Well, we have an exciting episode today because a lot of you have retirement accounts. Many of you have self-directed retirement accounts and a percentage of you don’t know what to do with that money. And so we’re going to help you today because yes, you can invest in real estate. Yes, you can get financing. And unfortunately, a lot of people don’t realize that they can get mortgage financing to invest in real estate within their self-directed retirement accounts. Did you know, there is over $19 trillion, that’s trillion with a T held in retirement accounts. This is as of 2020, just last year. So there is a lot of cash and assets held in retirement accounts. But the question is, is those of you who are in the stock market and are afraid that maybe it’s a little frothy and a little overvalued, and maybe you need to take some chips off the table and move them to hard assets like real estate, or you’re sitting on cash because you don’t know what to do with it. Well, that’s what we’re going to talk about today.
Download yourFREE copy ofThe Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to The Wealth Gap with Connor Boyack
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here’s how.
See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
SUBSCRIBE on iTunes | Stitcher | Podcast Feed
0:00
00:34:12
Apple PodcastGoogle PodcastAndroid PodcastStitcherSubscribe RSSDownload
So today I have two guests. I have one of our newer and very well seasoned investment counselors, Nate hall, on, on the I guess the zoom call and the recording. We’re kind of recording in multiple ways here today. So Nate is one of our investment counselors here who is very well-versed on investing in self-directed IRAs and strategy related to that. In addition to that, we also have Bob Cash and Bob is the president and CEO of Sierra Crest Capital Inc. Now Sierra crest capital is a commercial business purpose lender, and they are a vital source of capital to over 1200 real estate investors. They’ve originated in excess of $150 million in non-recourse IRA loans. Now that’s a key term there non-recourse this. We’re going to talk about this today because it has to be a non-recourse loan for you to invest in your self directed retirement account. And Bob has an extensive background in all aspects of mortgage lending, including appraisals, residential sales, loan, origination, escrow title, and underwriting, private money loans. So with that, Bob, welcome to the show, Nate, welcome to the show.
Thank you, Marco. Thank you, Marco.
Well, it’s great to have you guys on Bob. Let’s start with you. Did I miss anything in terms of your background and Sierra Crest Capital or anything you want to fill in?
No, I think you nailed it pretty good. We are a private money lender. And the one thing that I really want to heart by is, are focus on, I shouldn’t say is the, the commercial business purpose lender, and the difference between what we do and what maybe a conventional lender would do is that we don’t lend to individuals. We are not a consumer lender. We’re a commercial business purpose lender, which means that we only lend to entities. You have to have an entity, a trust, and as, but an LLC, or you need to have it take title your asset in the name of a custodian. And we’ll get more into, into that from a standpoint of what works best in that scenario. But if you called up and said, Hey, my name is Marco sands, really? And I want to borrow money from you, Marco, unless you’ve got an LLC doing business.
Okay. I don’t want that to deter or scare off anybody listening to this because they might be thinking, okay, yeah, I’ve got a self-directed account. I’ve got some cash. I’ve got real estate, but I don’t have an LLC or an entity. So I don’t qualify. Or this is not something for me. You’re absolutely wrong because it is very quick, simple, easy, and cheap to set up an entity like an LLC that you can use for title holding purposes. So once you have that, which is quick, simple, and easy to do now, you are able to have access to this financing assuming you qualify for the other terms, right?
Yes. Yes. And thank you for pointing that out. So yeah, we’re ready to go from that standpoint. So once you’ve determined what your entity or how you’re going to take title to the property, we’d like to think that this is the easiest real estate loan that you’ll ever get your hands on. So what we’re going to do is we’re going to determine where your assets are, how you’re going to take title. And then we’re going to look at the asset. We are an asset-based lender. So we focus more on the asset. Non-recourse loan means two things. Number one is that there’s no personal guarantee. The IRS requires to be non-recourse because there is no personal guarantee. The reason there’s no personal guarantee on these types of loans is because in a technical way, you do not own your retirement dollars. Your tie retirement dollars are held in trust by a third party.
