GI214: Self Directed IRAs with Alex Perny

GI214: Self Directed IRAs with Alex Perny

Alex Perny is a business development specialist and host of Advanta IRA’s podcast, the Alternative Investment Advantage. For more than a decade, Alex has helped thousands of clients invest in alternative assets by using Self-Directed Retirement Accounts.

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Transcript:

Announcer:
Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host Charles Carillo combines decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now, here’s your host, Charles Carillo.

Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Alex Perny. He is a business development specialist and host of Advanta IRA’s podcast, the Alternative Investment Advantage. For more than a decade, Alex has helped thousands of clients invest in alternative assets by using Self-Directed Retirement Accounts. So thanks so much for being on the show today, Alex.

Alex:
Yeah, thanks very much for having me on here. It’s, uh, it’s always fun to, uh, get out there and kind of help educate people on a lot of the other options that they have when it comes to retirement finance, since most people are just kind of under the assumption if it’s not on the stock market, well, it’s not really available. And, uh, you know, we’ve been, this is our 20th year in business over at Advanta I r a trying to, uh, fix that, uh, misconception. So thanks for having me on today.

Charles:
Yeah, no problem. I think, uh, the last person we had about self-directed IRAs was, uh, scat Mauer, which is, uh, one of your, um, I guess you’d say associates over there at Advanta, and that was years back. So it’s great to get a refresher for the listeners here about what they can do with retirement funds other than investing ’em in traditional assets. So, uh, before we get started, Alex, can you give us a little background about yourself both, uh, personally and professionally prior to getting involved with self-directed, uh, retirement accounts?

Alex:
Sure. I’m one of the, uh, kind of few people out there that, uh, <laugh> have pretty much cut my, uh, entire professional career in this industry. I, uh, graduated with my degree in business administration from Eckerd College down here in sunny St. Pete, Florida. Uh, unfortunately I graduated right in one of the worst times to get a job, which was the tail end of, uh, 20 11, 20 12. So, um, you know, after college it was, you know, basically just trying to find something to literally put a roof over my head. And I managed to get a job, uh, in our mail room here back in quite literally our mail room. It was opening mail, uh, <laugh>, uh, for people back in, uh, 2012. And, uh, just kind of, uh, took a liking to it and it kind of fit my skillset of, you know, not liking to just look at a stock ticker all day.

Alex:
And I know I wanted to go into finance, but that’s kind of how I got my foot in the door. And then, uh, from there, you know, I, you know, I, I started my kind of investing career with clients trying to, to pull all the r e o roles off of all the foreclosed properties from the Great Recession. So it was a lot of negotiating with big banks, which caused me to, uh, have a rather jaded view of, uh, the general financial system in the United States, especially when it comes to, uh, what a lot of those financial institutions were doing with, uh, zombie properties and properties that, uh, my clients and investors were actively trying to pull off their rules to get ’em out there, get ’em rented, get ’em rehab, get the, you know, get, you know, get this stuff back out on the market.

Alex:
So I know that’s kind of where, where it started, and then it just progressed from there. I believe before I moved out of operations, I, uh, handled something like almost $300 million worth of client capital and over 1200 or 1300, um, you know, individual closings, investments and things like that for clients. So, um, you know, it was the first half of my career and then I moved into, uh, business development and, um, haven’t looked back since. So that’s kind of Alex per in a nutshell for my, uh, professional, uh, career out of, uh, out of college into this.

