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2013.4.2 david coe presentation slides

Reggie Lal
Reggie Lal

The document discusses using self-directed retirement accounts like IRAs to invest in real estate. It provides examples of clients who have used strategies like SD IRAs, special purchase LLCs, and Solo(k)s to purchase real estate investments and leverage their retirement funds. The key takeaways are that self-directed retirement accounts provide more investment options and flexibility than traditional retirement accounts, and allow using retirement funds to invest in real estate and other alternative assets.

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the power of REAL ESTATE inside your RETIREMENT ACCOUNT
Proprietary & Confidential, Property of Freedom Growth who we are Self Directed IRA Real Estate Consultants Investment Advisors
Proprietary & Confidential, Property of Freedom Growth what we do Self Directed IRA
Proprietary & Confidential, Property of Freedom Growth agenda Intro to self-directed retirement accounts Actual Client Case Studies Final Exam
Section 1 Introduction to Self-Directed Retirement Accounts Text Freedom to 24587
Proprietary & Confidential, Property of Freedom Growth investment restrictions Prohibited Assets Collectibles Life Insurance Art S Corps
Proprietary & Confidential, Property of Freedom Growth disqualified persons Certain family members cannot do business with your IRA YOU! Your Spouse Your Parents Your Grandparents Your Children Your Grandchildren Spouses of Lineal IRA Descendants IRA Fiduciary
Proprietary & Confidential, Property of Freedom Growth what can go into an ira Cash Stocks Real Estate Mutual Funds Precious Metals Superbowl Tix IRA =Special Safe Private Biz Bonds Foreign Currency
takeaway #1 Self-Directed = Unrestricted
Proprietary & Confidential, Property of Freedom Growth types of retirement accounts Traditional IRA..................................................... YES Roth IRA............................................................... YES SEP or SIMPLE IRA............................................... YES 401(k).................................................................. MAYBE Pension Plan......................................................... MAYBE Individual 401(k) or Solo(k).............................. YES 529 College Plan................................................. NO Educational Savings Account or ESA.............. YES Flexible Spending Account or FSA................. NO Health Savings Account or HSA...................... YES
Proprietary & Confidential, Property of Freedom Growth 3 step process 1. Open Account 2. Fund IRA 3. Invest
takeaway #2 #1 Set up SD IRA #2 Find an Investment
Proprietary & Confidential, Property of Freedom Growth the players CUSTODIANS PROFESSIONALS INVESTMENTS
Section 2 Case Studies Jim - SD IRA Barbara and William - SP LLC Gabby and Michael - Solo(k) Text Freedom to 24587
Proprietary & Confidential, Property of Freedom Growth case study #1 Jim - Medical Professional Age 47 $85K in previous 401(k) plan Looking for cash flow and growth Wants to be moderately passive Willing to leverage
takeaway #3 Start by Saving YOU CANT INVEST MONEY YOU DONT HAVE
Proprietary & Confidential, Property of Freedom Growth how it works Rental House $36,000 Self Directed IRA Custodian Traditional IRA Trust Deed $200,000 $85,000 -$85,000 -$80,000 $11,000 $115,000 $5,000 Note $33,000
Proprietary & Confidential, Property of Freedom Growth taking title in an ira Self Directed IRA Custodian Owner Investment Another Party in Escrow IRA takes title IRA Custodian Name FBO Client Name #XXXXXX IRA owns property Client can manage the investment
