PODCAST EDUCATION

Self-Directed IRAs

Episode 002

The Real Estate Cowboys, John Larson and Johnny Collins, talk passive income real estate investing.

Heard locally every Sunday morning at 8 a.m. in Dallas-Fort Worth on NewsRadio 1080 KRLD, the Cowboys invited Ben Williams, a Real Estate Cowboy to talk about self-directed IRAs and how they can benefit you in passive income investing.

Host Amanda Guerra keeps the #CowboyCoffee hot while John and Johnny talk how to #BeACowboy and earn passive income in real estate.

Segments:

1) Self-directed IRAs
2) Interview with IRA 401k Specialist Ben Williams
3) Examples of Using Self-directed IRAs in Real Estate
4) Questions from Listeners and Weekly Words of Motivation

About Ben Williams

Ben Williams

With 20 years of experience in the financial services industry including the areas of public securities, mortgage brokering and lending, life insurance, and qualified retirement plans, Ben has been educating business owners on why the Self-Directed 401(k) is the best vehicle for retirement. Focused on self-directed retirement account education and services, Ben has been traveling all across the country for the past 5 years speaking to live audiences and training business leaders on this topic. He is passionate about empowering individuals with information to make their own financial decisions and believes in finding creative solutions for almost any financial problem. Prior to joining iSelfDirect Ben’s experience includes World Marketing Alliance Securities, Horner, Townsend & Kent, and American Skanida Insurance/Prudential Financial.

Episode Transcript

Self-Directed IRAs

Spokesperson: The following is a paid commercial program, paid for by American Real Estate Investments, LLC, and does not reflect the opinions or advice of KRLD or Intercom Media Corporation. Are you wanting to invest in real estate? Get your cowboy hat on, and let’s talk passive income investing in the real estate market in North Texas. Here’s your experts, John Larson and Johnny Collins and your host, Amanda Guerra.  

Amanda Guerra: A very good morning to you and welcome to the Real Estate Cowboys Radio Show. Hope you’ve had a good week. I’m going to get going along with John Larson and Johnny Collins and our goal of this show, and every show, is to teach you everything you need to know about real estate investing, and what is your return on life. OK, so John and Johnny have come up with a great topic for today’s show.  We’re talking about IRAs, 401Ks, which normally sounds kind of boring. You don’t really know where your money’s going. So you gentlemen have a better option.  

John Larson: Yes, we do. It’s called a self-directed retirement account and that could be within a self-directed IRA or what we call a solo 401K or solo K on the streets. What you can do by self-directing your retirement account is you can have more control of where that money’s going. And so if you’re somebody like me or Johnny, you can actually direct a portion, or all of your retirement accounts to a self-directed account and put it in things like real estate; single family homes, multi-family projects, things like that. Now of course with an IRA investment or 401K investment, you can buy a house with it, but you can’t use it. OK? So you can’t take your money and go use it. It’s still an IRA. So your account is what’s going to actually own the investment, alright? Alright, so no, you can’t use the house. No, you can’t buy a house for your kid or anything like that, but you can buy a rental property with it and cash flow of that rental property and put that cash flow back into your retirement account. tax-free. And then, if you decide to sell that asset one day, let’s say it appreciated 50 or  100 thousand dollars, which in the Texas market and the Dallas market, that’s not unheard of. So let’s say you sell that investment and cash in on some capital gains, you roll that capital gains right back into your retirement account, tax-free. It’s tax-free capital gains at that point. So you know, capital gains, any profit made from selling the property outside of retirement account, the IRS is going to come after that unless you take advantage of a 1031 exchange.  

Johnny Collins: And the great part about it, you have somebody very special to come along a little bit later on in the show, and really give us some real detail about that.  

John Larson: Yes we do. We uh, have my good friend Ben Williams, who’s also a real estate cowboy. He is our real estate cowboys, IRA 401K self-directed account specialist. So he comes with a wealth of knowledge. I can’t wait to get him on here talking about these opportunities, um, within a self-directed account. But yeah, there’s a couple of things inside a self-directed account that I really like and my family actually practices it themselves, and that is buying real estate, buying single-family rental properties and also lending money out of their IRA or 401K because we believe that that is the most passive option that you have. Because at that point, if you’re loaning on someone’s development or somebody’s project or even loaning to someone to fix and flip homes, it’s very hands-free for you.  Right? Someone else is doing the work, they’re paying you a fixed interest rate on the money and then when they sell that asset, that’s when you get your money back into your account and at that point, you’re free to do whatever you want with it. You can reinvest it in private lending with the same group or another group or, you know, stick it into a single-family home, whatever it may be, but, uh, it’s a very, very passive option and it really does yield some much higher returns, much greater returns than what you can see in the stock market, which tends to be pretty volatile.  

