes is the answer because there's an exception that you can as long as you fund concurrently you can do deals with disallowed parties and remember everyone check your attorney on everything please right um so we have a bunch of people commenting in here uh cindy said hi robin said i um and i know bruce said hi as well so i'm glad timing in here throughout the time i'm gonna stay low my voice um feel free to ask questions and i'll forward them to nathan to ask can you share a little bit about um what are the benefits of using self-directed money yeah i mean the main benefit is that you can compound your earnings faster don't you love that and the reason you can is because when you have earnings and it could be you know it could be from a liquidity event could be from just monthly cash flow whatever that income is not diminished by tax so any kind of retirement account is tax deferred or in a roth tax-free so you get to so all the money that your ira earns can go back out into the next deal 100 of it it's not there are a couple exceptions there is this like two taxes where ira can be taxed uh but that's you know kind of going into the weeds but for the most part yes that's how it works to compound faster oh that's great and then uh you mentioned earlier we said you know as a canadian i can't have an eye area of my own however i can use other people's iras i go and invest and i do that all the time people use their ira money to invest with me so that we can go both make money together which is fantastic it's so smart you know i think what a lot of people don't realize is that there's a 39 trillion dollar pool of retirement funds that invest that people like you who are you know asset sponsors can tap into for your deals and so your qualifying question for that would be to say hey do you have an ira right now or do you have like a previous employer plan like something from your old employer a lot of people do and they just haven't rolled it over yet and so then they can take that money and invest with you so i think this really became apparent around 2008 2009 is when we really had a boom in our industry it's when i opened the company you direct but it's because banks weren't lending you know and so people investors are like where do i find the money to for my deals where do i find you know where's this money going to come from it's not the bank they won't even give me any money and so the realization that there is this huge pool of retirement money that may or may not be doing very well in the stock market let's move that over into alternative assets and help them do that help those people to build their retirement um using alternative assets so baby boomers could if they have a bunch of money seeing their 401ks and they retired and they want to control their money they could move the money over right yeah sometimes when you're 59 and a half and you have a 401k you automatically can do what's called an in-service transfer that's true but um but i mean you could be 25 and change jobs and have a 401k you could roll it over so it's not really about your age it's more about you know where's if you've got the retirement capital to debate you know to really do something it's like you're not going to you're not going to invest in a note typically for 10 000 right it's it's usually going to be a bigger deal so you just have to put that money away and of course we have um contribution caps so it takes a little while to build a retirement account up to the size where you want to uh you know invest in it you know in a note or sometimes you have to be an accredited investor right you know to do a deal to do a note deal because notes are securities so sometimes you have to be uh you have to be um you know right exactly you have to be accredited and that's for my funding it's only accredited investors however so the money that somebody has in their ira that would count towards their net worth is that right you know i believe it does but you want to ask your tax person there it doesn't count your house though i know that's for sure no not your primary residence but uh but it seems to me like your savings you know kind of yeah yeah certainly yes you counted and your other assets right yes yeah and and i think we'll be seeing the sec getting a little stronger on that accredited thing i mean i think being accredited sort of means that if you lost the money you could still you know feed your family yeah and they just don't because these deals uh can be risky so you really need to of course understand the risk unless it's cured by real estate and it's by done by somebody that's been doing this for years and years hey you know there's i list that yeah hey and there's risk in any investing but without risk there's no rewards so yeah i think investors are people that are looking for you know to take risks and make investments yeah absolutely i've got a question here this is a great question um yvonne is saying uh i guess she's got her iras with fidelity she says fidelity won't let me have a self-directed ira they said that it's self-directed in the stocks that i choose [Music] right so they kind of jumped on the self-doubt directed bandwagon saying you can choose any stock you want but a truly self-directed ira that's what we provided you direct ira services you know one that you can invest outside of the stock market so if if yvonne wanted to move you know transfer her fidelity ira to you drug to a self-directed ira that's a pretty simple process we do that if you know many times a day what is the difference between you guys and a fidelity kind of it's well think of this like the typical ira versus a self-directed ira is because an ira is an ira it's just the same rules but the difference between self-directed and a typical ira is is like what assets you could put in this ira bucket right so for somebody who's working at fidelity they have licenses like maybe a 6 or 63 or 7 or something like this and they're not allowed to deal in the real estate environment but so now we've got the alternative asset pool and so that's different so so they end up being two different things same rules for iras it's still an ira but a self-directed ira is a bucket for alternative assets and your company is designed for that alternative assets versus and they could take it and put in stocks they want to but you guys have the availability to do anything that's legally bound right right well we have the ability to help them invest outside the stock market that's we're all about outside the stock market can you give advice on it's not what you should buy but what things you can't buy so if someone's about to make a bad transaction that's illegal can you advise them hey listen you can't go out and buy cars with us exactly exactly you know people think they can um so right yes we do we offer a free consultation for anybody who wants to talk to us and say someone is already an account holder their account is open it's funded they found an asset they want to invest we're going to review those investment documents and we're going to look and see hey wait a minute it looks like this you and the seller have have the same name the same last name are you related are you disallowed to each other you know we're looking for things like that um you know and so there are times when we're able to catch things but the responsibility not to commit a prohibited transaction is always on the investor uh the ira holder because it's self-directed you know it's it's sort of like when you go buy a house i mean when you go to closing closing doesn't tell you if it's a good or bad deal they're not going to tell you how to write it off on your tax return they're just going to help you complete that transaction so that now you own that house right nathan i don't think it matters where you're at that's how it works yeah they didn't tell you okay well here's how you you know take your tax benefits yeah because that's not that's not their thing and we're like that we're administrative and we help you you know get it to the right place but we definitely want to talk to our account holders and any you know anybody