Ep. 373: Control Your Investments with a Self-Directed IRA with Scott Maurer of Advanta IRA

Updated : Sep 13, 2019 in Articles

Ep. 373: Control Your Investments with a Self-Directed IRA with Scott Maurer of Advanta IRA


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together super excited for today’s guest and that
the name sounds familiar is because we’ve had him back all the way on the
episode 236 we have Scott an hour of advance at IRA with us and show today
hey Scott how you doing good Jason how are you good good well we’re Scotts
bearing with me here as I do take three or four get the marbles out of my mouth
and we’re gonna we’re gonna hit on this again and you’re gonna have some awesome
feedback coming back from Scott and remember go back and check out episode
236 he’s gonna give you a great background for what Scott does but Scott
is the director of business development for Advanta IRA advances specializes in
administering self-directed IRA and retirement accounts scott has worked for
des vana since 2006 and is a frequent speaker and lecturer on the topic of
self-directed IRAs and using retirement funds to invest in real estate and other
alternative assets as the business development director Scott oversees the
sales marketing and education staff to ensure that new clients receive proper
guidance and support when establishing relationships with Advanta Scott’s also
worked with numerous individuals and companies to educate them on how to
self-direct IRAs can be used in their capital raising strategies scott is also
an attorney and a member of the Florida Bar and although he does not give legal
advice to Advanta clyde’s okay cool we got we got that same card
in there as well good well Scott we’re super excited to
have you you know last time we covered so much we’re talking about
self-directed IRAs and today we really want to talk about fundraising with
retirement funds so you know thanks for coming back on and before we get into us
just give us a little bit more of a recap about the business size of what
administer just just a quick recap what we do in Advanta is we help people who
have IRAs old 401 k plans maybe they’re starting up a new 401 k plan for
themselves but we help people who have money in those accounts invest outside
of the stock market I’m sure as people look back over the last several months
they’re gonna see ups and downs in the stock market what we allow people to do
is get their money out of those markets and into investments that they know and
can control and so much of what we do is in the real estate field whether it’s
rental properties single-family homes rehabs multifamily syndications you know
private lending there’s so many different things you can do in real
estate and most people have no idea that their
IRA can be used to do that so it’s as an administer of administrator of
self-directed iras we facilitate and help people that you
find the investment will help you keep that money inside the IRA keep it tax
protected and hopefully you know you’re getting out of the market and investing
in what you know so why aren’t more people using this simple reason most
people don’t use it is that if you have an IRA or you have an old 401k with a
brokerage firm they won’t handle alternative assets and that’s a business
decision they made not a legal decision that simply they decided they don’t want
to hold it so if you have an account with those firms they’re never going to
advertise to you that this is possible so it’s incumbent upon you to either do
the due diligence yourself and find out about it or maybe you get told about
self-direction for a friend or financial advisor or CPA that’s generally speaking
how people it’s gonna either doing your own research or somebody telling you
about it because if your IRA is with one of those firms now they’re not gonna
independently tell you you can take your money elsewhere and go invest in real
estate yep and you might actually hear no you can’t and that’s it’s huge as you
said that is it’s not that you can’t they’ve just made to the business
decision is they don’t offer this side of it so actually we have of course
investors who invest in our deals they said oh well I can just go my ask my IRA
provider and you know I said okay see what they say and they said no you can’t
as if it was like an illegal process for them to do this when in fact it was just
that they didn’t offer that and the person they spoke to then didn’t know
because they had their checklist of questions basically just saying oh can
we invest you know substract in real estate the answer is no that’s what we
have on our placard no other reasoning or guidance behind it so in terms of
investment strategies what is some of the most beneficial ways that we can use
of course the services of Advanta to find real estate investments that may be
best suited for us yeah I think there’s two ways people usually use our service
the kind of the people that we talk to in business development on a daily basis
it’s the individual investor that has their own 401k has their IRA funds that
you know found that single-family home down the street that’s available for
rent or purchase they say hey I could go buy that at me and put that
my portfolio or a rehab project or someone who’s looking to invest in a
large syndication my IRA could put 50 100 grand into somebody else’s three
million dollar deal so we work a lot with those individual investors and
their particular IRAs to make those investments and then the clients you
know come to us they bring the investment and again our role is to make
sure it’s properly titled but we also deal a lot with syndicators other real
estate investors who are using other people’s IRAs as the source of capital
for their deals so it’s not someone using their own money to fund their own
project through their IRA it’s actually hey I have another rehab that I want to
buy I have another rental property I want to buy I’ll use Joe’s IRA account
he’ll lend me the money and I’ll use that money to make a deal
or in the case of a syndication we’re raising millions of dollars here’s one
more Avenue that people can use another way that people can invest with us in
that syndication so we again work with people on both sides out whether it’s
the individual account owner – also those people who are looking to raise
capital so for people that are looking to raise capital is there is there a