Johnny Collins: That’s really what we’re doing today. We want to provide people a platform to where you’ll just have options. There’s nothing wrong with the stock market. I’ve got great friends over at Merrill, John Mckenzie and those guys are taking great care of me. 

Amanda Guerra: But it’s going up and down.  I mean, every day, people are, “How much have I lost in my 401K today? How bad is it today?”  

Johnny Collins: You never know. Just depending on how the conversations go on CNN today. It might fluctuate good or bad, you know, sometimes. So, you’re right.  

John Larson: Once again, going back to, you know why I like owning real estate in a self-directed retirement account. If you look at the market as well, back in the early 2000s, 911, right? Bad time. My family lost a lot of money in the stock market at that time. Then you look back to the just the last global financial crisis that we had, right?  A bad time to be in the stock market. Bad time would be in real estate, you know? But the thing about rental properties, when the real estate market goes down, you don’t need to panic. You don’t need to sell, right?  Because if anything, rentals are going to be in higher demand. Fannie Mae is not loaning money for these people to go out and get an FHA loan and things like that. You know, a first time home buyer loan, they’re only option could be to rent. So if you’re a landlord, a person that has an abundance of rental properties, you can weather that storm and still cash flow on these properties, pay your expenses and still make some extra money while the market goes back up. You’re in the stock market and the market crashes., I mean you could lose your entire retirement.  

Johnny Collins: Well, not only that, but you to think about it. When the market crashes, interest rates go up. So people’s ability to qualify for mortgages evaporate. If you have a plethora of rental properties that you can afford to get people in, to let people in, you know that you become a commodity in those times.  So you gotta be cognizant of that.  

John Larson: Absolutely. And I’m sure there’s probably some listeners out there that are just saying, you know, what is a self-directed IRA? How come I’ve never heard of this before? You know, self-directed IRAs have actually been around since 1974. This isn’t some recent phenomenon. I just feel like people, they don’t know about it. You know, their financial advisor at Edward Jones or Merrill Lynch, they’re not telling them about why would they? They’re not making any fees on a self-directed IRA. They like to keep your money in the stock market and bonds and mutual funds and things like that, you know, they need to make their money too. But like I said, it’s not a recent phenomenon. And what’s just crazy to me is there’s 18 trillion dollars in retirement accounts, and probably only four percent of that money is self-directed.  And so what that tells me, it’s just people don’t know.  

Johnny Collins: Yeah, and we’ve been taught traditionally to park our money in the stock market and let it ride. That’s what we’ve been taught, you know when stocks start to plummet, buy more, it’s just what we’ve been taught. Um, you know, I remember when we first really started rocking and rolling together and you introduced this into a business plan, right? And you’ve had some great examples of people who have done tremendously well. Can you just kind of share a little bit, because I know you’ve had great relationships with these folks. Well, Amanda’s telling me we’ve got to take a quick break, but I will touch on that when we come back. I will give some great examples of some success stories of people who have self-directed their retirement account and bought real estate or done private money lending.  

Amanda Guerra: Like you said, a lot of people just don’t know about it, which is why you guys are here to teach them about it. So coming up we are going to talk to the Real Estate Cowboys expert, Ben Williams, who is our IRA 401K specialist. Delve in a little bit more to this. In the meanwhile, if you would like to figure out how to get started in passive income investments, all you have to do is head to our website at RealEstateCowboysDFW.com and we’ll be right back.  

Interview with IRA 401k Specialist Ben Williams

Amanda Guerra: Welcome back to the real estate of cowboys radio show. I’m Amanda Guerra, along with John Larson and Johnny Collins. We’ve been talking to you today about self-directed IRAs and how you can utilize them when it comes to real estate. So John, let’s pick up where we left off.  

John Larson: OK, we got Ben Williams. Now he’s our self-directed retirement account expert. He helps individuals and small business owners understand the benefits of self-directed retirement accounts. Ben Is often invited to speak with the nation’s top business and real estate experts all over the country. Before saddling up with the Real Estate Cowboys. Ben worked in the financial sector for 20 years, so he comes with a wealth of knowledge. Ben, thank you so much for being on the show.  

