1.
Using a Self-directed IRA to Create
Hassle-free Cashflow
David Campbell Kaaren Hall
www.HasslefreeCashflowInvesting.com www.uDirectIRA.com

2.
David Campbell
Former high school & college band director
Professional investor
Self-made multi-millionaire
Real estate developer
Real estate broker
Real estate & business advisor
Financial mentor
Over $800 million of real estate experience
Houses, condo-conversion, multi-family, winery, resort, office,
retail, medical office, commercial development, home building
California, Texas, North Carolina, Mexico, and Belize

3.
Kaaren Hall, President
uDirect IRA Services, LLC
(866) 538-3539
KHall@uDirectIRA.com
uDirect IRA Services, LLC
2522 Chambers Road, Ste 100
Tustin, CA 92780

4.
Begin with end in mind
My Philanthropy: helping other people live more
abundant lives through hassle-free investments by
giving the knowledge and support for our others to
invest with mental tranquility.
 NOT a sales pitch
 NOT investment, legal, or tax advice
 NOT a securities offering

5.
WHAT THIS IS !
 This IS a service to our existing clients
 This IS an opportunity to introduce other
people to the possibility of living more abundant
lives through hassle-free investments by giving
the knowledge and support for our others to
invest with mental tranquility.
 This IS a job interview

6.
Compelling WHY
Husband
Father
Musician
Regular guy

7.
Deployment Phase
If your desired monthly expenses are
less than
1% of your “liquid” NET worth
$500,000 cash x 1% ROI per month = $5,000

8.
Aggregation Phase
If your desired monthly expenses are
greater than
1% of your “liquid” NET worth
$100,000 cash x 1% ROI per month = $1,000

9.
Aggregation Phase
If your desired monthly expenses are
greater than
1% of your “liquid” NET worth
$100,000 cash x 1% ROI per month = $1,000
cash rate of return expectation

10.
Essential Resources
 cash
 cashflow LIMITED
 credit
 equity
 time LIMITED and INFINITE
 talent
 strategic relationships INFINITE
 control of an opportunity

11.
How To Use SD IRA to Retire Younger
Than You Thought Possible
 cash Traditional IRA
 cashflow Self-Directed IRA
 credit (other people’s)
 equity
 time
 talent
 strategic relationships
 control of an opportunity

12.
How to Self-Direct Your Retirement Savings
uDirect IRA Services, LLC is not a fiduciary and does not render
tax, legal, accounting, investment, or other professional advice. If
tax, legal, accounting, investment, or other similar expert assistance is
required, the services of a competent professional should be sought.

13.
Self-Direction
Why Haven’t I Heard About This?
• Few attorneys are knowledgeable
– About self-directed plans
• Few CPAs are knowledgeable
– About self-directed plans
• IRS rules have allowed self-direction since
IRAs were created in mid-1970s

14.
What’s the Difference?
Typical IRA Self-Directed IRA
• Stocks • Rental Property
• Bonds • Notes
• Mutual Funds • Private Stock
• CD’s • LLC’s
• Tax Liens
• Foreign Property
• Raw Land
• Etc.

15.
What About Losses?
Losses
• Cannot be written off taxes
• Cannot be replaced in the retirement plan

16.
What Are The Limits?
A Self-Directed IRA can invest in anything EXCEPT
1. Life Insurance Policies
2. Collectibles
1. Artworks
2. Coins
3. Collectible Cars
4. Antiques
5. Gems
6. Stamps
7. Rugs

17.
What if your funds are with your
current employer?
Your plan will probably NOT allow you to self-
direct
Must wait until you leave the company
To rollover retirement plan
You can request an “in-service” transfer
from your current plan administrator.

18.
Prohibited Transactions
(IRS Publication 590)
• Borrowing money from the IRA
• Selling property to it.
• Using it as security for a loan.
• Buying property for personal use (present
or future) with IRA funds.

19.
Disqualified Person
• Disqualified persons include your fiduciary and
members of your family (spouse, ancestor, lineal
descendant, and any spouse of a lineal
descendant).