Charles:
Awesome. So it, it’s very interesting because, I mean, what’s changed when you were talking about 2011, we got outta school there and, um, today it’s, it’s amazing how, I mean, the whole market has, has changed. I mean, it’s just, back then it was just so crazy. I was talking to someone else about this a few days ago and it was just, it was blood in the streets kind of a thing and, uh, didn’t really turn around until after, you know, uh, 2011 kind of thing where it started. It’s really trajectory, uh, to where we are now. But pretty amazing. I don’t think anybody knew it was gonna go this long or this this high. So yeah,

Alex:
And it’s, and it’s been really interesting to watch. I know you de definitely, uh, deal more in the, uh, the commercial and the multifamily side, and even those kind of deals have changed. But one of the more interesting things, at least from my perspective, is really how deals have changed, you know, real estate, you know, Hey, I have money, I have something I wanna sell and buy. You know, that kind of general economic driver hasn’t changed, but the different creative ways that people have put deals together, whether it’s in the single family side, seeing it go from, you know, low ball cash offers to, you know, market values increasing and people getting more creative with debt structures and, you know, stepping into a lending role and then things like equity participation and all sorts of different caveats to how real estate has evolved over the past decade.

Alex:
I have been fascinating to watch, and it’s been really cool to be a part of that too. So, yeah, that, uh, that blood in the water mentality really hasn’t gone away over the past 10 years, unfortunately, no matter whether it was, you know, the tail end of the great recession with just properties being, you know, inventories being crazy. And then, you know, we have a little bit of a spike and a drop, and then we have to what we are now where it’s, you know, it’s a huge seller’s market now to a buyer’s market. It’s, you know, it’s been been fun to ride that, ride that wave, but it’s been the, probably one of the cooler things I’ve seen is just how creative people have gotten with putting together these deals. And, you know, basically, you know, you, you take some dips, but it’s kind of been a 45 degree angle on that, on that graph of prices and demand, uh, for the past 10 years of real estate.

Charles:
Yeah, for sure, for sure. So Alex, for people that might not know or be well-versed in the, uh, self-directed retirement space, can you give us an overview of what a self re uh, directed retirement account is and the types of accounts, uh, you know, business and professional accounts that are available?

Alex:
Yeah, and it’s interesting you sent me over the kind of the question sheet earlier of some things you were gonna pose to me. And I, and I found it kind of fitting that, uh, an individual called me this morning and it’s, and and they were asking me the question of, well, you know, on this paperwork it doesn’t say self-directed i r a on here. What’s, what’s the deal with that? I thought it was opening a self-directed i r a and it’s always kind of a fun thing to explain to people what this is. Um, and it’s kind of maybe counterintuitive to what most companies or people in my profession would tell you is that there is no such thing as self-directed i r a and you look up the i r s code, you’re not gonna find something that says, Hey, here’s a self-directed i r a self-direction is a, a marketing term and a philosophy basically aligned with what you’re actually investing in.

Alex:
You are going out and picking your own investments that are in the scope of self-directed IRAs out that are outside the stock market. So things like real estate, private equities, limited partnerships, uh, private loans, startup companies, trust LLCs, anything that’s not on a traded securities market is what you can pursue with a self-directed i r a. And that can be a traditional i r a. So your pre-tax from your old 4 0 1 Ks can be after tax, it can be a Roth i r a, you can even self-direct stuff like health savings accounts and education savings accounts. Uh, and I personally self-direct my own H S a and not to get too far into the weeds, but there’s so many cool opportunities with different tax qualified plans that you can actually self-direct and buy alternative assets with that are just not a traditional or Roth I r a.

Alex:
So that’s a big part of, you know, what we try to do is, you know, bring that education to say, Hey, you know, you’re not locked in to just buying, you know, Coca-Cola, Microsoft or I b m. You’re not just saying, okay, great, well I wanna not pick individual stocks. I want a mutual fund, or I want a hedge fund, I want an index fund. Those are good options for people out there, but if you want true diversity and you want to buy tangible assets, you need a custodian that’s willing to hold that and you need a self-directed i r a.

Charles:
Yeah. So what type of assets can someone purchase or invest into, let’s say, uh, with a self-directed account or a account where they’re making their decisions on what assets is going into?