helpful talk track or some key points that they should make known to a
potential investor to help them better down the path of potentially using it
you know a self-directed IRA yeah I think if you’re raising capital and
you’re sitting down with an individual it’s maybe outlining
a number of different ways that they can invest in you and we by no means say
that self-directed I raise is the best or the only way to do it but it’s
another tool in your tool belt when you’re sitting down in front of a couple
or an individual and you’re saying let’s if you’re interested in investing here’s
my prospectus here’s the rates of return and here’s a couple of different ways
that you could invest with me you could invest with your personal savings
account other funds that you have they may be available to you or have you ever
thought about investing using your IRA or old 401k because again most people
we’ve talked about it at the beginning don’t know this is an option because
they’re their money’s at Schwab or fidelity they’ve never been told through
Schwab or fidelity that I could invest in real estate so I must not be able to
do it so it’s merely adding that as part of your rep
for when you’re talking with people here’s the different ways you could
invest with us and when you say IRA or 401k that’s what will pique people’s
interest I think at times there are a lot of people sitting on a lot of money
in their accounts they think just has to sit in the market until they retire and
don’t realize they can take ownership of that money now and actually do a little
bit more with it so that’s and especially when you’re investing through
an IRA or 401k the benefits are a lot of the returns you get come back either tax
for your tax deferred back into your account so it’s a tax advantaged way as
well of making an investment can you talk to some other advantages if
you had the option of of course using you know cash in your account or you
know having an old IRA it talked to us about some of the disadvantages and
advantages from a passive investing standpoint sure if someone was looking
at making an investment say let’s just use a very simple example a single
family rental property you’re gonna go buy a house rent it and receive the
rental income now if you were analyzing between IRA and non IRA funds on the
positive side of using an IRA all of your gains the income that is generated
from the rents the profits on the sale of a deal that all comes back to your
IRA tax deferred now you’re going to eventually pay taxes on that money down
the road but in this case you’re boosting your IRA account
you’re allowed you compound’s your money more quickly when you’re not paying
taxes as you go the downside though when using your IRA you don’t get
depreciation and other kind of deductions because your IRA isn’t paying
tax on that income so if you’re analyzing it from IRA or non IRA sources
you’re going to definitely have some tax considerations getting a CPA involved
that being said the one thing we kind of always make sure one thing to realize if
you have an IRA account and you have a hundred two hundred five hundred
thousand dollars sitting in that account unless you want to distribute that money
to you personally and pay all the taxes you’re gonna leave that money invested
in an IRA at some institution it’s a matter of what you choose to do with
that money at an institution for it to grow so you can put that money in mutual
funds and stocks and ride the stock market you could buy that single family
rental home and get a consistent income so sometimes there is a tax analysis
that you may say hey this isn’t the right deal for my IRA but at some point
you want to look at IRA accounts say what is the best
investment for this money that I have here I love that and so for me maybe
using a cost segregation standpoint that that wouldn’t be a beneficial use here
again it transcends or correlate to the self-directed IRA correct tax benefits
you we get personal business you’re not going to get with the IRA and that’s in
that instance so from a passive investor environment when when they are
conducting research about potentially working in a syndication what if they’re
you know working with you what questions should they be asking of the syndication
group or how they should be how should they best prepare themselves to be able
to use self-directed funds yeah I think when you’re investing really in any
almost any investment that you make to a self-directed account just note that you
know ativan are a we don’t do due diligence and and no self-directed
company does due diligence on the investment so it is gonna be incumbent
upon you to ask the questions of who you’re investing with make sure you know
evaluate the property let me see your financials let me see your projections
they’re involved because when you bring it to us to make the investment our role
is to make sure that your IRA is properly listed on the documents and
you’ve approved that ours is not to do the background checks and the due
diligence on the investment so when you’re looking at those investments it’s
very very important I mean in an IRA or not you should be doing your due
diligence running your information on the people that you’re investing with
and from a timeline perspective say you are actively raising capital for a
project you do come upon an investor who has an old IRA an old 401 K or a 401 K
that they want to roll over what kind of timeline expectations should one have to
be able to see if this can actually meet the timeline of their raise objectives
yeah I mean if you’re raising capital you probably if you’re someone has an
IRA you want to allow for a few weeks probably to get that account for that
the timing for someone to get an account open get money transferred in and then
ultimately invest it into your syndication and unfortunately the time
lapse is simply waiting on money to transfer from your Vanguard account from
your morgan stanley account some of them are very easy to work with and we get
money within a few days others take a little bit longer
can take a couple weeks so that’s it’s it’s gonna depend on who the other
custodian is one of the things we do if you’re if you’re working with us we will
let the client know upfront oh you’re you know who you’re moving
money from this is their process this is how long we could expect to receive the
