www.HasslefreeCashflowInvesting.com                             Investing Your Self-Directed IRA                          ...
www.HasslefreeCashflowInvesting.com          David Campbell - Founder        Hassle-Free Cashflow Investing               ...
www.HasslefreeCashflowInvesting.com                                      Compelling WHY                Husband            ...
www.HasslefreeCashflowInvesting.com                            Today’s agenda        •when your IRA should own positive ca...
• Kaaren Hall, President• uDirect IRA Services, LLC• (866) 538-3539• KHall@uDirectIRA.com                                u...
• Stay to the end for a FREE report• Using a Solo 401k to avoid UDFI
Begin with end in mindRELATIONSHIPSIDEASOPPORTUNITIESNOT a sales pitchNOT investment, legal, or tax advice
STRESS iswhen your expectationsdon’t match your reality
“Stress / distress is not created by a property;it is created by an owner’s relationship to a property.”                  ...
DO YOU HAVE MISMATCHED?  expectations    resources      team   philosophyemotional stamina  time horizon    strategy     t...
Essential Resources★   cash                 Typical IRA★   cashflow★   credit                       THIS IS WHERE★   equit...
www.HasslefreeCashflowInvesting.com       “Main Stream” Sources of Passive Income                  are Not an Option      ...
Cashflow in your IRA?
Cashflow in your IRA?         IRA CASHFLOW SUCKS         Higher cashflow = lower ROI         Investing transaction expense...
Cashflow in your IRA?          IRA CASHFLOW ROCKS          great for distribution era          better than bonds / CDs    ...
Cashflow in your IRA?           Cashflow          Does NOT          necessarily          correspond           with RISK
Deferred Down Payment     When you don’t have a down payment     When you don’t need cashflow but the     seller does     ...
CAP > interest rate• $100,000 price• $7,000 NOI• 7 CAP• $100,000 debt at 5% = $5k• $7k income = $2,000 profit
Small IRA?
Small IRA?Group investmentsPartnershipsLeverage future contributionsHigh LTV financingDeferred downpayment
What about amortization?•   $100,000 debt at 5% = $5,000 interest•   $7,000 NOI - $5,000 interest = $2,000 PROFIT•   If am...
What situation is appropriate     FOR YOU?        • There is no such thing as a          good property or bad          pro...
Pitfalls of low money down       inside your IRA     Increased probability of cash call     Inability to meet cash call = ...
Non-recourse = higher rates  Getting non-recourse debt at low ratesIRA debt needs to be non-recourse TO YOU               ...
• How to Self-Direct Your Retirement Savings•      uDirect IRA Services, LLC is not a fiduciary and does not render tax, l...
Self-DirectionWhy Haven’t I Heard About This?•Few attorneys are knowledgeable – About self-directed plans•Few CPAs are kno...
What’s the Difference?•   Typical IRA           Self-Directed IRA•   Stocks         •   Rental Property•   Bonds          ...
What About Losses?• Losses• Cannot be written off taxes• Cannot be replaced in the retirement plan
What Are The Limits?• A Self-Directed IRA can invest in anything EXCEPT1. Life Insurance Policies2. Collectibles 1.   Artw...
What if your funds are with your current employer?Your plan will probably NOT allow you to self-directMust wait until you ...
Prohibited Transactions(IRS Publication 590)• Borrowing money from the IRA• Selling property to it.• Using it as security ...
Disqualified Person• Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal desc...
Qualified Persons•Aunts & Uncles•Cousins•Brothers & Sisters•Unrelated friends•Nieces & Nephews
Prohibited Transactions•Neither you nor any disqualified people may benefit from IRA•Cannot buy, sell or exchange property...
Self-Directed IRA - Structure• You• Your IRA• TPA• Custodian
Buying Real Estate With Your IRA• Pros1.   Capital gains are tax free2.   Positive cash flow is tax free3.   No time limit...
Buying Real Estate With Your IRA• Cons1. No tax advantages of owning real estate2. No deduction for capital losses3. You a...
Your IRA Can Take A Loan!•Loan must be• non-recourse – Upon default, lender can seize subject property   only•Upon default...
Non-Recourse Loans•Few lenders to choose from – Must be a portfolio loan – Cannot be sold on the secondary market•Larger d...
Personal Guarantees• Personal guarantees by the IRA owner not permitted• Can be personally guaranteed by a third party – M...
UDFI•Unrelated Debt Financed Income tax•Any property held to produce income is debt- financed property if at any time duri...
UBIT•Unrelated Business Income Tax•If a tax exempt entity engages in a business that is unrelated to its primary purpose, ...
Buying Real Estate - The Process• Open a self-directed account• Shop for a property• Remember, it’s the IRA that is the bu...
What if the IRA depletes itsreserves?1. Make your yearly contribution2. Liquidate other assets in the IRA3. Transfer money...
IRA-Owned LLC“Checkbook IRA”•IRA purchases shares of a newly-formed LLC formed for this purpose•LLC receives funds in it’s...
3 Types of Plans• IRAs  – Individual Retirement Accounts  – What you are doing for your own retirement• Qualified Plans  –...
Types Of Self-Directed Plans    IRAs       Qualified Plans    Other Plans Traditional   401K/ 457/ 403b     Coverdell     ...
How Do I Self-Direct?1. Complete an application 1. Provide copy of driver’s license 2. Copy of statement2. Fund your accou...
www.HasslefreeCashflowInvesting.com                       Questions / Counseling             David@HasslefreeCashflowInves...
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Investing Your IRA When Your Income is High but Your Balance is Low