that's got a transaction that says hey is this is this prohibited can you do roth and traditional with your company yeah traditional difference yeah well the difference is a tax treatment so roth iras are the only kind of ira that can be tax free for life that's pretty sweet but we offer the traditional roth sep simple you know spousal and inherited um and k and the health savings account can be self-directed too so it's i'm just kind of comparing it to the canadian plans in my head so a roth ira trying to figure out which one is which if you're gonna put in um like pre-taxed dollars is that an ira or is that the 401k or or is there a difference in u.s right so pre-tax in other words the money has not yet been taxed right that money goes into anything but a roth you know the roth is after tax money got it the pretext goes in we have i would say 90 of what we have here is traditional iras and the reason for that is most of the accounts we have are rollovers from an employer plan so a pre-tax employer plan normally will roll over into a traditional ira same tax treatment okay yeah they can so the canadian version of the ira is called the tax free savings account tfsa the advantage of the tfsa is there's no age limit on when i can start taking that money out the disadvantage is i can only put it into publicly traded assets oh so yeah but it's an interesting uh differentiation because it's i you know that not having that age limit i think is great um but i'm limited like i can't buy excuse me i can't buy notes with my tfsa well i i think that has to do with risk i think that maybe the regulators think there's too much risk in alternative assets but i mean tell me is there risk in the stock market absolutely there's some risk you know so that's investing right am i right yeah so with with iras um there's no cap where you can invest in um you can do any almost any deal you choose to do that's legal right um any deal you want to do with someone else lend money on deals lend money on apart buildings or even start your own kind of business right you can do any of those things well no it's not going to be your own business because you're disallowed to your ira and you're not allowed to have you know present benefit it's all it's all about saving for retirement so you can have it later but you're not going to take your ira invest in your own business but yeah everything else is right so whenever an ira is investing it's always in either a debt or an equity position you know could you get into like a checkbook ira where sure sure so a checkbook ira isn't a special kind of ira what it is is an asset that the account buys the retirement account will invest in a special purpose llc so the ira is open with money you have a third party create the llc your ira you know buys the 100 of the initial units of that account and then we fund the money you put the money into the checking account now you've got your ira money you know as the is the umbrella and the llc under that retirement account umbrella so it's it's um an ira owned llc is also called a checkbook ira and it's not a gift with purchase a lot of people where's my checkbook it's like well you have to have a third party create this and it has to have special language uh that's what it is stock market i can move money like quickly how long does it take for you guys to fund a deal typically 24 to 48 hours usually yeah yeah typically 24 to 48 hours we're pretty quick um and yeah so it's really good i mean as long as everything's all queued up and the money is is cleared and and then you're good to go and and dave asked and you know this but but dave asked that because in the note world it moves quickly like once once you've got an accepted bid usually you know you might have a week to do your final due diligence um but there are then those other times where okay i need you to fund tomorrow where due diligence is already done and all right we need to fund tomorrow tomorrow with the subjected ira if you want to talk about how long it takes you know it it you know it's not going to happen tomorrow you're not going to give us stocks today and get it funded tomorrow typically um i mean it happens but i mean we're not going to we're going to under promise and over deliver on that one sure and just say you gotta give it a couple of days but be coming from the real estate world myself and really having ingrained in my body that sense of urgency you know um that you have and especially in residential real estate it's crazy people everything is now now now yeah um so that's what i hire when i hire people for you know on staff they have real estate experience they understand the sense of urgency um and you know then all of a sudden we're gonna you know we're gonna do what we can to make things happen yeah that's that's a huge huge plus i i know they're and and not all ira companies are created equal in that sense where some will take like a full week to get the money turned back out and that that can be a long long time in a transaction setting lose a deal and you could lose the deal and then there's others if you can do it in 24 or 48 hours man that's a that's a huge plus well we're going to talk to you about the deal and there are things that can hold up a deal for a week that have nothing to do with us you know so we're you know we'll try to set your expectations up front the best you know the best that we know how uh given the information we have available but sometimes there are outside reasons that a deal could get held up too and then for for anybody who's watching where if you're doing a deal and the money is coming from whether it's your own or somebody else's ira and the seller says okay we're going to close friday i let them know the money's coming from an ira and just make sure that's up front so that there's an understanding that you know what it might take an extra day or two and then the seller understands that but you don't say anything the seller doesn't know right but if you say it and then they know that there's a potential delay there it's fine no big deal it's not a problem let me make a suggestion to you to your listeners that you're a node investor you need something happening like you know time is of the essence always request a wire never never you know mark the box that says you want to check because that check's going in the mail unless you ask for overnight delivery there's a fee for that you know we pass a little pass on the fee that we're we get but never check the box that you want to check if you're in a hurry that's going to take longer all right so so we're kind of with the new kind of the the beginner advice type stuff um any ideas like anything you can share about biggest mistakes that you've seen for like newer investors a couple of common mistakes it's kind of it's kind of funny actually i mean since you know knowing the industry as well as we do but we saw somebody um uh by the way who uh they what did they they wanted their ira to buy a property a property so they went to their bank to get a loan so they're they're telling some mortgage loan officer hey i'm buying this house so the loan officer's got this deal all queued up ready to fund and then no no no an ira doesn't take on regular fannie freddie conforming fha va funding so the whole so the poor loan officer who thought he had a deal that was going to close didn't close because now this ira account holder had to get a non-recourse loan and by the way if your listeners want a list of non-recourse lenders we do have a list i mean it's not necessarily a list of people we recommend but it's like for your convenience so you can check them all out and see what you think um because it has to be non-recourse money so that is a real rookie mistake to think that your ira could go to your regular bank just like when you got the mortgage on your house uh and and get that kind of a loan for an ira it you can't because you because it's discipline got it all right uh so and then another another area where uh different library companies differ is on their fees can you tell us about your fees yeah our fees i mean i think everybody