Proprietary & Confidential, Property of Freedom Growth taxes on iras Unrelated Business Income Tax - UBIT Tax on non-taxable entities that make profit unrelated to their purpose Applies to fix-and-flippers using retirement accounts Needs to be a hobby, not a business Unrelated Debt Financed Income - UDFI Tax on leveraged profits for a non-taxable entity Profit taxed based on % leveraged A 40% loan will require that 40% of profits are taxed
Proprietary & Confidential, Property of Freedom Growth case study #1
Proprietary & Confidential, Property of Freedom Growth sd ira real estate - pop quiz Owning real estate inside of your IRA doesnt make sense if there are no tax breaks, right? No If I buy the property in Mammoth, can I use it for one week a year? No Can I rent it to my son if he pays full market rent? No
Proprietary & Confidential, Property of Freedom Growth sd ira real estate - pop quiz Do I have to hire a property manager if I want to hold real estate in my IRA? No Can I get a loan to create leverage? Yes Is it possible to avoid or minimize UDFI if I take a loan? Yes
Proprietary & Confidential, Property of Freedom Growth case study #2 Barbara - Nurse, William - Auto Professional Age 65 & 67 Recently retired Barbara from large hospital group William from auto dealership Barbara, pension vs. lump sum distribution Looking for cash flow and capital preservation Utilizing cash flow for living expenses Want to be completely passive
Proprietary & Confidential, Property of Freedom Growth setting up a special purchase LLC Both opened a SD IRA Attorney created LLC Husband LLC has separate bank account Make investments via LLC SP LLC Check writing capabilities Checkbook IRA or Real Estate IRA IRA owner is Manager Wife
Proprietary & Confidential, Property of Freedom Growth checkbook ira investing Note $42,000 SP LLC Special Purpose LLC Note Fund Pension Plan $25,000 $350,000 $250,000 -$350,000 -$245,000 $0 $3,000 MHP Fund $50,000 Self-Directed IRA Fund Flip $75,000 $350,000 -$250,000 $100,000 TD Fund $50,000
Proprietary & Confidential, Property of Freedom Growth flip renovations
takeaway #4 No sweat equity is allowed The IRS Prohibits Non-Cash Contributions
Proprietary & Confidential, Property of Freedom Growth case study #2
Proprietary & Confidential, Property of Freedom Growth sd ira real estate deal- pop quiz If Im a real estate agent, can I take a commission on the purchase or sale? No Its OK if I do some of the work, right? No My brother is a contractor. Can I hire him to do the work? Yes
Proprietary & Confidential, Property of Freedom Growth sd ira real estate deal- pop quiz If I hold it for more than a year, can I avoid capital gains? YES How many properties can I safely flip before UBIT kicks in? ~THREE If I run out of money, can I transfer more money to my IRA? YES
Proprietary & Confidential, Property of Freedom Growth case study #3 Gabby - Realtor, Michael - Attorney Age 54 & 56 Gabby long time self-employed Entering her prime Michael long time employee at a firm Recently started his own practice Want to limit exposure to the stock market Two kids in college
Proprietary & Confidential, Property of Freedom Growth solo(k)s are awesome SEP on steroids Contribute as employer and employee Whos eligible Solo business owners with no full time employees Advantages Higher contributions for moderate earners Individual 401(k) Faster to $50K per year or Solo(k) No income limitations on Roth Loans- can be used for college! UDFI exempt Custodian not necessary!
