Can you use IRA money to invest in real estate? It's a really good question. I've
done it with millions of dollars. And today I'm going to share with you your
3 options of what you can do with turning an IRA into real estate.
You know, the world is changing so rapidly right now and I look at the
advice that I was given financially, right? It was go to college and then go
work for somebody else and then do that for 40 years. And my dad who is a
hard-working entrepreneur convinced me, "Son, that is going to be the best option
for you." But you know what? So much has changed in such a short period of time.
That I think a lot of that advice now is bad. And it's no different than the
advice that we have on IRAs and 401Ks. We have a financial world that supports us
putting our money into these retirement accounts. And the question is are you
really doing the math to find out whether it will amount to what you need?
The sad truth, the sad reality is that it is not enough. So, that's when people
start clicking on videos like this and saying there's got to be some
alternatives, right? So, let's start with the basics. --IRA. It's an Individual
Retirement Account. It's you basically saying... And what most people do is, "I'm
going to give money to some fiduciary or some financial planner. I'm going to put
money in an IRA an individual retirement account. And this is my hard-earned cash
where I've trained my time for dollars. And I want to put it to work." And IRAs
are normally held in like the stock market or some kind of mutual fund. Which
means that they're usually pulling 3, 4, 5 6 %. And with a 3% inflation, it means
that you're earning next to nothing. It feels like diddly-squat.
That's what the report says that you get in the mail. Your account is diddly-squat
on its growth, right? You watch this video you say, "Okay Kris, what are my options?"
Today, I'm going to give you 3 options and what you can do with an IRA. I want you
to understand though that there are 2 types of IRAs in general. The first one
is it has to do with whether you pay taxes on the money or not. So, if you take
your money and you're like "I want to cut down on taxes." This is what financial
planners sell you on. Then you put it in an IRA. And you haven't paid taxes on it
yet. What you're doing is you're deferring those taxes. And many
retirement accounts allow you the ability to do that. But if you put it
into like a Roth IRA, you're saying, "I'm going to pay all my taxes upfront. And now,
I'm going to put it into an IRA. And I'm going to try to grow in the stock market
with post tax dollars." Well, those are 2 different ways of setting up your IRA.
Regardless of whichever one you have or maybe you're watching this video because
you're wondering whether you should. What I want to do is I want to help you
understand 3 things that you can do with that IRA. The first thing that you
can do if you want to invest that in real estate is that you can do what is
called a self-directed IRA. Now, you can self-direct a Roth, you can
self-direct a normal IRA, a SEP IRA. And when you self-direct, it what you're
basically saying is i am pulling you out of the market and I'm in control. I want
to decide what I want to do with this money. Now, if you put it into a
self-directed account, you have basically the option of... You can put it into paid
off real estate which if you think about it, that's a really sucky point of
leverage. You're not using a bank, you're not using any point of leverage. You're
basically saying here's 100,000-dollar house, I'm going to buy it
cash with my IRA. It'll be owned by my self directed
account. It's an option, you could do that. But you know what? I hate the way an
IRA account grows, I'm not a huge fan of how paid off real estate grows. Paid off
is what you do when you're ready to retire money. And remember, you're trying
to grow your money. So, if you're not ready to retire it, then you shouldn't be
buying paid off stuff with it. That's your thinking that comes from fear and
scarcity that says that there's security and having no debt. They're striving so
hard to get out of debt. And here's what they don't realize. They don't realize
that having no debt you can't retire on that. You still have needs, you still need
to eat food and you can't eat your bricks. You can't eat no debt. You
actually need an income source. A higher level of security is to actually have a
cash machine producing a residual income hence why you're probably looking at
real estate. So, you can put it into a self-directed account. Another option
that you have is you can actually liquidate your IRA. If you liquidate it,
don't you know that you're going to have to pay 10% in penalties? This is why I
think our retirement accounts are such an incredible sham. You want me to pay
10% on my money because I no longer want to use your investment system? And what
it does is it scares people into thinking 10% is so bad I'm never going to
take it out. It was your choice to put it in. This is the cost to get it out. Hence
I call that a cost of business. And you know what?