20.
Qualified Persons
• Aunts & Uncles
• Cousins
• Brothers & Sisters
• Unrelated friends
• Nieces & Nephews

21.
Prohibited Transactions
• Neither you nor any disqualified people
may benefit from IRA
• Cannot buy, sell or exchange property
between plan and
– Self or
– Disqualified people
• Cannot provide goods, services or facilities

22.
Self-Directed IRA - Structure
• You
• Your IRA
• TPA
• Custodian

23.
Buying Real Estate With Your IRA
Pros
1. Capital gains are tax free
2. Positive cash flow is tax free
3. No time limit for holding property
4. IRA can borrow money
– Leverage your investment
5. Potential to earn a larger rate of return on
invested capital

24.
Buying Real Estate With Your IRA
Cons
1. No tax advantages of owning real estate
2. No deduction for capital losses
3. You are solely responsible for all gains or
losses
4. You cannot replace losses

25.
Rule #1
There is no such thing as a good
property or bad property.
 There is no such thing as a good
investment or bad investment.
There is only appropriate and
inappropriate ownership and
timing.

26.
Inside IRA Outside IRA
Ordinary income
Long term capital gains with
ability to 1031
Short term capital gains
unable to 1031
Real estate with depreciation
that creates an immediately
Promissory notes
USABLE passive loss
Flips
Get as much low rate high
LTV financing as you can
Syndications that are
FIRST
active
Positive cash flowing assets
Debt relief faster than
w/ no tax bill
amortization
No equity properties
High equity properties
(form of asset protection)

27.
Your IRA Can Take A Loan!
• Loan must be
non-recourse
– Upon default, lender can seize subject
property only
• Upon default, lender cannot
– Seize other IRA plan assets
– Seize your personal assets

28.
Non-Recourse Loans
• Few lenders to choose from
– Must be a portfolio loan
– Cannot be sold on the secondary market
• Larger down payment required
– 40% to 45%
• Cannot personally guarantee the loan

29.
Personal Guarantees
• Personal guarantees by the IRA owner not
permitted
• Can be personally guaranteed by a third party
– Must not be a “disqualified” person
– Disqualified people are
• Ascendants
• Descendants
• Spouse and self
• And others

30.
Getting the Best IRA
Financing Possible
Recourse to your allowed partner and
non-recourse TO YOU
 Group investments
 Seller financing
 Swap debt with an non-disqualified
investor
 Blended interest rate

31.
UDFI
• Unrelated Debt Financed Income tax
• Any property held to produce income is
debt-financed property if at any time
during the tax year there was acquisition
indebtedness outstanding for the property.

32.
UBIT
• Unrelated Business Income Tax
• If a tax exempt entity engages in a
business that is unrelated to its primary
purpose, any income derived from such
business will be subject to UBIT
• IRS Pub 598
• UDFI & UBIT are reported on form 990-T

33.
Buying Real Estate - The Process
• Open a self-directed account
• Shop for a property
• Remember, it’s the IRA that is the buyer
• Custodian to sign “Offer to Purchase”
• Submit a Buy Direction Letter for earnest money
deposit
• Funds wired to closing from your IRA
• Fund & Record
• Rents are made payable to your IRA

34.
Example
Father & Son buy a house
Father: 50% Cash
Son: 50% Traditional IRA
Title reads as:
Custodian FBO Son’s IRA 50%, Father 50%, TIC

35.
Disqualified?
• Before the deal
– Father has no ownership
– Son’s Traditional IRA has no ownership
• Because this is a new deal
– Father and son do not have to worry about
the “disqualified person” rule

36.
Disqualified?
• After the deal
– The “disqualified person” rule comes into
effect
• Neither Father nor Son can live in the
condo
– No one who is disqualified to either of them
can live in the house
• Ascendants, descendants, etc.