really loves our fees um we have a flat fee uh annual fee of 375 and that's regardless of the number of assets in your account and regardless of their value it's not on a sliding scale so it's a great it's a great fee we have a fifty dollar setup fee it's a one-time setup fee when your account opens you know that flat fee per year um and then uh the first 10 checks that come in per year are have no cost after 10 it's uh or after yeah after 10 it's a 10 fee so it's extremely reasonable our fees are very low for the industry a 15 wire fee it's like half of what most other companies charge so you know we're not going to fee you to death right because you guys make money how do you make money how does an iron company make money yeah i mean it's obviously not on the fees right we make money like bank like all banks and trust companies make money and that's on you know on the deposits that are you know the money that's on deposit not on people's assets we don't make money on if your ira invests in a house we're not making anything on that house but just like banks you know how they they've got the fed funds right they earn interest overnight so we earn money the same way any bank would okay okay so it's to your advantage to have people have a larger ira is that accurate yes but i mean it's nothing i have control over people have the size ira that they have they're going to invest what they want to invest you know we can't say you know we're not going to do an ad campaign that says put all your money here but don't invest it i mean that's not and that's not in our account holders best interest it just works out it works out so that everybody wins yeah and and as an ira company you can't recommend any specific investments or even vendors necessarily but but you can say you know invest it go go out and do something with it make your account bigger because we all win you know you're so right that is a real uh sticking point right now um with the department of labor and just the the lawmakers they're they just want to make sure that we're not recommending any investments to our account holders because we're not advisory and the minute we do that we become what's called a fiduciary and if you have that label on you as being a fiduciary it comes with a lot of rules so we stay out of that ballpark entirely um right and so it's up to the account holder it's self-directed the account holders choosing their own asset doing their own due diligence and then so then that that comes back to that's where i'm at is i'm trying to get it in front of ira holders and say listen you need to use and make money yeah i'm one option i have many but i'm i'm an option and i think i'm a pretty good one how many people with iras have money sitting as cash in a bank account like you know we're not person is that there's a lot of money sitting there on the sideline just not doing well almost every account has some idle cash in it in fact you need to leave a little pad because a hundred percent of the expenses of an ira owned asset have to be paid for by the ira so with a note maybe you need somebody because you're asking earlier nathan like can you do the servicing on your account well you have to stay arm's length from that you certainly couldn't get paid for it um you can do the cert you know certain minor things but if say for example you need someone to collect that debt well you'd have to your ira would pay a third-party debt collector to handle that you know so you need to leave idle cash in your account for expenses almost every account has some idle cash in it at some point we have thousands you know thousands and thousands of accounts so it works out so so if you're prohibited from from actively managing it it would make sense to give that money to somebody else who can actually manage it for you i mean that is an asset oh i see like like for example you okay as an example yes yeah yeah one of them aesthetically speaking yeah but also too like it's also good to have like like a loan service or i'm sure you have like if your ira is is lending money you know you want someone to service that note for you right um so you need or if you have a if your ira has a piece of property having a property manager having a third party in there doing you know doing the sweat equity is is always a great idea yeah you definitely need to need a third party looking out for stuff right right i've got a question here from john anthony he's asking can you open a self-directed ira at 59 and a half yes yes you can you in fact there's no age limit to having an ira once once you hit the rmd age it's called required minimum distribution age which is recently changed to 72.

once you hit 72 you can only contribute to a roth but as long as you have active income from a job or maybe house flipping or anything else that's considered active income you can still contribute 59 and a half is that magic age where you can take the money out without a penalty okay you still pay tax but at 59 and a half you can take the money out without penalty okay and what what is the penalty if you're 57 50 it'd be 10 so it's some expensive money that's 10 plus your tax rate right yeah hello yeah yes yeah so it could be 10 10 plus if you're a 30 tax or you could be a 40 hit yeah i sure could so you always want to have a great tax advisor you know as part of your you know your tree of advisors you've got to have your insurance your tax advisor your realtor perhaps your note specialist you know you've got to have all these people in your in your tree of advisors to be able to be a successful investor i believe so just let everyone know that we actually have um all the ira comparison chart uh huge wreck is on our comparison chart on our due diligence portal with the fee schedule as well but you can also reach out the carriage direct uh karen can you just tell them what your website is sure it's easy yeah it's you direct ira.com uh the letter u and so you can just info is generally info at udirectio.com that's easy to remember and if you want we'll send you the list of non-recourse lenders uh you can you ask us for a consultation hey this is what i'm thinking of doing does this sound right for an ira how do i make that happen or hey i'm ready to open an account right now let's get this done you know we can we're we're here to help it's it's what we do all day so you need active income and a social security number and 50 bucks to get started yeah can you open one for your kids even if you can yeah as yes you can yeah as long as your kids have active income so your children have to have active income to contribute yeah so they can work for your company um i went through this it wasn't easy to do um they have to be a certain age in our state and everything else um but it's just difficult but yeah i mean how great is that if you can get a self-directed ira for a kid who's younger it's awesome yeah or any ira even if it's in the stock market you definitely you know i got my kids started really young with it with a with a roth um and so their money will grow tax-free and later on when they're my age they'll thank me you know yeah i think that's what a fantastic way to set them up for later in life that's great and what else that's what we want for our kids right we just we want them to do well so yeah absolutely yeah oh that's fantastic so one of the questions was you know um what's the interest potential instead of you so i'm presuming interest means that could you put this money in an interest-bearing account while you're waiting for a deal well if you're while you're waiting for a deal it's going to earn a front you know kind of what the market rates are you know a fraction of a percent on the idle cash does um you know pay the account holder a fraction of a percent but no it's really sitting there otherwise is idle cash but the other thing is it's not at risk in the market and that's great you know uh there have been times we've had really big drops and our self-directed ira account holders didn't experience a you know one-time 40 percent drop in in the market back in the you know back in uh was it 2008 it dropped 