Hi mark Kohler here with another tax and
legal tip let's talk about how to buy
your first rental property inside your
IRA I know this is exciting to many of
you that maybe just searching here on
YouTube enough you know falling on my
channel
others of you that have been following
me for years you may know where I'm
going with this and this is just a
review but bottom line is buying real
estate in your IRA as possible
people have been doing it for years and
it's an extremely powerful tool and
don't let anybody tell you well because
you don't get the tax benefits of it you
should just buy real estate in your own
name and definitely not put real estate
in your IRA I completely disagree when
you're deciding what you should put in
your IRA the question should be what is
it what can I put in there to get the
best rate of return the best rate of
return and you should have a balanced I
want you to put money in real estate
investments in your own name as well as
inside your IRA or 401k your separate
simple but when someone says oh real
estate should never be in an IRA let's
talk let's argue about because i think
that real estate is provides a wonderful
rate of return and it should be inside
some level or degree inside your IRAs
and 401ks and tax preferred vehicles
there's nothing wrong with that look at
the net rate of return
so with that stated let's go through
some quick steps of how to get your
first rental property in your IRA number
one you've got to get IRA money to a
self-directed custodian now in the Wall
Street world you would call this a
stockbroker or a brokerage account but
in the IRA world we call it a custodian
now the 401k conversation that's one for
another video or another day let's just
talk about IRS for a minute now you may
have an old 401k that got rolled out to
an IRA
well let's take that IRA and put it into
a custodians account i know you may put
new money in an IRA but it may not
enough to go out and buy a piece of real
estate but if you have old IRA money and
old 401k money
step one is let's get that money to a
self-directed custodian and we work with
custodians all over the country we can
give you a list of some great ones to
interview or look at their website and
find the custodian that fits your style
but these custodians are just going to
hold the money until you calm on day two
and say I'm ready to invest so get that
money to a custodian step one step two
we need to decide what we're going to
buy because it's going to dictate what
type of vehicle we're going to use so
let me repeat that make a decision on
what the investment within the real
estate industry is going to be I mean it
could be a single-family home it could
be a mobile home it could be a
commercial building a building it could
even be the process of doing some
rehabbing or fix and flips it could be
wholesaling I don't know and that's
gonna really dictate what type of
structure you're going to invest it
don't think that it's all i'm just going
to use a trust or use an LLC and I'm
done and home be careful number to
decide what type of real estate you're
going to be embarking on and be clear
about that
I don't be Harry Carey be quite clear on
that investment strategy because it's
going to dictate the next structure
number three
of course this video's about rental
property and assuming you're going to
buy a rental property so what we need to
do is step in step 3 is set up an LLC
now this is going to be an LLC limited
liability company set up in the state
where you're going to buy real estate
not in Nevada not in Wyoming New Mexico
or Alaska some sexy sales pitch that
you're going to get from some non law
firm or heaven forbid you go to legal to
even try to make this happen and
custodians are going to go for that this
has to be a well-crafted limited
liability company operating agreement
that has ERISA and IRS provisions and
you should pay more than 1,500 bucks to
get an LLC to hold real estate owned by
your IRA CA IRA is going to hold the LLC
and the LLC is going to hold the real
estate and so you want to be
working with a company that can help
guide you through the process i'll offer
because this is really over
we've been doing this for over 15 years
helping clients setup llc's to own real
estate we could do it as affordably as a
hundred bucks filing fear may be a
registered agent fee but eight hundred
dollars is the core feet to get a single
member LLC set up now
shop around this is an infomercial but
it's to let you know that a real law
firm helping clients nationwide can be
affordable
now this LLC again is going to be in the
state where you're going to own that
real estate that's point number one now
you might register a foreign back in
your own state if you're in California
that's a typical problem because
California's going to want your register
in their state even if it's in it a
George LLC with Georgia property you
have to register for in California and
pay their darn eight-hundred-dollar
minimum tax which sucks i know but the
LA but the LLC is critical to hold the
real estate hold the checkbook to buy
that rental property next I want to talk
about the acquisition of the real estate
in the management LLC for a moment now
that this is an important step in
managing LLC that we talk about what
those limitations are now this of course
could be a much longer video and my
partner Matt Sorenson has written an
incredible book called the self-directed
IRA handbook
this is a chapter in my newest book the
tax illegal playbook and we've got all
sorts of videos on our website and
support and when you set up an LLC with
our law firm we go through all the
details and it's included in the set up
and you talk to a real lawyer now with
all that said again let's hit a couple
highlights and that is this LLC which is
going to have a checkbook you could be
the manager of that LLC you can be the
cider of that checkbook
that's ok if your custodian says you
can't you've got the wrong stony that's
their rule that's not the IRS or risks
rule and we've been studying this and
doing llc's for over 15 years helping
clients do this we are experts in this
and we stand behind our LLC's and if you
get on and there's a penalty we pay
that's why we care about practice
insurance so we notice custodians have
their own internal guidelines the law
firm is representing you to design your
LS
seat so you can manage that LLC you can
buy real estate you can control the
checkbook but you cannot provide sweat
equity you can't go out there work on
the rental property you need to have a
third-party manage the room rental real
estate you also have to use a realtor
can't be yourself
so you've got to be cautious on the
acquisition and we guide you through
those rules but you can manage that LLC
so once you've got your LLC funded
you're out there you got the checkbook
you would write an offer to go buy a
piece of real estate and start to go
through the closing process now you
cannot cosign on the loan or use your
credit to get that loan you have to use
a non-recourse loan but it's can be
exciting and you don't have to buy real
estate for cash you can pool your money
with other people and and to leverage
your money in a sense with other
partners or you can get a non-recourse
loan banks will loan you money usually
about sixty cents on the dollar when you
put forty percent down and keep it some
sort of reserved very common so it can
be exciting
that's that step in the process of
managing the LLC now finally let's talk
about annual maintenance and again
except previously this is a big topic
and I'm just trying to get the
highlights but once you have this LLC
set up in your buying real estate you
may need to file a tax return annually
there's taxes that could occur called
unrelated debt-financed income and if
you're flipping properties not Reynolds
but I want to throw it out there there's
this you BTW i tax or unrelated business
income tax or taxable income you're
going to want to learn about these
things this is why you're going to get
some additional study and consultation
and books to help you through the
process and we'll be there as well as
your attorney but it can be very
low-maintenance maybe a tech annual tax
return an annual evaluation to give your
custodian but you shouldn't have to
stress about the process people have
been doing this for over 30 years
it's very common and it's certainly
legal so for someone said you can't do
it it's not that you can't do it its
maybe that they can't do it because
they're your stockbroker or their
custodian rules don't allow for it but
get a law firm behind you if it's not a
law firm that's when get someone else
to write you a comfort letter and give
you guidelines so they can stand behind
and help you set this up and then
maintain it for many years to come
bottom line get out there invest with
your ira investing what you know best
and i think having rental property in
your own name and your own LLC is owned
by your trust and having rental property
in your IRA and the owners LLC's and
you're out there getting a better rate
of return in your IRA I think it's
fantastic have both buckets going
don't be afraid of rental property
inside your IRA you can do it
give us a call with up to help thanks
for watching and if you found that
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