馃攳
How To Use A Self Directed Roth IRA for Real Estate Investing - YouTube
Channel: Realeflow
[4]
what if would have Don you know he
started working for Realeflow 10 12 years
[10]
ago long or even um but what if he what
if he rolled his 401k over he had a
[16]
couple hundred grand in the 401k he
rolled it over to equity trust company
[20]
how would he really use that like like
what's a real-world example of somebody
[27]
with a lot more funding in inside of an
IRA
[31]
yeah yeah that's a great question Greg
and really it comes down to when I work
[35]
one-on-one with with folks and my team
members when they work one-on-one with
[39]
individual investors we like to talk a
little bit about what your specific
[43]
needs and goals are you know obviously
we want to know what your long-term
[46]
goals are a good example is I got a
client that ten years ago when we met
[52]
his goal was to officially retire in 15
years he was gonna list his house and
[58]
him and his wife we're gonna get in an
RV that they bought a couple years back
[61]
and travel the country you know and I've
heard a lot of folks that have similar
[65]
goals like that
so his there was a your plan now what he
[69]
wasn't accounting for when he was doing
all of his financial calculations is
[73]
that all the investments he does in his
Roth IRA in his wife's Roth IRA they
[78]
primarily buy properties and sell them on
seller financing they do private lending
[82]
they've had rentals they've done fix and
flip deals when he wasn't accounting for
[87]
is all of the tax savings so going back
to that rule of 72 which I'm really glad
[91]
you brought that up Greg he was able to
compound faster and so I just got a
[96]
message from him a few weeks back and
he's gonna list his his house his
[101]
personal residence he sold off all of
his rentals and his wife are gonna
[105]
ultimately go off to their lifelong goal
in less than five years and they
[110]
anticipated so they shaved five years
off of their retirement long-term
[114]
retirement goal because they were doing
these investments in their Roth IRA so
[119]
ultimately I would first ask down a
little bit about you know what are his
[123]
goals and what is the investment
strategies that he's doing now that are
[126]
working and then what is he looking to
do going forward now let's say that in
[131]
role-playing this Don says hey I'm a
buy and hold guy I wanna buy rentals
[135]
hire a property management company and
generate cash flow and eventually I'll
[141]
sell the property maybe five ten years
down the road depending on if a good
[145]
buyer comes into the market for me so
let's say Don turns over is $100,000
[150]
401k and I'll give you a real example
let's say he goes out and buys a duplex
[156]
for 68,000 here in Cleveland and he puts
$20,000 worth of work into it so 68 goes
[163]
out of the IRA buys the property
IRA holds title of the property he puts
[167]
$20,000 worth of work into it so now
he's in it for 88,000 and he did this
[171]
all in cash without any leverage
he's a cash buyer with his IRA and that
[179]
with John yes you're saying just so
everyone knows that Donna is 100k in his
[185]
IRA he can take 68 out to buy the
property from his IRA but he can also
[191]
take the 20 grand for rehab or
renovation costs out of his IRA
[196]
absolutely in fact that's the way he has
to structure it so if the IRA buys it
[201]
the IRA has to pay for all fix up and
repairs
[204]
okay so 20,000 goes out to fix it up and
now let's say he's renting both units
[210]
for $900 a month so he's got he's got
he's got what fifth he's got 1500 I'm
[219]
sorry he's got he's got 900 per unit
right so he's got 1,800 coming back in
[224]
every single month and then let's say
that his net is net operating income on
[230]
a monthly basis is $1400 so that $1400
is going back into the IRA and is 100%
[240]
exempt from taxation because it's in his
Roth IRA
[244]
there's no calculate depreciation if he
eventually sells the property there's no
[251]
recaptured depreciation that's all
tax exempt profit coming back to his IRA
[257]
the profit never hits his 1040 his own
income and Greg I gave that example
[261]
because I have a client here in
Cleveland his name's Gary and he did
[264]
this exact same transaction he bought a
duplex about three years ago at a
[268]
foreclosure auction the equity trust IRA
funded it he gave us the direction
[272]
68,000 went out he put $20,000 worth of
work into it
[276]
he hired contractors to do all the work
you didn't physically do any of the work
[279]
himself and that property still to this