Alex:
Yeah, so it’s, it’s a question best answer that I really feel like in telling people what they can’t buy, uh, because the, you know, the list kind of goes on in perpetuity. I’ve had clients put together things where a client had a secured commercial note against the breeding rights to a bowl in their I r a. I’ve had people that have bought burial Crips in highly desirable cemeteries in their IRAs, and I’ve had people that bought rental properties. So instead of kind of going through the list and saying, Hey, here’s X, Y, Z ’cause we have 30 minutes and I couldn’t scratch the surface, basically, here’s what you can’t buy with a, with an i r A of any kind. It’s just the i r s does say what you cannot purchase, you can’t buy a life insurance policy directly with the I R A kind of creates a, you know, a feedback loop of tax exemption ’cause they’ve paid out tax free anyway.

Alex:
So the I R A can’t hold a life insurance policy and it can’t buy collectibles. It can buy certain types of coins like gold bullion, things like that. But you can’t buy a rare bottle of wine. You can’t buy baseball cards, Pokemon cards, you can’t buy anything that derives its value from collectability. And of course there’s people that are gonna say, oh, well, you know, there is value, there’s markets for this stuff. I don’t make the rules, we just put ’em out there. So collectibles and life insurance. And you also can’t buy or sell anything to a disqualified individual, meaning you can’t buy or sell anything to yourself or your mother, father, son, daughter, or spouse, anything else. And when I say anything, I’ve had clients that have, again, gotten extremely creative with that I typically works. Um, you know, if, if you feel like you can make money with something and you feel like it’s a good avenue for you to pursue that investment, go for it. But again, a lot of what we deal with, uh, in our a u m portfolio is clients buying real estate or real estate adjacent. Um, so, you know, direct equity debt, debt type instruments, trust LLCs, limited partnerships, uh, that’s kind of the lion’s share of what people do. But again, if you feel like you can make money on it, go for it.

Charles:
Yeah, no, that’s pretty great. It’s, it’s, it’s a very interesting, I have a self-directed I r a I’ve had for years and I typically invested into, I don’t have any real estate in, actually, it’s all in, um, I do a lot of angel investing in venture capital net, which is not very tax efficient investing <laugh>. So it makes it very, it makes it fantastic. I invest in real estate all outside of my ira, but it, it’s in, I mean, it’s, it’s pretty powerful. I mean, you can, you know, there’s lots of stories. There are people that really harness the power of investing into assets that they probably know better than, um, you know, like you said before, major blue ship companies that they don’t, you know, it’s just there and they’re not gonna have the upward mobility or the gains that you might get from something else that you know really well. So, yeah,

Alex:
And it’s, it’s one of those things where, you know, I try to make sure people understand it’s that, you know, there’s nothing wrong with the stock market. People do incredibly well by letting other people kind of invest their money. But if you were to sit down the average person, and I consider myself, you know, working in finance for over a decade, I’m, you know, by no means do I know everything, but maybe I’m, you know, smarter than the average bear occasionally when it comes to this stuff. I know my know my head from the hole on the ground when it comes to understanding the stock market. It’s, and anyone that tells you that do that does is lying. Um, you know, ’cause it’s just almost, it’s one of those things where it’s complicated to a fault. And again, it has a use case out there for a lot of people. And as far as diversity goes, certainly is probably a shoe part of your portfolio. But how many people do you know that are consummate stock experts? But how many people do you know, are pretty good at real estate or are, you know, understand these kind of things that are much more tangible to a higher degree that could probably make more money utilizing it? I’d say the latter is probably true.

Charles:
Yeah, no, I to I totally agree with that. So as a, as we’re talking here mainly about real estate, um, you know, many of our listeners to show will mostly likely be interested in investing in real estate. And there’s one part that I think trips up some real estate investors when it’s coming to self-directed IRAs and accounts and it’s the, uh, UBIT tax and it’s, um, as I understand it, it’s the only income tax that you need to pay when investing in real estate. But can you explain more of what the UBIT tech is and when it is, um, you know, when it comes into play for investors?