Ben Williams: John. I’m happy to be on the show. Thank you for the invite.  

John Larson: No problem, buddy. So I kind of briefly touched on, you know, what exactly a self-directed retirement account is, but now we’ve got a professional on the line here. So why don’t you tell the audience exactly what is a self-directed retirement account, Ben? 

Ben Williams: I’d be happy to. Self-directed, actually all retirement accounts are self-directed, but um, depending on where your money is parked, the custodians or trustees will only allow you to invest in certain sectors or they kind of guide you to go. For example, like, uh, Fidelity. Fidelity will go ahead and allow you to, uh, invest in mutual funds, stocks, variable annuities. But the IRS Code says, under self-directed retirement accounts or IRAs, depending on the custodian or a trustee, you are limited to what you can invest in real estate and other things. So a true self-directed IRA or a true self-directed retirement accounts allow you to invest in stocks, mutual funds, bonds or real estate or land banking, anything, you know, anything you really want to. And so I love self-directed retirement accounts. ‘Cause it really gives clients the options and more control because when I talk to somebody and they say, I’m self-directed, I say, “What are you in?” And they say, “Well, I’m with Fidelity and I’m in the stock market. And I’m like, “So where’s your diversification?”  

John Larson: Right. Okay, yeah. Ben, why do you think a self-directed account? Why isn’t it more popular? I mean, I just saw a stat, $18 trillion dollars are in U.S. retirement accounts and only about three to four percent does that sound about right? Of that money is actually self-directed.? 

Ben Williams: A hundred percent. Those are numbers exactly about three to four percent of all retirement accounts are only self-directed because really you got to understand like somebody that holds your money, uh, for example, Fidelity can go out and spend billions of dollars on marketing and getting people to follow the green arrow or follow the green line, but a true self-directed retirement account. Think about this. You are the one controlling that. So really the custodians–they’re the people that hold your money. And when I’m speaking and throughout the country, I might have someone in the audience, you know, very studious in the market and I might say to them. Your money’s at Fidelity. Who holds your money, then? And nine out of 10  or 10 out of 10 times people will say Fidelity does. But Fidelity does not hold your money. The banks hold your money. And so you think about this, if I truly self-direct my retirement account, meaning that I have a retirement account, I roll it over so it’s 100 percent self directed, the bank that they choose, they’re the ones that hold the funds and then when it’s time to invest in real estate or other things, I’m the one that is telling the bank where to move it, to title, or move it to escrow or something like that.  I’m in control. So think about that. I mean, Fidelity, Schwab, they spend millions and millions of dollars per year just marketing. And so really the big companies try to smash the self directed, taking control of your retirement because they’re losing hundreds of billions of dollars every year.  

John Larson: Yeah, that makes sense. So they’re not making any money on it. So why are they even informing you that you can self-direct and put your money in things like real estate?  

Ben Williams: Yeah, in fact, sometimes when we’re working with a client and we’re getting ready to educate them and kind of get them their options and have to call the financial advisor or the company they’re working with, the advisor might say, well, that’s against the law and you’re going to basically get taxed and penalized. Then when that happens, we generally say, listen, we’re are going to actually need to sit your compliance officer on the phone because that’s a hundred percent wrong and this is what the code says. The reason why you’re saying that is because you’re not gonna get paid on an annual basis off of this portfolio, which is generally one to two percent per year that the advisor makes regardless if the market goes up or down.  

John Larson: I get ya. OK? So here, I’m sure there’s a lot of people that are listening to the show that are thinking to themselves, well, how do I even get started with this? Um, can you kind of just give an overview of just how you go about setting up a self-directed retirement account, what the process looks like? And is it easy to do, you know, a lot of people are worried about, oh, is there to be a bunch of paperwork involved and you know, is this an easy thing to set up, Ben? 

Ben Williams: it can be, you know, it’s not impossible. You know, what I like people to do and you’ve been in real estate for a long time, John, but how many people got there and make mistakes and don’t have someone hold their hand through the process, you know, do the paperwork, documents, and making sure everything’s done on the real estate side.  The same thing is on the retirement side. There’s a whole bunch of different retirement plans out there that are self-directed. If you’re a business owner, you want to go with a self-directed business plan, which gives you more options. If you’re not self employed and you just want a regular IRA that’s great, but you really need to know someone in the posse, on the cowboy side, kind of watch your hand, hold your hand through the process that you have to just ask questions to identify what’s the best thing for you. So you know, there’s a whole bunch of different custodians out there and when I go speak I find out that a lot of times people are wanting something but the custodian that they talk to, they just send the paperwork without asking questions. So our values are, to inform people, educate them and make sure they have the right team helping them to be successful on the retirement side Make sure that you don’t go online, go through the process. Contact someone from your team and be able to talk to us, and we do not charge anything. There’s no credit card transaction, there’s nothing. It’s really education. We’re never going to ask for a credit card or anything like that. We really help people understand what is best for them and be able to give them options instead of telling them what to do. They have to follow the green line. – that’s not what we believe.  