And that’s what keeps the tax-deferred status or the tax-free status in a Roth IRA. So you want to be able to make sure IRS says you can’t give a personal guarantee on something you don’t own. So that’s a real key point from a standpoint of why the non-recourse, the non-recourse from the lender standpoint is mean that because there’s no personal guarantee, the only recourse we have against this transaction is in the event of default is to foreclose on the property and take the asset back. So we want to really focus on the asset, not the individual, not the, the entity that’s taken place. We’re going to go through that and figure out what’s going to happen. But we really want to focus on the asset and the assets ability to generate sufficient income to service the debt. So it’s really debt service ratio is what we want to look at.
We don’t do appraisals on any of the loans. So we don’t really worry about what the value of the property is. That really is between buyer and seller, to have a meeting of the minds, to determine what’s a good price for that particular property based on that proforma. And Nate can get into a little bit more about that. But what we want to do is we want to verify the rent. So the income that that property can and will produce going forward is what we want to focus on upfront. We do that through third-party channels. When we get somebody that comes through and says, Hey, I’ve got this great property in XYZ market. It’s going to rent out at a thousand dollars. Well, if it’s a two bedroom, one bath, 600 square foot house, you know, Montana, it’s probably not going to run out for a thousand dollars. So we really kind of know what the market is going to bear and where going to be. But it is an asset based loan. We want to focus on the income ability of that property.
So it’s not an appraisal based loan. It’s an income based loan and it’s really a focus on the asset. Okay. Yep. Yep. Okay. Nate, you probably can answer this. I’m sure both of you can, but I’m just curious. Why do you think more people aren’t aware of the fact that you can a invest in your self-directed retirement account and B you could actually finance the real estate acquisitions in your self-directed retirement accounts?
Yeah, I think that’s a really good question. And I can tell you over the years I’ve been teaching at us, most investors, I work with have zero idea that they can do it until they come into the real estate world or they speak with me or they speak with Bob. I’ve met CPAs. I met financial advisors who don’t even know this is an option, to be honest. I think it’s mainly because this is a very niche market. And I think the marketing, when most people are listening to the radio, when they’re watching TV, most of the marketing revolves around your standard 401k fidelity account, you know, standard IRAs, I think because that’s, what’s pushed. I don’t think people realize it because it’s not, it’s not in your face unless you are really in the real estate sector. You know, you hear about self-directed retirement accounts, but a lot of times bigger institutions that have a self-directed account don’t allow you to buy investment real estate, right. You have to find the right custodian to do so. So that’s really, that’s really my opinion. It might not be always correct, but that’s my take on it.
Is it fair to even ask the question, who is this for? And who is this not for? I mean, is there really some sort of qualifier to say that this should be, you know, a good investment choice or option for certain people and not for others? I mean, on the surface, you would think that if someone’s got a reasonable amount of cash in a self-directed retirement account that they could or should be investing in income producing real estate, but maybe that’s not the case. Did you have any feelings about that or comments about that?
Yeah, I do. I don’t think there’s an age requirement. I don’t think it’s not necessarily that there’s a right person for this. What I think it comes down to is timing and age has a lot to do with it. So when I’m working with clients, a big part of that is creating a timeline on when you want to access your cashflow. You know, someone who is 45 and has $200,000 in a retirement account is going to be different acquisition strategy than someone who is 65 with $400,000 in their retirement account. So I think it’s for every age group, there’s a plan and a strategy for anybody.
Okay. Interesting. All right. Let’s swing back to you, Bob. Talk about the financing a little bit more. Maybe just touch upon how this you’ve already talked a little bit about this, but how does this really compare to traditional financing? Because obviously one of the main differences is that you’re not required to have, at least with your company, you don’t order an appraisal, but I know there’s some differences in terms of how many loans you can qualify for or acquire. What are the differences, I guess, with traditional financing, IE, conventional financing? Oh, well, the biggest difference is that
We get to set the underwriting criteria as opposed to somebody on wall street or somebody that’s got, you know, deep pockets and says, Hey, this is what’s going on. So what we try to do is our underwriting criteria is based on what makes sense for that particular transaction. We have our guidelines, but we also have exceptions to those guidelines. There are no limits as to how many properties you can have. The only limitation you have on your qualified retirement plan is how much capital do you have? You know, you can leverage that as much as you want. So we don’t have the same conventional guidelines that, that are out there that say, you know, it started at 10 and went down to six. I’ve heard that some people were even eliminating to four. We don’t have that. We basically look at it from a standpoint of where is the portfolio for that particular individual?