Alex:
Yeah, absolutely. So it’s <laugh>, you asked me a question that, uh, I, I am real, pretty passionate about. I kind of am the person that tends to get a lot of these questions and I’m actually doing a webinar in a few weeks, um, directly on this kind of stuff. Anyway, it’s um, it’s, it’s interesting stuff. So UBIT Tax, we kind of need to break this down into two parts. So UBIT stands for Unrelated Business Income Tax and there’s a subset of it called unrelated Debt finance income tax. Now, they’re both basically kind of the same as far as the calculation goes, but UBIT really refers to, let’s say, a tax exempt entity. In this case we’re talking about IRAs owns an active trader business. So your I R A goes and it operates a laundromat is the example I like to use. Well, if the I R A owned it, it would never be paying any taxes.

Alex:
So the I r S comes in and says, Hey, we gotta level the playing field. We’re gonna subject this business income to tax. Now more specific to real estate investors is that if they invest into a project that has debt, that’s more of the trigger for what a lot of people run into because what is real estate, if not expensive, most of the time people are gonna have to borrow money or there’s gonna be some type of debt that’s gonna work in there to allow for the project to come to fruition. Now, easy example, your I R A has a hundred grand in it and wants to buy a $200,000 property. So it needs to finance the other a hundred grand. Well, in that case, and not to get too far into the minutia of, you know, qualifying I r a loans, what lenders like to look for, what kind of points and expenses go into that?

Alex:
Let’s just say that’s the example you’re gonna use. So it’s 50 50 debt leverage loan to value is 50 50, a hundred grand down a hundred thousand financed. Now, let’s say in this is same example that it has $2,000 a month in rent. And let’s say you live in Narnia and there’s no taxes, there’s no insurance, there’s no expenses, and at the end of the year you have $24,000 coming back into your I R A. And again, for argument’s sake, let’s say it’s interest only. So you have no change to your debt ratio at the end of the year. $12,000 of that is going to be subjected to ubit or more specifically U D F I. Now what does that look like? Well, it’s taxed trust rates, which can be kind of onerous. But the benefit of that is that the i r s for this gives you a thousand dollars deduction.

Alex:
You get to take depreciation amortization, you get to write off everything with regard to the property to help narrow that down even further, just like y’all do in commercial real estate. With things like cost seg and accelerated depreciation, you get to take advantage of those tax tools. So hopefully at the end of the day, the I R A has a negligible or net zero tax liability. But that’s where it mostly fits in, is that if your IRA is going to be invested in something with debt, then U D F I is going to apply. If it buys an active trader business, UBIT is going to apply. Now, one last thing I’ll say on that before I get loose myself completely and getting into the nuts and bolts of it, is that a lot of times when people buy real estate, they buy it through things like LLCs.

Alex:
Well, LLCs a kind of a business limited liability corporation. People think, oh my I R A buys into an L L C, I’m automatically gonna have ubit even if the property’s bought cash. Well, again, there is a spectrum of this whole thing, but if you’re in a passive position and it’s not an active trader business, it’s being taxed as a pass through and there’s no debt or anything. So just an i r a being a member in a private L L C, there’s no debt. U U b’s not gonna really apply in that scenario. But again, I always recommend people talk to a tax advisor. Problem is, is that this is really boutique stuff. There’s not a <laugh>, even even a consummate tax professional might not be too familiar with this, but if you need further assistance, I recommend, uh, talking to a tax professional that deals in the nonprofit sector because this is the same type of tax return that nonprofits have to file when you have income outside the scope of the nonprofit.

Alex:
So, like, you know, nonprofit goes out and does something that’s not under their tax exempt nature, they have to file the same tax return. So those are the people you need to talk to. But again, if you avoid debt with your I R A investment, and also if you’re not act investing in an active trader business, you don’t really have to worry about it. Um, so that’s kind of UBIT and U D F I in a nutshell. And one thing I’ll leave you with is that, again, debt being so synonymous with real estate, hard to get away from it, real estate is expensive. If you are someone that has, let’s say a self-employed business or you have an L L C that maybe you run your personal rentals through, you can establish what’s called a SOLO 4 0 1 K for that self-employed business. And a really cool part about SOLO 4 0 1 kss is that they are across the board exempt from the U D F I, that part of ubit for debt and real estate.