There are steeper prices to pay. If I'm doing 25% a year on my money in
real estate, do you think I care about my 10% penalty? No, I'm not going to
keep it in this fear base model for that reason. Number 2, if you
have your... If you haven't paid taxes on your IRA yet because it's not a Roth,
then you're also going to have to be taxes. This is where people really get blown
away. And they're like, "Wait a second Kris. Are you telling me that if I pull
out a large sum of money... And let's say that I have to pay 20% taxes on that and
10% penalty, you're saying that in that example, that 30% is what I'm going to have
to flush?" No, I'm going to keep it in my IRA. I'm going tO keep it doing things that
don't serve me. I'm going to keep it in places that don't work for me. Because
that sounds like too steep of a price. The real steep price to pay is the price
of doing nothing. That right there my friend is a huge huge risk. So, you've got
a couple of options. You can self direct and buy paid off real estate. Technically
there is something called a non-recourse loan. But I hardly bring it up because
I've hardly found a bank that can actually provide non-recourse loans. They
claim but they can't fulfill. So bottom line is self-directed usually means buy
it paid off. Liquidate means eat the taxes. And that's the steep price which
is why before I share with you the third option, I want you to understand that if
you're considering or have recently started an IRA, I would cancel that.
Whatever tax benefits through claiming, they're not worth it. Because it's not
your money anymore. It's tied up. And your only option is the market. And right now
the market's in a... It's not a good place to be. And basically, if you want to be in
the market, that's a 30-year strategy. So, this is where you get into option number
3. Option number 3 is what I call do nothing. And then I'm going to compare
the stall all what real estate can do for you. But if you do nothing, you're
basically saying I'll keep it in IRA. And if you're doing that, you got to ask
yourself. What's your earning power for the next decade or 2 decades or how
many more years are going to work? How much more are you going to actually put in
there? And then I want you to pull out your calculator or go tap on this on the
shoulder of a smart a nerdy person that knows how to use a financial calculator
and say, "Hey, if I keep growing at 5% and I keep adding X amount what will the
future value of this money be in 19 years?" And you know what? I'm telling you
right now, that number? It's abysmal. It's a not a number that you're going to be
happy with. Which is why all of a sudden this option, especially this option,
aren't that bad. I'm going to tell you right now that of
all of these options, do you know which one is my personal favorite? It's clearly
not that. And I don't believe in the lack of leverage when you're
starting to build wealth in real estate. So guess what? This is Christmas. Get your
money out of the market and start getting your money put to work. There
will be it'll be like ripping off a band-aid at first with your penalties
and with your taxes. But now you finally have your money that you can put to work
and actually have it doing something for you. If you had to take a 30% hit on your
IRA (Theoretically here.) but you were producing 20 or 30 percent in real estate on
just the leveraged portion which meant that the overall amount might be closer
to 100%, guess what? You can afford that. That's not that bad. And
after the first year, you've now played... You've played catch-up. And guess what
you get to do now? You get to actually build and grow and get yourself
somewhere where you want to go. Now, I'm going to tell you right now that a number
of people that watch this channel will actually reach out to me and one of the
links below and say, "Kris, even if I pull my money out of the market, I'm a little
bit scared like... What am I going to do? I'm used to actually having them have my
money and I let them manage it. If I pull it out, all of a sudden I have a new job.
I've got to put my money to work. What am I going to do?"
And you have a number of options. 1, in the link below you're just copy of my
book. Get my book and let me share with you how you take that money and grow it
to your first million dollars on your own. Do-It-Yourself style, right? But the
other thing is there's a link below if you want to learn about partnering with
me. I select a small group of people on a regular basis that I actually partner
with in a one-on-one relationship. We put it that money in an LLC. And guess what
we do with it? We go into the marketplace and I find the very best markets with
the highest returns that's based on my track record of 4,000 single-family
homes. And I'm telling you, when you watch how that money compounds, that figure is
exciting. That is an amount of money, that's a return that can actually get
you where you want to go for retirement. So there's another option for you.
Doesn't mean that it'll work for me to want to partner with you. It's a vetting
process with my team to see if that's a fit. But either get my book or go through
that vetting process. And either way, know this. There are options for how you can
take that IRA money and put it to work for you right now. So that when
retirement comes along, you might be able to look in the
mirror and say, "I'm financially free." Because I've been able to do that. I've
been able to help thousands of people do that. And it might be your turn.
Friend, thank you so much for watching today's video. I hope it was good for you. If
you liked it, give it a thumbs up. Share it with someone else that you know has
an IRA and might be wondering, "What are my options?" Because guess what? When the
market tanks and these, accounts drop. It's no fun.
And of course, if you want to get my book or learn more about partnering, you can
find those in the link below. Ring that bell after subscribing. I'll see you on
tomorrow's video.