Are they buying properties? Are they leveraging some? And not all of them. We’ve had scenarios where clients will buy four or five properties, leverage them, they’ll buy two or three properties and pay all cash for them. And when we look at that and that the entire portfolio, we don’t do any cross collateralization, but we look at that and we say, if we’ve got five loans and eight properties, three of them are free and clear. Now we’re taking rent from eight properties to service the debt on five. And that makes those debt service ratio, numbers just pop and it’s going on. It’s not a problem. And then if they want to later on down the road, if they want to leverage those properties, take some cash out of those properties that are sitting there and they want to buy additional properties. We can certainly do a cash out refi on those other properties, as long as they’re held within that qualified retirement plan account.
Yeah, I didn’t think about that, but that’s actually a great strategy because you can leverage the equity growth that’s within your retirement plan on those properties to buy more property.
Exactly, and the strategy is really, if you’re generating more income than you’re servicing debt, then you can actually view that debt, snowball and attract one and boom go after. And we’ve got clients that are sending, you know, three, four or $5,000 a month towards one debt. And then once that gets down, then they’re basically putting all that stuff. If the money sits in the qualified retirement account, whether it’s an LLC checking account, it’s not doing anything, it’s just building up and it’s not generating any return. So if they can actually pay down debt because we don’t have a prepayment penalty and all over in Alberta loans, they can actually pay down as much as they want whenever they want. And then based on what Nate said, if they’ve got a time horizon that says, Hey, they’re going to retire in 10 years and they can pay off everything in 10 years. Now, they’re sitting on multiple properties that have positive cashflow on a monthly basis with zero debt. So that’s where the strategy comes into play. To be able to say what works best for you based on your age and your time horizon for retirement. The last thing we want to do is put somebody at age 70 that has debt on eight problems. That’s not a good thing to do.
So that’s a great segue over to Nate because I know that Nate and I have had a couple of many conversations about investment strategy within a self-directed retirement account. So you’re not entirely all in and leveraging or financing each and every property, even though the LTVs may be lower and different than conventional financing. So Nate, you know, maybe just kind of unpeel that on you and then just about, you know, what you suggest in general terms, because really this doesn’t necessarily apply to everybody everybody’s case is going to be a little bit different, but you know, what is kind of a general high level investment strategy within a self-directed retirement account when investing in real estate?
Sure. So what I was referring to about owning cash and non-recourse properties to me is really the safest bet you can do inside of a retirement account. Let’s just keep it very simple. When you invest inside of a self-directed retirement account, everything is housed in that meaning you have to pay the vacancy, the maintenance, everything has to come from that account. So if you’re over leveraged, if you take, you know, half a million dollars and you buy, you know, 20 pieces of real estate, all financed and heaven forbid all those go vacant at the same time, you’ve got to have a massive buffer in your retirement account to pay for the principal interest payments, any maintenance that come across on those rental properties. So in my opinion, as an educator, you know, I can’t be your fiduciary. Let’s remember that. I always say, go back and check with your fiduciary is talk to your CPA, talk to your advisors on this.
But I think works best is when you have one or two cash purchases, regardless of age here, let’s remember that regardless of age, I like to see usually at least one cash purchase in the retirement account, because what that does is that buffers, you know, any maintenance or vacancy that you might have on other rental properties, you’ve used to buy with non-recourse financing. Now there is risk tolerance for individual investors here. Some investors say, Hey, you know what? I want to take my $200,000 and I want to do all financing. That’s fine. As long as you’re well aware of the risks inside that type of strategy. So I like to call it a hybrid strategy. And if any, of any of the clients I’m currently working with are going to listen to this, they’ll hear that. And the hybrid strategies utilizing both that cash purchase, along with that non-recourse purchase to create, you know, a, basically a risk tolerance account.
So one thing if I can add on that, Marco is we’ve seen some clients that have actually said, I want to leverage everything because I’ve got five years, I’m going to retire in five years. And I can’t touch my employer sponsored plan right now. And I may have a half a million dollars there. So I only have to bridge that gap for another five years. And then I’m going to pull that money out when I retire and I’m going to pay off all this debt and boom be done with it. So in that situation, we know they’ve got that cash. We verify that cash, we know what their time horizon is, and we don’t have a problem with that, extending that to a max capacity because even if they had to, they could actually tap into that emergency fund if you will, because they can take a loan against that employer sponsored plan and then be able to do that. So we’ll take into consideration the fact that they’ve got additional capital, that’s sitting on the sidelines with their employer sponsored plan that they can’t touch until either they leave or they retire. Right? So those are the things that we take into consideration as well.