Proprietary & Confidential, Property of Freedom Growth how it works Note $43,000 Self Directed Solo(k) Note $41,000 Old 401(k) $300,000 $190,000 -$190,000 -$184,000 Fund Flip $110,000 $6,000 $50,000 TD Fund $50,000
Proprietary & Confidential, Property of Freedom Growth case study #3
Proprietary & Confidential, Property of Freedom Growth final exam - real estate in your IRA When deciding on an investment, I should always look for the highest possible return? No! Should I wait to find an investment and then open up a self-directed retirement account? No Whats more important, the operator or the investment? The Operator Whats the most important thing to learn about being a real estate investor? Evaluating Risk
takeaway #5 WHO YOU INVEST WITH MATTERS MORE THAN WHAT YOU INVEST IN
Thanks! To get a copy of this presentation Text Freedom to 24587 David Coe david@freedomgrowth.com www.freedomgrowth.com https://www.facebook.com/FreedomGrowth

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2013.4.2 david coe presentation slides

  • 1. the power of REAL ESTATE inside your RETIREMENT ACCOUNT
  • 2. Proprietary & Confidential, Property of Freedom Growth who we are Self Directed IRA Real Estate Consultants Investment Advisors
  • 3. Proprietary & Confidential, Property of Freedom Growth what we do Self Directed IRA
  • 4. Proprietary & Confidential, Property of Freedom Growth agenda Intro to self-directed retirement accounts Actual Client Case Studies Final Exam
  • 5. Section 1 Introduction to Self-Directed Retirement Accounts Text Freedom to 24587
  • 6. Proprietary & Confidential, Property of Freedom Growth investment restrictions Prohibited Assets Collectibles Life Insurance Art S Corps
  • 7. Proprietary & Confidential, Property of Freedom Growth disqualified persons Certain family members cannot do business with your IRA YOU! Your Spouse Your Parents Your Grandparents Your Children Your Grandchildren Spouses of Lineal IRA Descendants IRA Fiduciary
  • 8. Proprietary & Confidential, Property of Freedom Growth what can go into an ira Cash Stocks Real Estate Mutual Funds Precious Metals Superbowl Tix IRA =Special Safe Private Biz Bonds Foreign Currency
  • 9. takeaway #1 Self-Directed = Unrestricted
  • 10. Proprietary & Confidential, Property of Freedom Growth types of retirement accounts Traditional IRA..................................................... YES Roth IRA............................................................... YES SEP or SIMPLE IRA............................................... YES 401(k).................................................................. MAYBE Pension Plan......................................................... MAYBE Individual 401(k) or Solo(k).............................. YES 529 College Plan................................................. NO Educational Savings Account or ESA.............. YES Flexible Spending Account or FSA................. NO Health Savings Account or HSA...................... YES
  • 11. Proprietary & Confidential, Property of Freedom Growth 3 step process 1. Open Account 2. Fund IRA 3. Invest
  • 12. takeaway #2 #1 Set up SD IRA #2 Find an Investment
  • 13. Proprietary & Confidential, Property of Freedom Growth the players CUSTODIANS PROFESSIONALS INVESTMENTS
  • 14. Section 2 Case Studies Jim - SD IRA Barbara and William - SP LLC Gabby and Michael - Solo(k) Text Freedom to 24587
  • 15. Proprietary & Confidential, Property of Freedom Growth case study #1 Jim - Medical Professional Age 47 $85K in previous 401(k) plan Looking for cash flow and growth Wants to be moderately passive Willing to leverage
  • 16. takeaway #3 Start by Saving YOU CANT INVEST MONEY YOU DONT HAVE
  • 17. Proprietary & Confidential, Property of Freedom Growth how it works Rental House $36,000 Self Directed IRA Custodian Traditional IRA Trust Deed $200,000 $85,000 -$85,000 -$80,000 $11,000 $115,000 $5,000 Note $33,000
  • 18. Proprietary & Confidential, Property of Freedom Growth taking title in an ira Self Directed IRA Custodian Owner Investment Another Party in Escrow IRA takes title IRA Custodian Name FBO Client Name #XXXXXX IRA owns property Client can manage the investment