Alex:
So if you can use a solo 4 0 1 K to buy real estate that has debt associated with it, whether that’s a limited partner in a commercial real estate venture, or if you’re buying properties and just leveraging them and, you know, rinse, wash, repeat, you know, money down debt finance, don’t have to worry, don’t have to file that tax return at all. They are automatically exempt from acquisition debt taxes on newly acquired real estate. So again, that’s a lot to take in, but if you have a personally owned business or yourself employed, you almost don’t even have to worry about it ’cause you can just run it through a solo 4 0 1 K.

Charles:
Very interesting. Yeah, I’ve heard about the Solar 4 0 1 Ks and people like, you know, selling those type of, uh, self-directed plans. I never knew, I never knew that it was except like that. So that’s very interesting. Um, yeah, Alex, so say someone wants to get started with this and say someone has a Roth I r a or traditional i r a at, uh, one of the large brokerages. And, um, you know, what is the process for getting set up and you know, how difficult it is for just, let’s say, opening and funding a self-directed retirement account.

Alex:
It’s about as easy as anything else you do when it comes to banking, which maybe isn’t the greatest example to use right now, <laugh>, but, um, I mean, it’s just a little bit of paperwork. You complete an application, um, with IRAs, we submit a request to the other custodian, it gets wired over directly to us. There’s no taxes, there’s no penalties associated with it. Um, you know, just like if you were gonna go from a large wirehouse, let’s say if you were gonna move your accounts from Vanguard to Fidelity, almost exactly the same process, no taxes, no reporting, you’re just changing the custodian of who holds those funds. Um, so again, it’s pretty easy 4 0 1 k rollover. So if you have an old employer’s plan and you wanna move it to an I r a, just a little bit of a longer process. But again, not too bad, 4 0 1 K administrator sends it directly to us. Uh, and then once you’re funded, then you’re ready to go. You let us know exactly what you wanna do, we help you with the process, you know, making sure paperwork, documents, everything signed, you know, dotted done correctly to the letter of the I R SS law. You know, that’s what we take care of on, on the backend for you.

Charles:
That’s great. Yeah, I I, when I’ve done it before, some of them I know my brother has a regular Roth I r a somewhere and it takes literally like six weeks or eight weeks to get funds over. And for the one I have, it literally takes like eight days. So it just start the process sooner than later if you do want to get involved with this. And the other thing too is I found out is, um, you know, when you’re in there and it tells you how much is left for your contribution for the year, let’s say into a Roth or something like that, you have to be very careful because if you’re putting more money in, you can’t, you know, double dip there and have Yeah. Uh,

Alex:
Yeah, it’s always important to, you know, keep track of that stuff. And unfortunately with, or I should say there’s some fortunate and unfortunate things is that, you know, we, we so often times, you know, retirement’s far away from a lot of us and a lot of the things that change have a lot of impact on us just aren’t things that you kind of run into on a day-to-day basis. We just had a big tax law update with what they call the Secure Act 2.0 that changed, kind of turned the industry on its head. But, you know, not too many people outside of financial professionals like myself are kind of aware like that. But we just had essentially two new different types of Roth accounts created at the first of the year that, you know, people certainly aren’t taking advantage of. And the i r s also hasn’t exactly told us how to administer either. So <laugh> of course, course, they created something and uh, we’re just kind of sitting here going, okay, what do we do now? <laugh>, thanks Uncle Sam. But, uh, yeah, it’s uh, you know, just stuff to get track of. Um, it’s not too terribly difficult, but, you know, running in and just, you know, giving us a call and say, Hey, what do we do? Help you out. No problem.