So how, or when do, does a person’s age come into play here? Cause I know that you’ve got, you know, withdrawal requirements starting believe at 59 and a half. So how does that play, play out or play into the strategy?
Yeah. So 72 now is the new age requirement for taking what’s called an RMD, so required minimum distribution, right? So if I’m working with a client who’s in their sixties, most likely it’s going to be more of a cash centric, focused investment strategy. And Bob will probably agree with me on this. There are plenty of clients that do do financing in their sixties, but what we want to do is create a timeline on paying down that debt, right? So Bob said earlier, you know, we don’t want to be 70 over leveraged that’s because if you’re 72, when you have a bunch of debt, you’re not going to create enough cash flow to take your required minimum distribution. Right? So we want to have a timeline and a plan in place to pay off that debt by the time you’re 72. And a lot of times that means maybe we’re doing, you know, for every one property we do with non-recourse financing, we buy one property cash, and then we take that income and we snowball that income into the debt. Right. And we pay off that non-recourse loan usually within, around a four to six year timeline. It just depends. You know, if there’s how much vacancy, how much maintenance that might be.
Is there something mathematically magical about that? A ratio of one-to-one or is it I’ve heard, you mentioned two to one at one time, is there, I hate to call it a formula, but is there a formula?
Yeah. I mean, if you just do the simple math and you take, we haven’t really gotten to the financing terms yet, but you can tell me with this one, but if you take a typical non-recourse loan is 50% LTV, right? Yes. You’ve got 50% debt on a property and you’ve got one property that’s owned outright. Completely. Typically the math works out where you take your standard turnkey piece of real estate with the amount of cash flow it creates from that cash purchase. And you put it back into that 50% debt service. The math typically works out at about a four to six, four to seven year window. Right now that’s an estimate. There’s no guarantee on that, but that this is not like an industry term. I’ve just been teaching this long enough where I’ve seen the math play out right now. You know, depending on age, maybe some people want to be more aggressive and they’ll maybe buy one property cash and a few more leveraged. Right.
So Bob let’s let’s talk about, you know, rates terms LTVs and limitations. See you want to break down kind of a typical lending program and what that looks like.
Yeah. So our written terms are pretty straight forward. We have one product, one price, one loan. We offer a 20 year fully amortized fixed rate product at seven and a half percent. We do collect taxes, insurance on monthly payments. So it is the ITI and there are no pre-payment penalty on it. We charge a standard flat fixed loan fee. And we won’t go into detail about that. But as we go through and we don’t charge points, so our loan fees are fixed across the board on every property. So we do the same amount of work on every loan we can pay the same on every loan. Doesn’t matter if it’s $40,000 loan or a hundred thousand dollar loan, we do the same amount of work. So there’s no reason for us to get paid more on that a hundred thousand dollars deal. It just doesn’t make sense to us. All right, but it is a standard 50% down payment. That’s 50% of the purchase price, not of the value. So we’re not worried about the value. The value is determined between buyer and seller. So it’s 50% of the purchase price that comes in as a down payment. It’s 20 year fully amortized fixed rate product at seven and a half percent, no prepayment penalty. It’s very simple. It’s very straightforward. It’s not overly complex to look at that. Now our underwriting criteria is based on the debt service ratio and the way that you calculate that is very, very simple. We take 75% of the rents. We compare that against the principal interest taxes and insurance.
As long as the principal and interest tax insurance are less than 75% of the rents, the loan is approved. It’s a very simple, straightforward deal. Now there’s situations where we come into play that say, well, Bob, I’m limited on cash. I need to be able to put a little bit less down payment. How does that work? Keeping in mind that, you know, if we go to a 55 or a 60% loan to value loan to purchase, then we obviously are jumping up the numbers and we don’t want to over leverage that property. The reason we don’t is because the IRS has what they call passive activity rules, which means that if you over leverage a property using non-recourse financing, then they consider that to be a distribution on a monthly basis because now you have negative cashflow. So that’s the reason for the 50% down payment is we don’t want to create that distribution requirement.