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You've been hearing a lot about about self-directed IRA s and real estate. You're intrigued. You can think of all kinds of real estate investments you'd use your self-directed IRA for. The only catch? You don't have much money in your IRA yet.

Most IRA investors pay all cash for a property or they have to borrow 50-65% of the purchase price at rates 3-4% higher than conventional interest rates. Paying high interest rates inside your IRA can potentially erode your cash flow and decimate your returns.

So, what do you do while you're building up a balance inside your IRA? How can you take advantage of today's amazing real estate market if you don't have the resources inside your IRA to make a 35-50% down payment or pay all cash for a property?

Watch this 60 minute training video and find out!


Kaaren Hall president of uDirect IRA Services www.uDirectIRA.com and professional investor David Campbell www.HasslefreeCashflowInvesting.com will show high income earners how to use a self-directed IRA to create amazing real estate profits -- even starting with a small balance.

In this 60 minute FREE webinar you'll learn:

1) how to make IRA profits as a high income earner starting with a relatively small self-directed IRA

2) deferred down payment strategies used by savvy IRA investors to double their returns and lower their risk

3) how to buy a $1,000,000 property inside your IRA with as little as $10,000 down

4) the benefits and pitfalls of owning and financing "low money down properties" inside your IRA

5) when your IRA should own positive cash flow properties and when positive cash flow sucks

6) how easy it is to use a self-directed IRA to maximize your profits while minimizing your tax bill

7) where to find non-recourse IRA financing at low interest rates

Published in: Economy & Finance, Business
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Investing Your IRA When Your Income is High but Your Balance is Low