37.
After the deal….
• After the deal
• Neither Father nor Son can ever buy out each
other’s ownership
– They are disqualified to each other
• Expenses and profits are split
– 50% to Father
• Taxable
– 50% to Son’s Traditional IRA
• Tax-deferred

38.
What if the IRA depletes its
reserves?
1. Make your yearly contribution
2. Liquidate other assets in the IRA
3. Transfer money from other retirement
accounts
4. Bring on a partner
– Not a disqualified person
5. IRA can get a loan
6. Sell the asset

39.
IRA-Owned LLC
“Checkbook IRA”
• IRA purchases shares of a newly-formed
LLC formed for this purpose
• LLC receives funds in it’s checking account
• LLC follows same rules as IRA for
investing

40.
3 Types of Plans
• IRAs
– Individual Retirement Accounts
– What you are doing for your own retirement
• Qualified Plans
– ERISA controlled
– Typically, what an employer provides you
• Other Plans
– Education
– Health

41.
Types Of Self-Directed Plans
IRAs Qualified Plans Other Plans
Traditional 401K/ 457/ 403b Coverdell
Health Savings
Roth Defined Benefit
Account
SEP Profit Sharing
Simple Individual K
Spousal

42.
How Do I Self-Direct?
1. Complete an application
1. Provide copy of driver’s license
2. Copy of statement
2. Fund your account
1. Annual Contribution
2. Transfer
3. Rollover
3. Tell us what you want to invest in

43.
Retiring Earlier Than You Thought Possible
Higher Yields
Distributions without depletion of principal
Laddered strategies: liquid and non-liquid real estate
Avoiding the early withdrawal penalty before 59 1/2

44.
Early withdrawal penalty EXEMPTION
“IRS 72 t”
Retirement Distributions at Any Age
NO early withdrawal penalty
Substantially equal payments for 5 years
or until 59 ½ years old
$500,000 principal x 20% ROI = $100,000 annual profit
$50,000 profit distributed and TAXED as ordinary income
$50,000 income remains in IRA and is TAX DEFERRED

45.
Rule #1
There is no such thing as a good
property or bad property.
 There is no such thing as a good
investment or bad investment.
There is only appropriate and
inappropriate ownership and
timing.

46.
9 CAP rate based on actual performance
15% cash on cash return from leveraged return
Compare this to stock market risk / reward
CAP RATE 9% 9%
Cash on Cash Return 9% 15%
Purchase Price $1,000,000 $1,000,000
Debt $0 $700,000
Equity $1,000,000 $300,000
Net Operating Income $90,000 $90,000
Debt Service $0 $45,000
Cash Flow $90,000 $45,000
FREE video training: www.HasslefreeCashflowInvesting.com

47.
must take house
Paid $30,000
Rehab: $15,000
Appraised: $55,000
Rents: $550/month

48.
Co-investing with your IRA
+ IRA $$$ =

49.
Real estate equity as a down
party 1 party 2
property House Rite Aid
value $500,000 $4,000,000
debt $100,000 $2,500,000
real estate equity $400,000 $1,500,000
cash to balance $1,100,000 $0
TOTAL EQUITIES $1,500,000 $1,500,000

50.
Personal Investment Philosophy
FREE Consultation
Passive investing
Active syndicating
Equity Exchanging
New Houses In Dallas
Hard Money Lending
Creative solutionist
Dallas Field Trip
REG Cruise
David@HasslefreeCashflowInvesting.com

51.
“There are no risky investments, only
risky investors.”
- Robert Kiyosaki
Real Estate Guys
10th Annual Investor Summit at SeaMarch 30th
– April 7th, 2012
FACULTY: Robert and Kim Kiyosaki, David Campbell,
Rich Dad Advisors - Ken McElroy, Wayne Palmer, Tom Wheelwright, Wayne Kirk,
Robert Helms and Russell Gray - Hosts of the Real Estate Guys Radio Program.

52.
Using a Self-directed IRA to Create
Hassle-free Cashflow
David Campbell Kaaren Hall
www.HasslefreeCashflowInvesting.com www.uDirectIRA.com