The IRS will audit you. They will look at what your, your debt to income ratio is, or your debt to service ratio is. And they’ll make that determination. And we’ll say, you’ve taken a distribution on your, your soul, okay? Your qualified retirement plan. You want to pay taxes, penalties, whatever the deal is. So we want to make sure that we keep that income positive for number ones. That’s the reason why they want to do it is they want to generate positive cashflow. But more importantly, our job is to make sure that they don’t get into a situation with the IRS to be able to do that. We’re not their fiduciary, but we are their educator. And we want to be able to make them aware of that. We also want to make them aware of prohibited transactions. We can go into more detail about that, but prohibited transactions, doing business with family members, what is a private transaction? We want to educate the client as to what they can do and what they can’t do. That’s the same thing with a custodian. Custodian will actually sit there and go, no, you’re not going to do that transaction because it doesn’t meet the prohibited transaction guidelines of the IRS. So a lot of our underwriting criteria and a lot of our loan guidelines are based on what is going to keep you out of trouble with the IRS.
I assume the negative cashflow rule or requirement there is on an annual basis, not a monthly basis.
It is on an annual basis because you would have a vacancy. You would have some repairs and we’d have that, but it is on an annual basis. So they don’t consider that distribution. If you had maybe a vacancy or you had some excessive repairs in the eight year, you took a loss on that. That’s not considered a distribution, but if it was an ongoing type distribution, you had 12 months of rent, you have minimal expenses, and now you just generate a negative cashflow on, on the leverage then yeah, they’re going kind of consider that a distribution.
You know, for people listening to this and they hear, you know, seven and a half percent interest rate. Some people’s reactions are, wow, that’s really high compared to everything else, but you’re comparing an Apple to an orange. Yeah, they’re both financing. I’m going to call them both fruit, but we’re talking about two different product types here, but you have to actually step back and grab a calculator pen and a pad of paper and run the numbers and see that, okay. If you’ve got a much smaller loan, a 50% loan versus a, let’s say an 80% loan to value loan, but that’s at a higher rate, smaller loan amount, higher rate, your monthly debt service is a lot lower than the comparable loan at 80% loan to value. So when you look at what your actual cashflow is, when you take your income, subtract your expenses and then deduct your debt service, your cashflow is just as good.
If not better than a traditional conventional loan purchase. Now yes, the cash on cash return will be lower because you’re leveraging less. But it’s important to remember that. Number one, you’re still controlling an asset with less than a hundred percent of a down payment. So you’re getting the advantage of leverage. You’re getting the advantage of financing. So be it, it’s 50%, maybe 55-60, but you’ve still got the control of that asset. You own the asset, you have the benefits of that asset. You have the cash flow, it’s being amortized and paid off over a 20 year period of time or less. I mean, you’re getting all the benefits of real estate and you’re able to do it within your self-directed retirement account. So it’s a very powerful idea and strategy. And I don’t want people to be short-sighted and, you know, get lost at the 7.5% interest rate when they should be looking at the fact that, Hey, I can control, you know, one to 10 pieces of property leveraged within my retirement account. So I think that’s just worth pointing out.
You’re absolutely right, Marco. And one of the things that we see in Nathan can vouch for this is the fact that, you know, when you’re in the, your qualified retirement yourself record IRA plan, there’s nothing better than to have a little property, to have your tenant make a contribution to your IRA. Every time they make a monthly payment, that’s going to go towards servicing the debt. And when that debt gets paid down, somebody made a contribution to your IRA. And when people start talking about, well, it’s a big down payment, it’s a high interest rate. And then I come back and I said, well, but wouldn’t it be really cool if somebody actually made a contribution to your IRA and it didn’t cost you anything. Okay. So now offset that and then they go, Oh, well, they completely forget about what that other aspect is.
The negative aspect, because we talk about the positive aspect of that contribution. Yeah, that’s exactly right.
And if you don’t mind me chime in here, we have to go back to the intense behind using financing. Why did we use financing in the first place we use it because we get to, like you said, Mark, we get to control the asset, right? You can take a hundred thousand dollars and buy one property outright in cash, or you can take that same $100,000 and buy two properties. All right. And let’s just say the average rental property we own outright and paid off in full create somewhere between like eight to $10 a year for you. So if we use the power of leverage, if we’re thinking long-term right, real estate investors, we’ve got to think long-term that one extra property is going to create tens of thousands of dollars back into your pocket longterm.