  1. 1. www.HasslefreeCashflowInvesting.com Investing Your Self-Directed IRA When Your Income is High but Your Balance is Low Fourth Dimension Real Estate, Inc. David Campbell - CEO www.HassleFreeCashflowInvesting.com uDirect IRA Services Kaaren Hall - President www.uDirectIRA.com
  2. 2. www.HasslefreeCashflowInvesting.com David Campbell - Founder Hassle-Free Cashflow Investing Former high school band director Self-made multi-millionaire Real Estate investor / developer / broker +$800 million in transactional experience Financial educator / author / speakerHouses, condo-conversion, multi-family, winery, resort, office, retail, medical office, production home building Faculty Member: Investor Summit at Sea with Robert Kiyosaki Regular Contributor to the Real Estate Guys Radio Show
  3. 3. www.HasslefreeCashflowInvesting.com Compelling WHY Husband Father Musician
  4. 4. www.HasslefreeCashflowInvesting.com Today’s agenda •when your IRA should own positive cash flow properties and when positive cash flow sucks • IRA profits as a high income earner starting with a relatively small self-directed IRA •deferred down payment strategies •the benefits and pitfalls of owning and financing “low money down properties” inside your IRA •how easy it is to use a self-directed IRA to maximize your profits while minimizing your tax bill •where to find non-recourse IRA financing at low interest rates
  5. 5. • 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
  6. 6. • Stay to the end for a FREE report• Using a Solo 401k to avoid UDFI
  7. 7. Begin with end in mindRELATIONSHIPSIDEASOPPORTUNITIESNOT a sales pitchNOT investment, legal, or tax advice
  8. 8. STRESS iswhen your expectationsdon’t match your reality
  9. 9. “Stress / distress is not created by a property;it is created by an owner’s relationship to a property.” -David Campbell
  10. 10. DO YOU HAVE MISMATCHED? expectations resources team philosophyemotional stamina time horizon strategy tactics
  11. 11. Essential Resources★ cash Typical IRA★ cashflow★ credit THIS IS WHERE★ equity THE PROFITS ARE★ time and why we self-direct★ talent★ strategic relationships★ control of an opportunity
  12. 12. www.HasslefreeCashflowInvesting.com “Main Stream” Sources of Passive Income are Not an Option Bonds and CDs do not outpace inflation Stock market risky & unpredictable (ERISA withdrawal/ manipulated) High risk of hyper-inflation
  13. 13. Cashflow in your IRA?
  14. 14. Cashflow in your IRA? IRA CASHFLOW SUCKS Higher cashflow = lower ROI Investing transaction expenses IRA transaction expenses Decision making / time cost Your contributions = cashflow
  15. 15. Cashflow in your IRA? IRA CASHFLOW ROCKS great for distribution era better than bonds / CDs balancing a negative cashflow ordinary income tax deferral
  16. 16. Cashflow in your IRA? Cashflow Does NOT necessarily correspond with RISK
  17. 17. Deferred Down Payment When you don’t have a down payment When you don’t need cashflow but the seller does When the leverage enhances your returns
  18. 18. CAP > interest rate• $100,000 price• $7,000 NOI• 7 CAP• $100,000 debt at 5% = $5k• $7k income = $2,000 profit
  19. 19. Small IRA?
  20. 20. Small IRA?Group investmentsPartnershipsLeverage future contributionsHigh LTV financingDeferred downpayment
  21. 21. What about amortization?• $100,000 debt at 5% = $5,000 interest• $7,000 NOI - $5,000 interest = $2,000 PROFIT• If amortization is less than $2,000 then positive cashflow• If amortization is greater than $2,000 then negative cashflow
  22. 22. What situation is appropriate FOR YOU? • There is no such thing as a good property or bad property / investment • There is only appropriate and inappropriate ownership and timing.
  23. 23. Pitfalls of low money down inside your IRA Increased probability of cash call Inability to meet cash call = LOSS Unrelated Debt-Financed Income Tax Maximum contribution limits Inability to deduct losses in current year Less benefit from high depreciation
  24. 24. Non-recourse = higher rates Getting non-recourse debt at low ratesIRA debt needs to be non-recourse TO YOU Investment partners Group investments Seller financing Installment sale Investment grade tenants Blended interest rates
  25. 25. • 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.
  26. 26. Self-DirectionWhy 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
  27. 27. 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.
  28. 28. What About Losses?• Losses• Cannot be written off taxes• Cannot be replaced in the retirement plan
  29. 29. What Are The Limits?• A Self-Directed IRA can invest in anything EXCEPT1. Life Insurance Policies2. Collectibles 1. Artworks 2. Coins 3. Collectible Cars 4. Antiques 5. Gems 6. Stamps 7. Rugs
  30. 30. What if your funds are with your current employer?Your plan will probably NOT allow you to self-directMust wait until you leave the company To rollover retirement plan You can request an “in-service” transfer from your current plan administrator.
  31. 31. 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.
  32. 32. Disqualified Person• Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
  33. 33. Qualified Persons•Aunts & Uncles•Cousins•Brothers & Sisters•Unrelated friends•Nieces & Nephews
  34. 34. 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
  35. 35. Self-Directed IRA - Structure• You• Your IRA• TPA• Custodian
  36. 36. Buying Real Estate With Your IRA• Pros1. Capital gains are tax free2. Positive cash flow is tax free3. No time limit for holding property4. IRA can borrow money – Leverage your investment5. Potential to earn a larger rate of return on invested capital
  37. 37. Buying Real Estate With Your IRA• Cons1. No tax advantages of owning real estate2. No deduction for capital losses3. You are solely responsible for all gains or losses4. You cannot replace losses
  38. 38. 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
  39. 39. 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
  40. 40. 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
  41. 41. 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.
  42. 42. 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
  43. 43. 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
  44. 44. What if the IRA depletes itsreserves?1. Make your yearly contribution2. Liquidate other assets in the IRA3. Transfer money from other retirement accounts4. Bring on a partner – Not a disqualified person5. IRA can get a loan6. Sell the asset
  45. 45. 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
  46. 46. 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
  47. 47. 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
  48. 48. How Do I Self-Direct?1. Complete an application 1. Provide copy of driver’s license 2. Copy of statement2. Fund your account 1. Annual Contribution 2. Transfer 3. Rollover3. Tell us what you want to invest in
  49. 49. www.HasslefreeCashflowInvesting.com Questions / Counseling David@HasslefreeCashflowInvesting.com www.HasslefreeCashflowInvesting.com KHall@uDirectIRA.com www.uDirectIRA.com

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