40 percent so all the self-directed irp ira people are like yay i have all the value of my of my my cash um so you're not at risk in the market and and that's a good thing and then you do earn a little percent on on an uninvested cash so one of the english okay go ahead again we'll say can you move over any time of the year or is there a certain period of time like tax day they get then you can move it is it open window well since it's april we're getting hammered right now because people remember oh my gosh i gotta make my prior year contribution and by the way this year you can make a prior year contribution up until april 18th so you can make a contribution for 2021 up until april 18th that has to be postmarked by that date or wired on that date right um but yeah no there's no any any day of the any day of the year your ira can be you know could be created funded invested as long as it's a the banks are open we can move money that's really cool and then how is how the income that you make inside your ira is that reported anywhere how is that yeah yeah that's a great question so if you take a withdrawal we report it on what's called a 1099 right and we tell the irs hey this person had a taxable event and then every year the ira holder since these are alternative assets we reach out to our account holders and say what is your what are your alternative assets worth tell us the value give us a valuation so it could be like a broker opinion of value um a lot of times with a note it's pretty clear how much you know the the face value and what's owed i mean it's really easy usually to determine the value of a note um you know precious metals that's a market value you can just google that um but then we report that value on a form called a 5498 to the irs okay and we do the tax reporting and record keeping on the ira accounts the solo case you're the trustee of your plan so you and your tax person are filing if you need a 5500 easy or something so lots of lots of options of different things you can do with your area somebody asked you mentioned about working income um they want to know does that include a w-2 income it does w-2 is money from an active active job would passive income is the opposite so passive income would be you know um you know even note income is passive income because you're not you know you're not out there sweating for sweat equity um flipping houses is active income i mean your tax person can really break it down for you but like social security income retirement income is not active income so active income from a job you can google it what's active income what's passive income yeah and arrive at that and you have to have some active income in order to contribute yes you can't contribute more than you earn through active income oh really okay right and then every single ira type has you know has uh has a contribution limit the most you can put in now the amount of money you can earn from investing that's unlimited you know um so you know ask peter thiel right yeah but if you don't know who pure2 is yeah google them you'll find they're like p-h-e-i-l yeah so but as far as like writing a check from your checkbook and putting the money you've got a cap and it depends upon your age your account type in your income how much you can put in and also you know the tax deductibility is in question too so depends on how much you make so there are rules some of it is covered on our website but again this is when you need your advisors to really um be telling you hey this is what you can and can't do this is or you know this your advisors will tell you hey this one is best for you and then go for that all right we've got a question here from robin jackson she's saying if you're a licensed real estate professional and actively manage your notes isn't that income ask your tax person how do you how do you file it on your tax return you know i'm not that's not my call right okay um so you mentioned uh when someone opens an ira it's not just an account you have to create either trust or llc associate with that ira you can okay yeah so when you create it is it just an account that opens up and you guys do the paperwork and we can start investing next month yeah boom you are the next week you know or the next day once the money's there you can invest straight away so so right now you an ira is like a trust you don't need a trust in your ira in fact we won't we we won't accept a trust as an asset you know so um like like a land trust or something we don't accept those as assets you don't need an llc at all um if you live in california like i do i mean it's you've got to pay 800 a year to the franchise tax board just to have for the privilege of an llc anyway you know you're gonna pay somebody some attorney a thousand two thousand dollars to set it up for you and so it's an expense and it's an ongoing maintenance to have an ira owned llc so just make sure you really need that and make sure it makes sense because once the irs finally gets some capital they start doing audits you know like as frequently as they used to they're going to be looking at these ira owned llcs sure it's low hanging fruit for them so if you have an ira owned llc make sure you're all buttoned up that your accounting is beautiful you've never spent a single penny on anything that isn't asset related and that you followed all the prohibited transaction rules and not broken any and then you'll be okay so just to make sure we're clear on what you can't do can somebody the most famous question i've ever heard can i paint a house that i own my array okay well today the irs isn't out there inspecting house painters okay as far as i know i don't think they have the budget for that so if you did it i don't know but if but if your ira paid for house paint and they would say well who painted your house you know what i mean so they would want to probably see an invoice for that house paint how about retirement houses can i buy a retirement house for my ira and you mean can you live in it later on so here's the thing when you buy an asset with your ira like a house or any asset it's it's supposed to be that you have no intention of ever using it personally so usually when you buy a house you buy it as an investment and that's what you're supposed to do in an ira so just keep records you know love like every time you solicit for renters every time you know you hire a vendor just kind of keep a diary like dear diary today i you know rented my place to this person and then later on now boom you're 65 you think you know what i really like i like that little house you know i think i'm just what i'm gonna do is i'm going to go get an appraisal i'm going to give it to my ira company my ira company is going to disperse that house to me and i'm going to get 10.99 for that market value and then i'm just going to go live there because i'm going to own that property i'm going to pay the tax on the market value i'm going to take the hit but then i've got that house and that's what i'm going to do so you can do that later but really your intention for buying a house needs to be investment purposes okay huh very interesting keep good records yeah what are some tricks you've seen people use iras and that were very creative and you've you have a good story that someone says wow that was pretty cool uh yeah well i mean we don't want you know you don't want to be too creative um i mean i mean you do but you don't because you want to follow the rules and the irs kind of figured out the creative stuff already but um back in the day i saw somebody who took their ira their roth ira and bought tickets you know uh sporting sporting event tickets a ticket is literally real estate did you know that the seat is like renting real estate it is considered part of real estate no way yeah so then and then he sold it never didn't use the tickets himself and then sold those tickets at a profit huh wow yeah that's an interesting repeat yeah well it's not an asset class we take you know i think because there can be abuse and we want to make sure we stay in business but i mean i've seen it happen there may be you