It’s why we use the product. It’s about the control of the asset. You’re taking your money and you’re doubling how many pieces of real estate you can buy. And I liked what Bob had on. If you take the concept of principal, pay down your tenants, paying down the principal mortgage balance for you. There’s multiple profit centers. Even when you’re using your IRA, you’re getting principal pay down and you’re getting appreciation growth. You’re making cash flow. So once you educate the investor on the importance and the power of using this type of product, the interest rate kind of goes out the window because one we’re paying that down quicker. Anyway, let’s remember we’re using it as a tool. Most people are accelerating their debt pay down, right? So it’s not going to be a 20 year loan paid out at seven and a half percent, unless you choose that most people are paying off their portfolios and half that time. So you’re really crunching that interest anyway, and who’s paying the interest. You’re not paying the interest, is the investor, the tenants paying the interest for you, right? So we have, we have to get out of that mindset of, Oh my gosh, that’s so high. Well, it’s not high to you. You’re not actually paying the interest rate, right? You’re not making this payment to it behind just credit card, your, your tenants paying that debt down for you.
There was a time think back 1980s when interest rates were well into the double digits, you know, they, they were as high as 18, 19%. So everything’s relative. I mean, back then, you still could have been buying investment real estate and making a profit and controlling an asset and creating wealth over time. And sure, you know, interest rates were 14 to 16, 17%. So the thing is, it’s not so much what the rate is. It’s what can I do and how do I leverage and, and create arbitrage with the cost of that money. So it doesn’t matter whether it’s 17% or 7%. The fact is, is I can borrow that money at a certain rate, put it to work and make more on top of that. That’s the arbitrage opportunity. And then over time, you just create equity, which is just more net worth than creating wealth for yourself.
So it’s always a moving target. But the fact is, is that you could always do better than what the cost of capital is. And if it didn’t work that way, our economy would come to a grind because credit wouldn’t be used to acquire businesses, grow businesses, scale businesses, acquire real estate, create developments, construct new homes, et cetera, et cetera. So there’s just a cost of capital. The question is, is, are you going to take advantage of that capital, put it to work and make it work for you and your family and your retirement. And that’s what you need to stay focused on big picture. And what is the overall strategy of what you’re doing? And the credit, the financing is just a tool. It’s just a tool to help accelerate what you’re already doing. So I don’t know where we go from here. I guess one comment that I want to make, and you guys can comment on it if you want.
I know there’s a lot of people out there that are listening to this. They love the sound of it. They think, yeah, this is a great option, but I don’t have a self-directed account. They have retirement accounts, maybe a traditional IRA or something else, or maybe they have an old 401k from a previous employer. It’s just sitting there and they’re not even aware that they can convert or roll that over into a self-directed. Do you guys have any comments for people that might be in a position where they can take advantage of self-direction but are not aware of it?
Yeah, certainly. So you hit the nail on the head you know, the funds have to be what are called qualified funds for rollover, right? So you can’t take typically your current employer, 401k and rolled over. It’s going to be a previous employer, 401k, a current IRA. Maybe you have a SEP or a traditional, something like that. I’ve helped people with old four Oh three BS, TSPs, you know, you name it. The best way to start is actually get with a custodian, right? What’s called a self-directed IRA custodian. And there’s a lot of out there. You can Google a self-directed IRA, custodian, find a million of them, and you can talk to one of our investment counselors. We have some very good suggestions for you if you’d like more on that, but really step one is figuring out which funds are qualified for a rollover, right?
So we get you with a custodian that custodian will actually help you figure out if your funds are qualified or not. And if they’re qualified, then you can move forward with that, know what we call an inservice rollover and keep in mind an in-service rollover is going from a like account to a like account. This is not a taxable event where you have to take all your money out of your retirement account, pay taxes, and then put it back in a new retirement account. This is going from an old 401k to a self-directed IRA or a solo 401k. We can get into that another time, but that would be the start of the process, right? There is just to initiate that in-service or all over and find out which funds are qualified
One of the other things just to add on that is if somebody is listening to this and they go, well, if I can do this in an LLC, then I can just go ahead and go to my local guy and pay $300 and get an LLC. And that would be a mistake because what we want to do is it’s got to be a specific purpose, LLC. It’s got to be the IRISA guidelines. It’s gotta be the IRS guidelines. So we do have sources of people that will actually do entity formation for you specifically for the IRA, LLC, because it’s not just a normal run of the mill, ticket it off the shelf, LLC. It’s got to have specific language. We won’t lend to anybody that has an LLC outside of this specific purpose.