  • 19. Proprietary & Confidential, Property of Freedom Growth taxes on iras Unrelated Business Income Tax - UBIT Tax on non-taxable entities that make profit unrelated to their purpose Applies to fix-and-flippers using retirement accounts Needs to be a hobby, not a business Unrelated Debt Financed Income - UDFI Tax on leveraged profits for a non-taxable entity Profit taxed based on % leveraged A 40% loan will require that 40% of profits are taxed
  • 20. Proprietary & Confidential, Property of Freedom Growth case study #1
  • 21. Proprietary & Confidential, Property of Freedom Growth sd ira real estate - pop quiz Owning real estate inside of your IRA doesnt make sense if there are no tax breaks, right? No If I buy the property in Mammoth, can I use it for one week a year? No Can I rent it to my son if he pays full market rent? No
  • 22. Proprietary & Confidential, Property of Freedom Growth sd ira real estate - pop quiz Do I have to hire a property manager if I want to hold real estate in my IRA? No Can I get a loan to create leverage? Yes Is it possible to avoid or minimize UDFI if I take a loan? Yes
  • 23. Proprietary & Confidential, Property of Freedom Growth case study #2 Barbara - Nurse, William - Auto Professional Age 65 & 67 Recently retired Barbara from large hospital group William from auto dealership Barbara, pension vs. lump sum distribution Looking for cash flow and capital preservation Utilizing cash flow for living expenses Want to be completely passive
  • 24. Proprietary & Confidential, Property of Freedom Growth setting up a special purchase LLC Both opened a SD IRA Attorney created LLC Husband LLC has separate bank account Make investments via LLC SP LLC Check writing capabilities Checkbook IRA or Real Estate IRA IRA owner is Manager Wife
  • 25. Proprietary & Confidential, Property of Freedom Growth checkbook ira investing Note $42,000 SP LLC Special Purpose LLC Note Fund Pension Plan $25,000 $350,000 $250,000 -$350,000 -$245,000 $0 $3,000 MHP Fund $50,000 Self-Directed IRA Fund Flip $75,000 $350,000 -$250,000 $100,000 TD Fund $50,000
  • 26. Proprietary & Confidential, Property of Freedom Growth flip renovations
  • 27. takeaway #4 No sweat equity is allowed The IRS Prohibits Non-Cash Contributions
  • 28. Proprietary & Confidential, Property of Freedom Growth case study #2
  • 29. Proprietary & Confidential, Property of Freedom Growth sd ira real estate deal- pop quiz If Im a real estate agent, can I take a commission on the purchase or sale? No Its OK if I do some of the work, right? No My brother is a contractor. Can I hire him to do the work? Yes
  • 30. Proprietary & Confidential, Property of Freedom Growth sd ira real estate deal- pop quiz If I hold it for more than a year, can I avoid capital gains? YES How many properties can I safely flip before UBIT kicks in? ~THREE If I run out of money, can I transfer more money to my IRA? YES
  • 31. Proprietary & Confidential, Property of Freedom Growth case study #3 Gabby - Realtor, Michael - Attorney Age 54 & 56 Gabby long time self-employed Entering her prime Michael long time employee at a firm Recently started his own practice Want to limit exposure to the stock market Two kids in college
  • 32. Proprietary & Confidential, Property of Freedom Growth solo(k)s are awesome SEP on steroids Contribute as employer and employee Whos eligible Solo business owners with no full time employees Advantages Higher contributions for moderate earners Individual 401(k) Faster to $50K per year or Solo(k) No income limitations on Roth Loans- can be used for college! UDFI exempt Custodian not necessary!
  • 33. Proprietary & Confidential, Property of Freedom Growth how it works Note $43,000 Self Directed Solo(k) Note $41,000 Old 401(k) $300,000 $190,000 -$190,000 -$184,000 Fund Flip $110,000 $6,000 $50,000 TD Fund $50,000
  • 34. Proprietary & Confidential, Property of Freedom Growth case study #3
  • 35. Proprietary & Confidential, Property of Freedom Growth final exam - real estate in your IRA When deciding on an investment, I should always look for the highest possible return? No! Should I wait to find an investment and then open up a self-directed retirement account? No Whats more important, the operator or the investment? The Operator Whats the most important thing to learn about being a real estate investor? Evaluating Risk
  • 36. takeaway #5 WHO YOU INVEST WITH MATTERS MORE THAN WHAT YOU INVEST IN
  • 37. Thanks! To get a copy of this presentation Text Freedom to 24587 David Coe david@freedomgrowth.com www.freedomgrowth.com https://www.facebook.com/FreedomGrowth