know another more expensive ira company that will take the risk but yeah you know there you go so does somebody have to have a certain amount of money to start an ira can they start with 500 bucks and be ready to go yes yes you can but the thing of it is do you want to do that i mean obviously i want to open ira accounts but i also want to do what's in the best interest of our account holders so if you only have 500 don't open a self-directed ira because every year you're going to get that fee right and then two years later boom you have no money and you didn't invest and you didn't prosper we want you to prosper so um when you self-direct your ira have an asset in mind or like i'm going to put this money here and it's going to be in this ira then i'm going to go then i'm going to shop for an asset that's that's the way to do it open the account fund it then go look for your asset so the money's there and you're ready to pull the trigger you're not waiting for the money to come over because we could wait two weeks or more for money to come over from another another custodian into the ira so if you've got your account open and funded you know it's loaded ready to go you find your asset boom pull the trigger we review your docs and get your deal funded just trying to see if any more questions we have from other investors and just make sure and then we'll get to our so when did you start you direct in 2009 2009 oh man that's a good time yeah it was it was just perfect you know and i just bootstrapped the whole thing and it was all because of the vast number of real estate investors and remember being able to buy houses on tape you know you're lucky if you can find a house for sale right now you know um it's the market's tight so obviously there are market cycles but it was a really good market cycle for sure for investors wow that's great that's great all right so then we're always trying to to hypothecate we're always looking towards the future and looking to see so you've got your real estate background and now you've got the ira present what do you see for the future are we heading towards more real estate becoming available because of certain circumstances or what do you see some coming down the pipe okay well you know also not an economist but what i hear the conventional wisdom is don't be wait don't be looking for another housing crisis and the reason yeah the reason for that is that we've just under built right during that recession we had like a decade of nobody building houses and what do we have you know like like i have kids and now they they're at the age they want to go buy a house so there's one now i have a house but now there's two more houses that we need we need two more you know in the supply chain um are those houses there were they built in california they passed a law here or whatever maybe was an edict from our governor that you can only build multi-family you can only get multi-family permits unless of course your house burns down then you can get a single family permit but right in california we're only building multi-family now so do i think that we're going to have this major you know glut of available houses i don't see that if there aren't we just have more people so i it's just a numbers game supply and demand interesting interesting also rates are going up right six more rate increases they said this year and the fed said that this year yeah and so that may make it less attractive to buy a house because the houses are going to be more expensive it might slow it down but as far as the number of people that need to live in somewhere you know need to form a household i think that number will increase faster than the number of available dwellings to put them in unless people just buy houses on metaverse they'll be fine right live in someone's garage and live in the better person and you could buy you could buy crypto with your ira yes you can yes you can is it the wild west just saying can you yes you know yeah so mario yeah one more question marco has a question go ahead sure so marco mario's got a question he says um could you talk about partnering with my solo 401k so he says so me personally partnering yeah 401k i'm i'm saying don't do it okay that's what i'm saying i'm there is a special a dol ruling dol 2000-10 okay there that's the sighting if you want to look it up that means in the year 2000 the 10th dol ruling said something about investing together with your ira but how do you prove to the irs agent who audits you that you receive no personal benefit from your ira investing it's tough so i recommend i wouldn't do it i wouldn't do it um there's that fine line that maybe you could um so i'm just saying uh you know really consider that before you do it because you could run it and so what happens when you commit a prohibited transaction we didn't even talk about that oh yeah your ira is like this tax protected bubble right well you commit your ira commits a prohibited transaction boom that bubble bursts and now all that money becomes taxable to you with possible excise taxes and penalties right so you run that risk you know with um with especially with ira money i'm super risk adverse in that regard it's precious money my opinion maybe somebody else has a different opinion and they can you know invest according to their risk tolerance but i'm just saying if you want to know what i think that's what i think all right very good is that all of our questions dave that doesn't think so discussion on that that's good it was awesome i was informative very educational it's one thing you have to think about constantly right because ira is a very great vehicle yeah but it can be disastrous if you don't treat it right it is it's super easy to avoid prohibited transactions like like land mines but that's why you talk to us hey this is what i want to do we say okay here's the path to get there without stepping on it yeah yeah yeah cool that's great well thank you so much you youdirect.com take a look at it our correct ira.com you yourdreckhirey.com their fee schedule is actually on our portal as well so if you want to see that anytime you can go log in look at that reach out okay right the company has been around for a long time right they know those people you guys have been at conferences you've been around for a while take a look at it i know it's cheaper than what i'm paying um so something i definitely gotta look into um i'm paying over a thousand dollars a year so it's definitely something i should look into so there you go we'll talk yes very good well thanks so much karen thank you gentlemen thanks there it is so all right there we go hit the record button so everyone dave puts here again for jkp holdings alongside mr nathan turner hopefully everything goes well today my brain's a little foggy from allergies i'm sure my voice sounds very very attractive so not covet though right no thank god um you know we're we're getting through a lot of this stuff um it's just been a whirlwind of a a couple days uh in and out just what it is um trying to manage email at the same time um it's been difficult but uh i'll get through it and just take lots of advil right now and just yeah push through and get through it and eventually get through how you been how's how things been for you good we uh so it's interesting our so we live in quebec just outside of montreal we intended to move here for a year 18 years ago and uh so finally just a couple weeks ago we were like you know what i think now's the time kids are getting older so this is it so we're actually listing our house this coming monday so i've been burning both ends yeah burning the candle both ends we've got to repaint the basement and just a couple of little small things down there so it's been crazy busy trying to get all that done but it's all good i'm not jealous of you for moving i'm sorry to tell you i just don't think i'd ever do it um it's just amazing so is this because the kids are getting older and things are just adjusting or what's the biggest thing yeah yeah um we love where we live we love our little town just outside of montreal all that's great