day is renting out at 900 per unit and
[284]
last I talked with him his net
operating income is around 1,400
[290]
now if we do a cash on cash return on
investment calculation they're assuming
[294]
that it continues to be rented out he's
got two two year leases in there
[298]
I he's gonna cash on cash ROI at a close
to 20% and so when we use we apply that
[305]
to the rule of 72 he'll double his money
in about three and a half years so
[310]
question question for you then they're
actually writing their rent check to my
[314]
Roth IRA in that example that's the
owner of the property yeah so the theory
[322]
yes is that the tenant is going to be
writing the checks made payable to the
[325]
IRA those checks are deposited right in
the IRA you know not to get too far
[329]
ahead of myself
we do have a technology portal that
[332]
allows our customers to send a link to
their tenant we call it a payment center
[336]
and they send a link to the tenant the
tenant goes in keys in their account
[340]
number routing number and the money
gets zapped directly into the equity
[343]
trust IRA allocated to that specific
property perfect that's pretty amazing
[348]
pretty amazing John for sure so so
that's a great example what about people
[355]
who don't live in Cleveland right so
they can't buy a sixty eight thousand
[359]
dollar duplex so let's let's use the
hundred K example again but let's say
[363]
Don lives in San Diego and he found of
four hundred thousand dollar property
[370]
that he wants to rent or he wants to buy
and rent out how would he structure in
[375]
that deal like when when he has to do
wants to use his IRA but he's also going
[380]
to potentially have to use some other
people's money or bank financing even or
[385]
cash of his own can he set that up yeah
absolutely so there's there's a couple
[391]
ways that we can go about this and we
can whiteboard a transaction like this
[394]
and this is exactly what I would do if
dant Don came to me one-on-one not that
[398]
equity trust or myself can give tax
legal or financial advice that's you
[403]
know always something we want to
communicate appropriately to our
[406]
customers or prospective investors but
if we were whiteboarding this together i
[410]
would first look at it say okay it's
four thousand you got a hundred thousand
[413]
in an IRA do you have three hundred
thousand in cash personally because down
[418]
if you have three hundred thousand
dollars in cash personally you could
[421]
actually partner your IRA with your non
hi ray funds so you got taxable funds
[427]
and non taxable funds now you have to be
careful when you go about doing
[432]
because you don't want to trigger what's
called a prohibited transaction that
[436]
being a transaction that would
invalidate the IRA so if you were to
[440]
structure the deal this way where you're
irate puts in a hundred and you
[443]
personally put in 300,000 proportionally
if the pro rata percentages would be
[449]
Don's IRA has twenty five percent
interest in the property and then Don
[454]
personally or likely he's gonna have his
real estate investment LLC right on
[459]
title will be seventy five percent owner
so 25 percent IRA 75 percent LLC I'm the
[465]
deed to the property he would have
listed or you would see equity trust
[469]
company custodian for the benefit of
Don's IRA undivided interest 25 percent
[476]
and Don's LLC undivided interest seventy
five percent and then going forward all
[482]
expenses would flow 75 25 so Don's LLC
responsible for 75 percent of the
[489]
expense this is IRA responsible for 25
percent expenses and then let's say he
[494]
sold this property for a profit and
let's call it a hundred thousand dollar
[498]
profit that profit in principle would be
split 75 25 and so the hundred thousand
[504]
dollars in profit twenty-five thousand
goes back into the IRA which is exempt
[508]
from taxation does not hit his 1040 as
ordinary income and then the other their
[513]
seventy five thousand is gonna flow back
to Don's LLC and then he's gonna report
[517]
that on his Schedule C or whatever
applicable tax schedule and pay via
[521]
accordingly taxes on his 1040 in the
same thing with positive rental income
[526]
if he's if he so he's bought that
property owns it free and clear he's
[532]
getting three thousand a month in rent
let's say they see 75 percent of the
[538]
rent income would be attributable to his
LLC in 25 percent seven hundred fifty
[545]
bucks would go tax-free into his IRA
every month yeah that's exactly correct
Most Recent Videos:
You can go back to the homepage right here: Homepage