funds I can’t guarantee it but usually give you a pretty good ballpark of how
long it’s gonna take but you definitely won’t allow for at least a week probably
two to three in order to get it done and obviously what we try to do on our end
is make it as easy as possible for you make it as easy as possible for your
investor and making it easy is giving enough time for the process to play out
properly so that we’re not scrambling at the last minute to get documents signed
but when we work with clients over and over again that are investing capital we
come up with a pretty good process for and they know it their clients know it
and it works very very smoothly very easily like said and usually it’s it’s a
two to three week process at the most so if a new customer comes to Adana wait
what are some of the questions that they should be asking to just fully
understand the process or better understand the process I think the
questions you need to ask us upfront sometimes it’s more us asking them the
questions but for the for them is you know what do we need in terms of
paperwork and again that comes from us asking the question really of what are
you investing in you know Jase if I was doing a deal with my IRA with you it
could be investing in a syndication which then I need your private placement
subscription documents my IRA could provide a for me providing you with a
mortgage loan in that case we need alerts to see a note document or a
mortgage document with the IRA reflected if you’re buying if I’m buying a
property from you I need to be able to see a contract in the name of the IRA so
that’s kind of important thing is really for a client upfront is giving us that
information of what you’re investing in and we’re gonna of course ask and prompt
that that question but that’s a good question up front is if I’m going to
make this investment what do I need to provide you as far as paperwork and
what’s the process gonna be going forward again some investments you just
get a monthly or quarterly distribution check and there’s not a lot for you to
do on a monthly basis but if you are buying say a single-family home you know
how is advance and process the checks to pay expenses how do how does Advanta
handle the income coming in and we will go
that entire process with you give you the different options that you have and
from a self direct custodian perspective you know not all companies of course
offer this if someone you know for some reason it doesn’t reach out to you it
reach out to another provider what are some questions they should be asking
that’s provided to make sure they meet the muster well I think asking kind of
what you ask them to go through their process you know if I make an investor
how long is it going to take to get my account open how long should is it gonna
take to get my funds will I be working with one person in your office for the
entire transaction what happens after my process my purchase is made do I have to
deal with other people at that point as well and really getting an idea from
them on on what their back office work is like how can I get bills paid do I
have to to fax in a bill or can I simply go into your online portal and then ask
for an expense to be paid that’s another good one to ask
thanks a are at what we do in Devan we try to give everybody one account
manager one person one point of contact to make it easy so I think that’s
important to ask is how they handle you know and even still you know what
educational support what kind of feedback can I get from my account do I
make the purchase and then you don’t answer the phone again or is it can I
call you with recurring questions on a daily basis four things are going my my
accountant we understand that the self-direction is new to you know most
of people that come to us this is a brand new concept as we’re talking most
people don’t know it’s possible when they come to this they’re gonna have
those basic questions and even after they make their investment you know
something’s gonna pop up in their head a week later or two weeks later or two
years later and and say I need that question answered I’m not sure call us
and then we’re happy to walk you through get those get you the right answers or
get you to somebody who can give you that answer yeah that’s huge right you
hit the nail on the head like the process is so huge and having that point
person that you know is gonna be your point person for your account is huge I
was just going through this I had to get involved on a laundry contract issue and
you know I like my seventh person I’m like how is this so difficult who is who
is our food person here you know and each person knows one up to one step and
then at that point it’s like it’s like they’re all trying to complete a
sentence and they all know like three words that said that’s kind of kind of
affect here and so I’ve been going through that just having
point person that that’s what you need because it makes you feel confident you
can be able to get the right answers and the story’s not gonna change each time
you come back to that story okay now I want to transition a little bit here so
we touched on it’s slightly in the past but let’s talk a little bit about solo
for one okay’s for solo 401 case how we can use that in our process and what are
the advantages of that sure so you know we do obviously administration for
self-directed iras but we also do offer the solo 401k plan as well for people
who own their own business the solo 401k gives you the ability to make larger
contributions on an annual basis so with IRAs
you may be limited to six or seven thousand dollars a year that you can put
in out of your pocket if you’re owning if you own your own business you can
defer upwards of fifty five sixty thousand dollars a year into a 401 K so
some great tax savings for you as a as a sole proprietor and business owner
additionally you can borrow from your 401k you cannot borrow from your own IRA
AKOP of this that is one difference and then if you’re investing your retirement
funds into leveraged properties or you’re investing your I your your
retirement funds into a business there is a tax called Ubud unrelated business
income tax that can apply to IRA accounts if an IRA is in is involved in
a leveraged or mortgage real estate deal so you’re investing into so you make a