uh there are definitely challenges and living in a french community and so that's uh that's a thing so we're moving back out west uh back out to alberta where i'm from okay just outside of calgary so same kind of thing small town just outside of big city so we're very much looking forward to that but it's it's busy busy busy for right now we'll list on monday so are you moving how far away from where you're at now are you moving so right now montreal is like right above uh burlington vermont okay and then calgary is right above um like billings montana okay so we're going we're going other side of the country uh back out to the rocky mountains will be will be less than an hour from the rockies uh which is fantastic very excited about that you can convince the kids yes i can't wait 40 minutes away from a much bigger ski hill with bigger runs and steeper runs and so i'm i'm very much looking forward to that who's more excited you're white for you that's a good question right now with everything going on both of us are just like let's just get it done okay we're busy trying to get that all set and ready but it's it's exciting it's fun cool nothing to do with notes at all but it's it's funny yeah and you could do the same thing where you're at right are you getting a smaller house or what i'd be maybe a little bit bigger about the same size uh we did that big renovation here a couple years ago and so it's it's roughly the same size and we'll be able to pretty much move straight across which is nice so we're wow that's exciting yeah new new stuff going on cool and that'll be with notes you can do it from anywhere i i'm still gonna be in canada um i'll be on mountain time zone instead of eastern and that's really the biggest difference okay okay otherwise you know nothing much changes so let's let's transition this right we're both getting much younger in our age here yeah um and one of the things we're looking forward to is this retirement word which i don't know about you but everyone i talked to retirement doesn't look much different than i'm doing now i don't see myself slowing down yeah yeah yeah my retirement plan is to have a portfolio of notes that's it that's really the same thing that i'm doing now but i enjoy it i can certainly do it uh as a retiree and and so looking forward to that so that's down the road but there's there's planning involved and there's things that you have to kind of consider and tax considerations and all those kinds of things come into play so gotcha so we've got our guests here today to help us figure some of that stuff out yes so we uh bring her in behold mrs karen hall how are you karen hey good it's karen it's character sorry i'm with an attitude so you're you're an experienced financial no know it all about money and everything else right you have a background in big bank stuff stuff you know but i'm not an advisor i know stuff but i'm like i'm not supposed to advise anybody but but we'll do our best today how did you get started in this space oh man i was a little girl and i just dreamt of self-directing iras i used to like journal about it you know i could hardly wait till i grow up i took a path that a lot of people did you know like working you know one job and then finding your way into real estate in some way so it started off with property management got a real estate license um you know years go by but i get into mortgage loan servicing right loan servicing getting it alone origination so you know the in the front and the back side of that elephant you know and from that i got into self-directed ira so i'd already in my career covered all the asset classes that our account holders invested uh so it was a real logical transition very interesting so so why do we care about what iras what difference does it make to the average joe's life and is it for just our average joes or is it for everybody is it for only the rich people or well it's not for canadians sorry i love you not doesn't it but it's yeah it's for americans anyways if you have a social security number so if that's you you're in business the only barrier to entry here is to have earned income from a job active income you know that's how the irs sees it that's the only barrier to entry but if you but does it make sense to self-direct well that's the thing it's like when you self-direct your ira it's not like we're putting it in some vehicle that's growing i mean it earns a teeny bit of interest but you self-direct your ira when you want to invest in alternative assets for example notes you know is a good one a lot of people invest in notes performing and non-performing debt secured and unsecured loans your ira can be the bank be the lender notes are a really big asset class but you know real estate precious metals are big right now whenever the economy goes a little haywire people love precious metals and we're doing a lot of that so just it's called alternative assets it's a really big space so let's let's clear up a few quick things self-directing your ira is not illegal oh gosh no right you don't have to put your money in the stock market you know 401k 403b whatever your plan is you don't have to do that you can self-direct it you do but you don't write so you can also self-direct it's another option talk to your hr about it that's another option yeah a lot of times when you work for a company and you've got if like a 401k a 403b or 457 you may not have the option to self-direct them you might have to wait until you leave the service of your company and then you can like small businesses can have what's called a separate array which is a um you know a self-employed you know a pension and then there's also the solo 401k so there are other things you can do as a employer but most employers have um other accounts but with us it's a traditional roth sep simple spousal inherited ira solo 401k and also health savings account you can self-direct all those things cool so you said one thing that i just want to pick out there inherited iras can you inherit somebody else's ira yeah yeah so when you when you open an ira like hey you know today nathan opens an ira and you name a beneficiary so usually it's your spouse as a primary beneficiary your children as contingent beneficiaries but god forbid you pass so what happens next is your beneficiaries the money from your ira goes directly into the beneficiary iras and you know so so the beneficiaries will open new inherited ira accounts and there are special rules um a lot of special rules and they're changing regarding inherited iras i did not know that one that's an interesting one i hadn't heard of that yeah it doesn't go through probate or anything an ira in this sense is like a trust okay so it goes directly from the decedent's account to the beneficiaries account um basically it works like the little paperwork but that's how it goes very interesting i did not know that so when you talk about owning notes um are there any restrictions in owning notes like like for example if i bought a note in my own ira um can i then do everything that i would normally do i can talk to the borrowers if i choose to or have the services do that or set up attorneys all that kind of thing like i can i can manage that or how does that work yeah let's talk about it so with self-directed iras there are special rules for sure and it's like a game of keep away from these things called prohibited transactions so if some of the people listening today are rule book kind of people they can read about prohibited transactions in the internal revenue tax code how fun does that sound awesome but if you want to it's irc internal revenue code 49.75 you can go ahead and read that talks about but i'm just going gonna distill it in about like one minute so people can be disallowed to your ira your ascendants and descendants right your parents and grandparents and their spouse you and your spouse children grandchildren their spouses disallowed a 50 50 business partner is disallowed and a fiduciary like your realtor or uh your cpa a fiduciary your attorney could be disallowed all right so there you go that's who can play the game so your ira can buy a note but it can't be um it can't be a note that was made to say for example your spouse a disallowed person and so you just have to it's keep away it's arm's length from these people you know so that's one thing to consider no personal benefit one thing i learned too over the years and i didn't notice a couple years ago was that any deal that i'm 50 50 with an individual not related to immediately becomes a non-qualified participant right right me and nathan are in a deal 50 50.