Charles:
Yeah. Alex, so one last thing about, uh, like the administrative part of it. Um, you know, we talked about the opening and funding of it. The, I deal with this a lot as a syndicator, our group does for bringing people into our deals with self-directed retirement accounts. And, um, it’s, uh, normally, you know, it’s, it’s always a few more steps than just, you know, doing a, your private place memorandum, signing it, sending over. Can you give us an idea of what you, so if I am, you know, I want to invest into a syndication, let’s say real estate syndication, what is, what do I have to do? Like, what do I have to provide? Yeah, do you, how does the process work? ’cause I think people would be very interested in this as well.

Alex:
Yeah, absolutely. The, the one piece of advice that I’ll give everyone is when you’re doing this, you’re never going to annoy us by calling us. I’d much rather have someone that asks what they perceive to be too many questions and stuff gets done and there’s no surprises. But at the end of the day, you know, being, being a, you know, you’re gonna be more involved in self-direction. It’s not, you know, a managed brokerage account. You are directing us as to what you do. So understanding there’s some back and forth is important, but start to finish, it’s not too terribly complicated. For your example, someone syndicating something, um, you know, a limited partnership agreement, uh, you know, subscribing to private shares of a, of an equity offering. Here’s how it basically works. John Smith or Jane Smith completes our account application. We submit the paperwork to their other custodian funds are in transit.

Alex:
That takes about five to 10 business days, depending wildly on who your other custodian is. Um, you know, if your, the quick ones could be five days for us to get a wire, the long ones, it could be almost, you know, three to four weeks. It just really depends on who the other other party’s involved in. But let’s say the account’s open and you know, over here at Harvard Site Capital, they say, Hey, we have a deal coming up. Okay, great. Um, we’d always ask that the client put us in touch with their syndicator. So, and you know, unless you came in and we’ve already been copied on emails, assume that we don’t know who we need to talk to. So say, Hey, you know, here’s Charles, talk to him. He’s the one handling the sub docs. Great. At that point, we kind of take over, we say, okay, great Charles, let’s get a copy of that.

Alex:
P p m, let’s get a copy of the subscription agreement. Anything that needs to be signed by the investor, we like to get first because we like to go through and put everything the I r A that needs to be specific to the I R A on there. So the tax ID number for the I r A, the name of the investor is the I R A, checking the right boxes to make sure that, you know, under the, you know, qualifications that saying, Hey, instead of this being personally, it’s a retirement plan or, you know, again, there’s kind of a, a few different places on these things on the standardized doc set that needs to be specific to the I R A. We prefer to do that instead of the client because we can get it right on the first shot once we get all that done.

Alex:
Long story short, we take care of the SubD docs for the client, send it to ’em through DocuSign, go through it, make sure everything looks good to you that we didn’t, you know, misspell your name or anything else like that. You approve it, we sign it, fund the investment per the wire instructions provided. So it’s really not too terribly complicated. We take care of the small fine tooth details on the documents. Uh, and it’s basically just kind of watching your email, reviewing some stuff, approving it, and then we push the funds back out once they arrive. Yeah,

Charles:
It, it’s not a difficult process, let’s just say, but it can be time consuming because you’re working with many different parties. So what I’m saying to someone that wants to or has one of these accounts that wants to invest into some sort of private placement, uh, investment, is that you have to start it as soon as possible and then also keep, um, you know, you’re, you’re the self-directed custodian up the date of what you’re doing, and then you also keep the syndicator or the group that you’re investing with up the date on what you’re doing. Yeah. Um, because then everybody knows what’s happening and they know, okay, this is a self-directed thing. This is not gonna be something that’s done in 24 hours. This is might be done in two or three weeks depending on the timeframe of what we’re doing and keeping everybody on the same page. We’ll make sure that you keep your, your spot with a syndicator and everything’s fine there. And then also they’re not waiting for anything, you know, over at, uh, you know, Alex’s office like that.