down payment on a property and you get a mortgage for the balance using your IRA
you’re gonna IRA is gonna be subject to that tax or if you invest in a private
placement where there is leverage involved your IRA can be subject to that
you’ve been at yuba tax solo 401ks are not subject to yubi tax in those
scenarios so if you are looking at placing your money into leveraged
properties and leveraged investments your 401k will cut out that you vit tax
issue it doesn’t always come up as they come up often but for leverage real
estate deals it does and that’s a huge benefit that the solo 401k has it if you
own your own business or you have a side business they can justify the
establishment of a solo 401k it can be a no-brainer in those situations hey
you talk to a point and I’m not even sure you know them I’m gonna put out
there that where you can see for him from an IRA perspective investing where
where it could be triggered can be triggered in an IRA again if there’s
leveraged reinvested into a leveraged real estate deal so your IRA you’ll see
a single-family home your IRA puts down 40% you get a mortgage for the balance
you have you’re gonna have a ubud issue if your IRA not really in the real
estate realm but if your IRA invests into like a private equity fund or a
private placement that is an ongoing business if you’re investing in the
restaurant down the street they’re sending back to you business profits
each month that can trigger you bit to your IRA account it’s not a
determination that we make when we set up the investment it is up to you and
your tax advisor to see if it’s going to apply but again the good thing is if you
have a solo 401k one of the benefits you don’t have to worry about it but for an
IRA it is something to think about again we’re here as a resource we’re just not
going to tell you we’re not going to file the tax return for the you bit and
we’re not going to tell you that yes or no it definitely applies that’s great
okay I appreciate that yeah there’s always some questions that outstand
about that you bit there and of course it comes down to the tax professional
really leading the charge about what can and what can’t be done without tax
implication so I do appreciate that from the solo 401k perspective if if there is
a business owner that that has the the chance or opportunity to self-direct an
IRA or do a solo 401k is there any other advantages to one or the other besides
the the EBIT of course approach again I think a it’s it’s it’s the lack of unit
that makes an advantage it’s the ability to take a loan from it there’s the
ability again to make a much larger contribution annually so if I’m a
business owner and I’m killing it one year I’m trying
to probably I’m probably trying to figure out a way to not pay as much
income tax that year by setting up a sole okay I can defer a larger larger
amount of my income that you’re into the 401 K I’d get a bigger tax write-off
also if you’re looking to put money away tax-free you can set up your sole okay
to have a Roth component so your the monies you put into that Roth
portion of the 401k ultimately are gonna come back to you completely tax-free
along with the earnings that are that are attributable to that so that’s
another huge component for for high earners individuals over a certain
income threshold you cannot contribute each year to a Roth IRA there are there
are limits there in putting money in that time a tax-free account but if
you’re a small business owner you own your business and you’re out there
killing it you can put in up to 19 thousand dollars a year tax-free into a
Roth IRA awesome so and from a prospective Advanta talk to us about
about the companyís of it what’s the company motto our company is invest in
what you know and take control and again it’s it’s we don’t sell investments so
when we’re not trying to push anyone in any particular direction but the the
common theme from the people who invest in single-family rentals to people who
invest in multifamily placements to people who buy gold and silver or do
private notes and mortgages the common theme is that they have come across an
investment opportunity that they feel more comfortable with maybe in the stock
market or that they’ve been doing personally for years and are just now
discovering that hey I could also use my IRA to make the same investment so we’re
enabling them to basically take that money and not put it you know I mean I
always the always hear the joke about the proverbial dartboard for the stock
market you’re just throwing a dart and seeing a sing what you get and a lot of
people that’s that unfortunately as a reality they’re just not sure that why
why the stock market might have dipped 500 points last week or why it went up
500 points the next day but they do know that they can get a certain amount of
income from a rental property from a private placement and they understand
that and they know that and so we’re enabling them to really like said
investing in what they know from that perspective yeah this basically sums up
everything we have right here in the podcast invest in what you know and take
control I love that that’s awesome Scott Scott for for listeners that want to
hear more about you find out more about the company where’s the best place to
find you they can get the resources they want to know about potentially using
your services just very simply go to you know advance’ IRA dot-com that you know
it’s advantage without the GE so adva MTA I
Icom we have a wealth of information on that page I would also encourage if you
go to our home page go to the you know scroll to the bottom we have the the
social media icons click on the YouTube you know go to our YouTube page we
archive all of the webinars that we do we are very big proponents of Education
we have a lot of guest speakers on it two different times on different
different topics related to self-direction all of our webinars are
archived they’re free to watch click there and that’s just a great place to
go for information that’s great well Scott we really appreciate you coming
back in the show giving us all this awesome knowledge love to be back good
definitely have you back in the future and again this is Jason with the real
estate investing foundation podcast huge thank you to Scott Mauer thank you to
you all the listeners out there have a great day
bye now

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