i can't use my self-directed money to invest in something with him you guys it it if you have a company and you're 50 50 business partners then you're disallowed to each other but if but if you're but if that's not the case and you say hey i want to get in this deal nathan you want to go 50 50 with me that's different but if you already have incorporated as 50 50 business partners then you're disallowed to each other what if i did a deal with nathan privately and then i wanted my ira money to do another deal with him could i do that are you 50 50 well i'll tell you what there is uh there is yes is the answer because there's an exception that you can as long as you fund concurrently you can do deals with disallowed parties and remember everyone check your attorney on everything please right um so we have a bunch of people commenting in here uh cindy said hi robin said i um and i know bruce said hi as well so i'm glad timing in here throughout the time i'm gonna stay low my voice um feel free to ask questions and i'll forward them to nathan to ask can you share a little bit about um what are the benefits of using self-directed money yeah i mean the main benefit is that you can compound your earnings faster don't you love that and the reason you can is because when you have earnings and it could be you know it could be from a liquidity event could be from just monthly cash flow whatever that income is not diminished by tax so any kind of retirement account is tax deferred or in a roth tax-free so you get to so all the money that your ira earns can go back out into the next deal 100 of it it's not there are a couple exceptions there is this like two taxes where ira can be taxed uh but that's you know kind of going into the weeds but for the most part yes that's how it works to compound faster oh that's great and then uh you mentioned earlier we said you know as a canadian i can't have an eye area of my own however i can use other people's iras i go and invest and i do that all the time people use their ira money to invest with me so that we can go both make money together which is fantastic it's so smart you know i think what a lot of people don't realize is that there's a 39 trillion dollar pool of retirement funds that invest that people like you who are you know asset sponsors can tap into for your deals and so your qualifying question for that would be to say hey do you have an ira right now or do you have like a previous employer plan like something from your old employer a lot of people do and they just haven't rolled it over yet and so then they can take that money and invest with you so i think this really became apparent around 2008 2009 is when we really had a boom in our industry it's when i opened the company you direct but it's because banks weren't lending you know and so people investors are like where do i find the money to for my deals where do i find you know where's this money going to come from it's not the bank they won't even give me any money and so the realization that there is this huge pool of retirement money that may or may not be doing very well in the stock market let's move that over into alternative assets and help them do that help those people to build their retirement um using alternative assets so baby boomers could if they have a bunch of money seeing their 401ks and they retired and they want to control their money they could move the money over right yeah sometimes when you're 59 and a half and you have a 401k you automatically can do what's called an in-service transfer that's true but um but i mean you could be 25 and change jobs and have a 401k you could roll it over so it's not really about your age it's more about you know where's if you've got the retirement capital to debate you know to really do something it's like you're not going to you're not going to invest in a note typically for 10 000 right it's it's usually going to be a bigger deal so you just have to put that money away and of course we have um contribution caps so it takes a little while to build a retirement account up to the size where you want to uh you know invest in it you know in a note or sometimes you have to be an accredited investor right you know to do a deal to do a note deal because notes are securities so sometimes you have to be uh you have to be um you know right exactly you have to be accredited and that's for my funding it's only accredited investors however so the money that somebody has in their ira that would count towards their net worth is that right you know i believe it does but you want to ask your tax person there it doesn't count your house though i know that's for sure no not your primary residence but uh but it seems to me like your savings you know kind of yeah yeah certainly yes you counted and your other assets right yes yeah and and i think we'll be seeing the sec getting a little stronger on that accredited thing i mean i think being accredited sort of means that if you lost the money you could still you know feed your family yeah and they just don't because these deals uh can be risky so you really need to of course understand the risk unless it's cured by real estate and it's by done by somebody that's been doing this for years and years hey you know there's i list that yeah hey and there's risk in any investing but without risk there's no rewards so yeah i think investors are people that are looking for you know to take risks and make investments yeah absolutely i've got a question here this is a great question um yvonne is saying uh i guess she's got her iras with fidelity she says fidelity won't let me have a self-directed ira they said that it's self-directed in the stocks that i choose [Music] right so they kind of jumped on the self-doubt directed bandwagon saying you can choose any stock you want but a truly self-directed ira that's what we provided you direct ira services you know one that you can invest outside of the stock market so if if yvonne wanted to move you know transfer her fidelity ira to you drug to a self-directed ira that's a pretty simple process we do that if you know many times a day what is the difference between you guys and a fidelity kind of it's well think of this like the typical ira versus a self-directed ira is because an ira is an ira it's just the same rules but the difference between self-directed and a typical ira is is like what assets you could put in this ira bucket right so for somebody who's working at fidelity they have licenses like maybe a 6 or 63 or 7 or something like this and they're not allowed to deal in the real estate environment but so now we've got the alternative asset pool and so that's different so so they end up being two different things same rules for iras it's still an ira but a self-directed ira is a bucket for alternative assets and your company is designed for that alternative assets versus and they could take it and put in stocks they want to but you guys have the availability to do anything that's legally bound right right well we have the ability to help them invest outside the stock market that's we're all about outside the stock market can you give advice on it's not what you should buy but what things you can't buy so if someone's about to make a bad transaction that's illegal can you advise them hey listen you can't go out and buy cars with us exactly exactly you know people think they can um so right yes we do we offer a free consultation for anybody who wants to talk to us and say someone is already an account holder their account is open it's funded they found an asset they want to invest we're going to review those