Alex:
Yeah. I always encourage people when you’re doing this, you know, well, I should say to, to preface what I’m saying, rarely do people get mad when expectations are set correctly. You know, if the syndicator knows, you know, Hey, this is gonna take two weeks, great. If the client is under the impression that’s saying, Hey, okay, I understand this is going to take X long, it’s when people have an expectation and it’s not met, it’s to when friction starts to come into the, so everything sand gets in the gears, if you will. So what I’d like clients to know, especially if you haven’t done this before, it’s probably gonna take longer than you think. And that’s not anything necessarily to do with, you know, us just wanting to be slow, but it’s just kind of nature of the process. We have to send a request to your other custodian.

Alex:
I can’t take control how long Vanguard takes to send us the funds. We send ’em the request, they’re a multinational corporation that’s monitoring fax lines, and it just takes some time for that to that to occur. Um, but you know, once things are here, we can potentially get stuff done within 48 hours of receipt. But again, to your point, the part that I see people get in the most, uh, have the most issue with, like the kind of recurring theme, the movie that keeps playing for people having issues is not starting that process early enough. Yeah. I’ll get a call from someone saying, Hey, I have this syndicator that is closing on, you know, due diligence is done, it’s day 55 and we need to close Friday. And I’m like, we need to do something. We, we need to have done this a week ago, <laugh>. Yeah. Um, so, you know, if you’re thinking about doing this, start the process early and things will run infinitely smoother. And that’s pretty much, much true with life in general. <laugh>, you know, it’s just, just carry that over to your retirement plans and and you’ll be fine.

Charles:
Yeah, no, no, great information. So Alex, as we wrap up here, I just had one, uh, one question here. I’d like to talk to people that are involved with, um, all different types of investments and, uh, since we specifically talk about real estate on this, uh, on the show, what, what kind of, uh, let’s just say other than people not having a self-directed retirement account, what are common mistakes maybe you see real estate investors make or investors make when investing in real estate? Or you’ve seen maybe, I imagine you’ve seen deals go south, I imagine you heard about that or anything like that. Is there any kind of common reoccurring theme that you’ve seen with that?

Alex:
Uh, yeah. One thing that I’ll say is to at least real estate where I’ve seen people have more issues, I see much people, people having far less issues when they invest for cash flow than when they invest for appreciation. You never know what the market is going to do, but the people that you know are investing for cashflow are the ones I hear complain less <laugh>. I mean, I can’t speak to, you know, my clients’, uh, you know, particular, um, you know, investment results. But what I will say is the clients that invest for cashflow, you know, tend to, um, you know, have, have less complaints. So they make as much money as the people that try to bet on appreciation. Certainly not, um, you know, $2,000 a month is not gonna get you nearly as fast as a hundred thousand dollars in a quarter basic math.

Alex:
But what I’d say is that that’s kind of, you know, what I’ve seen over the past decade is, is people being a little bit happier. Um, and then also, you know, making sure you understand the scope of what you’re investing in, that’s a big one, is that if you’re gonna go in and all you’ve been doing is relatively turnkey, long-term rentals and you want to do a rehab, not doing your research or not having someone walk you through that first deal, that can help you out. I saw one of the, the worst ones I saw was a client that, uh, thought they were buying and any real estate investor’s gonna cringe, is they were buying something that had foundation issues. Um, central and the state of Florida limestone, we get settlements, we get sinkholes. They thought they, um, had done their research. Turned out it was, uh, a tune of maybe falling short about $50,000 on a deal for a single family.

Alex:
And, um, it was a huge mess. So, you know, if you’re gonna change your trajectory in what you’re doing with real estate and investing, making sure you have a mentor to kind of guide you through that first deal, um, would be great. So, you know, again, cashflow typically, at least in my experience, I’ve seen people do pretty well with and be pretty happy, um, over the long term. And also if you’re gonna change your trajectory or change what you’re doing, make sure you have someone that has been there before to walk you through those first few deals. And, you know, I think that would probably be a, a pretty pretty sound way to go through investing in life in general, probably. Yeah,