Okay, cool. Guys, what else would you like to share? Or what did I not ask you that I probably should have that we didn’t cover?
I think we covered just about everything, you know, it looks on, on surface. And when you, when you first talk about it, it seems to be a little bit more complex. But I think that, you know, in talking to Nate and talking to us, we can simplify it because it’s what we do. And what we want to do is we don’t want somebody to go. I don’t know anything about that. I don’t want to deal with no, no, no, no. It’s really worth a 15, 20 minute conversation to dig a little bit deeper into this and to be able to say, what are my options? How can I leverage my qualified retirement? How can I take this and make it to my advantage? How can I do the alternative investment rule rather than just stocks, bonds, mutual funds, the people that are invested in the market right now, maybe like you started out Marco, we could conversation is maybe they’re a little wishy-washy about what the market’s going on, but now is a real good time to evaluate that situation and look at the performance of alternative investments going forward, looking back and what they’ve done over the last 10, 12, 15 years, and what they’re doing today and thinking about, yeah, let’s control that asset and let’s be able to take that into and just diversify your portfolio that didn’t even get completely out, but take a portion out, take something out and get involved. You’ll find that you’ll like it. Once you get into it, it’s not as complex as it sounds. We try to simplify it as much as possible. Perfect.
I’m a hundred percent agree with you, Bob. It’s not as complicated as it sounds and for a lot of people, and this is a simple diversity play. They want to diversify some retirement dollars. And I think it’s a great option for a lot of investors.
Well, the thing is, is there’s a lot of people out there that don’t have capital in hand, meaning that they have investible capital that is in their person. It’s they have investible capital in their retirement account or self-directed retirement account that they can use, whether they know about it or not, but that’s their only option because they just don’t have the savings or the capital to invest outside of their retirement account. And so this is the option that they have to get into or grow their real estate holdings. And it’s really well worth having a conversation with our team of investment counselors and then looking at the financing options that are available to you. And it’s really not correct me if I’m wrong, Bob, it doesn’t sound like it’s a very difficult qualifications. It’s really the asset that is qualifying. And it’s just based on the purchase price.
Yeah. Well, we’re having a conversation with a client we’ve really developed that education mindset and we’ll tell them what the steps are. And as we’ve gone through that steps, I basically give them my word that this was the easiest real estate loan they’re ever going to get their hands on because the process is very, very simple. It’s very straightforward once we’ve determined where the capital is and what they want to do. And then it’s just a matter of a hot knife through butter.
Yeah. Beautiful. Cool. All right guys. Well, I appreciate you guys taking the time to talk about this today. I think it’s a great topic. It’s certainly going to hit a lot of people and get them thinking about it. So Nate, you’re obviously on the team here, so people know how to reach you as well as the rest of our team of investment counselors and whatnot. Bob, why don’t you share how people can find out more about what you do or your website or contact information?
We have a vanity URL. It’s SDIRAlender.com. That’s SDIRAlender.com. That’ll take you to Sierra Crest Capital. You can get a bunch of information. You can find my contact information. You can reach out to our loan manager, Jennifer Barto, either one of us would be more than happy to meet with you. Answer your questions, but yeah, SDIRAlender.com.
Perfect. All right guys, as we wrap this up, I just want to remind everybody that they can get a strategy session, a free strategy session with our team here. You know, Nate is obviously one of our, and can talk to you about self-directed, IRA investing and financing and whatnot. Of course, Bob is another resource and he’s one of the very, very few people in the country that actually offer this type of financing to my count. There’s only four, correct me if I’m wrong, but there’s only four lenders in the country that offer non-recourse financing for your self-directed retirement accounts. So it is a very, very much niche product. So take advantage of it when you can, if you have any questions about real estate, remember to just click the Ask Marco button on our website, submit those to me. And I’ll do another Ask Marco episode here very soon. If you like the content, remember to subscribe. So you never miss an episode. We launched one every single week and sometimes two episodes a week, help us spread the word, visit us on iTunes or wherever you are listening to this. Leave us a rating and review. Thank you for listening. And we will see you all on our next episode.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here’s how.
See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
SUBSCRIBE on iTunes | Stitcher | Podcast Feed