investment documents and we're going to look and see hey wait a minute it looks like this you and the seller have have the same name the same last name are you related are you disallowed to each other you know we're looking for things like that um you know and so there are times when we're able to catch things but the responsibility not to commit a prohibited transaction is always on the investor uh the ira holder because it's self-directed you know it's it's sort of like when you go buy a house i mean when you go to closing closing doesn't tell you if it's a good or bad deal they're not going to tell you how to write it off on your tax return they're just going to help you complete that transaction so that now you own that house right nathan i don't think it matters where you're at that's how it works yeah they didn't tell you okay well here's how you you know take your tax benefits yeah because that's not that's not their thing and we're like that we're administrative and we help you you know get it to the right place but we definitely want to talk to our account holders and any you know anybody that's got a transaction that says hey is this is this prohibited can you do roth and traditional with your company yeah traditional difference yeah well the difference is a tax treatment so roth iras are the only kind of ira that can be tax free for life that's pretty sweet but we offer the traditional roth sep simple you know spousal and inherited um and k and the health savings account can be self-directed too so it's i'm just kind of comparing it to the canadian plans in my head so a roth ira trying to figure out which one is which if you're gonna put in um like pre-taxed dollars is that an ira or is that the 401k or or is there a difference in u.s right so pre-tax in other words the money has not yet been taxed right that money goes into anything but a roth you know the roth is after tax money got it the pretext goes in we have i would say 90 of what we have here is traditional iras and the reason for that is most of the accounts we have are rollovers from an employer plan so a pre-tax employer plan normally will roll over into a traditional ira same tax treatment okay yeah they can so the canadian version of the ira is called the tax free savings account tfsa the advantage of the tfsa is there's no age limit on when i can start taking that money out the disadvantage is i can only put it into publicly traded assets oh so yeah but it's an interesting uh differentiation because it's i you know that not having that age limit i think is great um but i'm limited like i can't buy excuse me i can't buy notes with my tfsa well i i think that has to do with risk i think that maybe the regulators think there's too much risk in alternative assets but i mean tell me is there risk in the stock market absolutely there's some risk you know so that's investing right am i right yeah so with with iras um there's no cap where you can invest in um you can do any almost any deal you choose to do that's legal right um any deal you want to do with someone else lend money on deals lend money on apart buildings or even start your own kind of business right you can do any of those things well no it's not going to be your own business because you're disallowed to your ira and you're not allowed to have you know present benefit it's all it's all about saving for retirement so you can have it later but you're not going to take your ira invest in your own business but yeah everything else is right so whenever an ira is investing it's always in either a debt or an equity position you know could you get into like a checkbook ira where sure sure so a checkbook ira isn't a special kind of ira what it is is an asset that the account buys the retirement account will invest in a special purpose llc so the ira is open with money you have a third party create the llc your ira you know buys the 100 of the initial units of that account and then we fund the money you put the money into the checking account now you've got your ira money you know as the is the umbrella and the llc under that retirement account umbrella so it's it's um an ira owned llc is also called a checkbook ira and it's not a gift with purchase a lot of people where's my checkbook it's like well you have to have a third party create this and it has to have special language uh that's what it is stock market i can move money like quickly how long does it take for you guys to fund a deal typically 24 to 48 hours usually yeah yeah typically 24 to 48 hours we're pretty quick um and yeah so it's really good i mean as long as everything's all queued up and the money is is cleared and and then you're good to go and and dave asked and you know this but but dave asked that because in the note world it moves quickly like once once you've got an accepted bid usually you know you might have a week to do your final due diligence um but there are then those other times where okay i need you to fund tomorrow where due diligence is already done and all right we need to fund tomorrow tomorrow with the subjected ira if you want to talk about how long it takes you know it it you know it's not going to happen tomorrow you're not going to give us stocks today and get it funded tomorrow typically um i mean it happens but i mean we're not going to we're going to under promise and over deliver on that one sure and just say you gotta give it a couple of days but be coming from the real estate world myself and really having ingrained in my body that sense of urgency you know um that you have and especially in residential real estate it's crazy people everything is now now now yeah um so that's what i hire when i hire people for you know on staff they have real estate experience they understand the sense of urgency um and you know then all of a sudden we're gonna you know we're gonna do what we can to make things happen yeah that's that's a huge huge plus i i know they're and and not all ira companies are created equal in that sense where some will take like a full week to get the money turned back out and that that can be a long long time in a transaction setting lose a deal and you could lose the deal and then there's others if you can do it in 24 or 48 hours man that's a that's a huge plus well we're going to talk to you about the deal and there are things that can hold up a deal for a week that have nothing to do with us you know so we're you know we'll try to set your expectations up front the best you know the best that we know how uh given the information we have available but sometimes there are outside reasons that a deal could get held up too and then for for anybody who's watching where if you're doing a deal and the money is coming from whether it's your own or somebody else's ira and the seller says okay we're going to close friday i let them know the money's coming from an ira and just make sure that's up front so that there's an understanding that you know what it might take an extra day or two and then the seller understands that but you don't say anything the seller doesn't know right but if you say it and then they know that there's a potential delay there it's fine no big deal it's not a problem let me make a suggestion to you to your listeners that you're a node investor you need something happening like you know time is of the essence always request a wire never never you know mark the box that says you want to check because that check's going in the mail unless you ask for overnight delivery there's a fee for that you know we pass a little pass on the fee that we're we get but never check the box that you want to check if you're in a hurry that's going to take longer all right so so we're kind of with the new kind of the the beginner advice type stuff um any ideas like anything you can share about biggest mistakes that you've seen for like newer investors a couple of common mistakes it's kind of it's kind of funny actually i mean since you know knowing the industry as well as we do but we saw somebody um uh by the way who uh they what did they they wanted their ira to buy a property a property so they went to thei....