Charles:
The, uh, the cash flow is, uh, great because if people are getting money out of a deal, um, and you reading online, um, you know, everything’s going to hell or something like this in the markets and everything, people, you know, people are much more, more calm if they’re like, oh, I’m still getting paid from, you know, on so-and-so property, something like this. And they’re actually getting money outta the property where someone that might be investing where it goes three, four years without any money back, um, it’s a whole different, uh, kind of plan unless you’re, unless you’ve done this many a times and you’re very seasoned in it. Yeah. But I think a lot of investors might not be, but, um, well thank you so much for all that insight. That’s great. Um, so when, um, Alex, give us a little, like, tell us how our listeners can learn more about you, uh, your business, advanta and, uh, you know, move forward with getting an account open.

Alex:
Yeah, absolutely. Um, advanta ira.com, so AD V A N T A I R a.com. We’re all over the website. Um, our <laugh>, we tend to get more and more people every day that find us on the first page of Google, which was a, uh, it was a challenge, but we’re there <laugh>. Um, so if, if you wanna learn more, uh, you can also reach me directly. Uh, it’s my first initial last name, so a [email protected] or my direct line at 7 2 7 7 5 4 9 9 5 4. Uh, give me a ring. I’d love to talk to you, uh, and, and kind of get you through the questions and get you in a position where you can invest in not only, uh, with whom you know, but in what you know as well, which is the catch marketing term that I do enjoy. And also, um, you know, Charles, you were just on my podcast as well, so a little shameless plug for that, the Alternative Investing Advantage podcast. Um, you can find it anywhere you get your podcasts, uh, and are, we’re running up on our 69th episode next week, so, uh, you know, we’re turning the corner into getting closer to a hundred day week by week. So really proud of that. Um, yeah, so that, that’s basically what I got for you, Charles, really appreciate you having me on, uh, today on your podcast.

Charles:
Yeah, no, great, Alex, thank you so much. And the one, one thing I just want to kind of put in there with anybody that’s a, when working with any of these self-directed accounts is, uh, you know, Alex, any other self-directed, uh, custodian is not gonna be doing any due diligence for you. Okay. They’re gonna verify probably that the deal smells somewhat right? But they’re not gonna be the same thing with like the foundation issue. So you have to be well versed in what you’re doing, and you have to perform your due diligence, um, on properties, on the assets, on the people running it, whatever it might be, um, because they’re not gonna be doing that. So it’s just one of those things is you have to know that going into it.

Alex:
Yeah. And that’s, that’s a great point to le to, to leave on. Um, you know, unlike stock markets that have, you know, things like the s e C and, and FINRA and stuff that are, you know, hopefully policing companies to make sure what they’re doing. Mm-hmm. Um, you know, the, the ons is on you. If you want to go in and buy a piece of real estate, we’ll make sure deeds are correctly titled, we’ll make sure documents are correctly done, but you need to be comfortable with who you’re investing in. And to go back to my point of, you know, investing for cashflow or having someone walk you through that new deal, if you haven’t done something before, talk to people. Get educated. Yeah. Um, it’s a big part about what we do at Advantage, trying to educate people and, uh, you know, make sure people understand, you know, what they’re investing with and whom they’re investing with.

Charles:
Oh, great way. Great way to, uh, leave it off. Alex, thank you so much for coming on and looking forward to connecting with you here in the near future.

Alex:
Absolutely. Thank you.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Alex Perny

Alex Perny is a business development specialist and host of Advanta IRA’s podcast, the Alternative Investment Advantage. He holds the designation of Certified IRA Services Professional (CISP) and is a self-described policy geek who loves diving deep to learn about the rules, regulations, and technical aspects of self-directed IRAs, employer plans, and IRS regulations. For more than a decade, Alex has helped thousands of clients invest in precious metals, real estate syndications, private stock offerings, promissory notes, and countless other alternative assets. As an expert in his field, he has spoken to thousands of investors across the country about using retirement plans to invest outside of the stock market. Alex believes so strongly in this strategy that he self-directs his own retirement and health savings plans to invest in real estate and private equity.

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