John Larson: Gotcha. Gotcha. What would you say, we kind of touched on some things already. You know, self-directing your account, you where your money’s at, you know, the custodian that’s managing or that’s holding the money for you. Um, you’re putting it into potentially assets like real estate that you can see, touch, feel. Go drive by and check on. What are some other benefits of having a self-directed retirement account? I think you told me something about where a potential investor or potential just person out there that wants to self-direct. They could use it to pay off debt. Is that true?  

Ben Williams: Oh wow, yeah, that is true. That’s definitely us, you know, something I like to talk to people a lot about. When I mentioned earlier, there’s two kinds of retirement plans. There’s a business owner plan and just a regular individual IRA. The IRS Code allows, if you create a qualified retirement plan for your business, you fall under different rules. So I can borrow from myself, take a loan.  I can hypothetically, let’s just say I had, you know, 100,000 dollars in my retirement account. I rolled it over to this qualified retirement plan. I can take a $50,000 loan from that and I could do that and use that money for whatever I want. I could go on vacation, I could pay down credit card debt. I like to use as leverage, and what I like to do is let’s just say that I wanted more leverage and I wanted more capital.  I could use that to be able to pay down my credit card. You know, to get my FICO score up and my debt to income ratio down. There’s no credit check or any personal guaranty with these plans. And these plans are in most big company retirement plans out there, so this is just something that’s in the IRS Code that people never ever talk about. It’s kind of like the self-directed retirement account. Only three percent or four percent know about it. It’s about the same in this. There’s only a small amount of people that ever talk about it because generally the broker or the financial company, there is no benefit to them. So why are they going to educate people if it does not benefit them? Exact opposite of us on the air, on are on our team and our policy. We’d like to help people understand all the benefits in every kind of transaction.  

John Larson: Right! I know and that’s awesome that you just provide a little bit more information on it that I didn’t even know about and that’s the benefit of working with a team like us. We’ll tell you about that stuff. This is the stuff that Edward Jones and Fidelity and Merrill Lynch, they don’t want you to know about, but we know these secrets. So if somebody’s listening to this program would like to take advantage of self-directing an account or learning more about how they could pay off debt with the retirement account, which is great. All they have to do is go to RealEstateCowboysDFW.com. Just put your information in. Let us know that you’d like to find more information out about self-directed accounts, and our team will reach out to you. Ben is a member of the Real Estate Cowboys, as well. So our team will reach out to you with the necessary steps and information to get this process started. And then Ben, just to close really quick, since this is a Texas show, what do you like about the Texas real estate market? What do you like about DFW? What do you like about Houston? Just really quick. Thirty seconds. Let us know.  

Ben Williams: DFW is on fire. I like to get paid every month when I have my money or have a performing asset like real estate, I know that I’m going to get paid every month from my renter or the person that I’m lending money to. In essence, it’s a set schedule unlike the stock market, so far this year, I don’t get paid every month on that realized gain. The only time I realize that gain is when I sell a mutual fund or stock or whatever. It’s not like that in real estate.  I love real estate because it allows people that are getting ready to retire or they’re going to be retiring soon, or need some kind of fixed income; you’re going to get paid every month. In the stock market it’s kind of a hope and pray like, I hope this goes up, and I’m not sure if it will or not. 

Speaker 4: Great Info, Ben. Great insight and folks, that’s why Ben is a member of the Real Estate Cowboys. What a great asset he is, so thanks a lot, Ben. 

New Speaker: Absolutely. Thanks, John, have a good day. 

Examples of Using Self-directed IRAs in Real Estate

Spokesperson: The following program has been paid for by American Real Estate Investments, LLC. All opinions expressed on this program are solely the opinions of American Real Estate Investments, LLC and do not reflect the opinions of KRLD or Intercom Media Corporation. You should not treat any opinion expressed on the program as a specific inducement to follow a particular strategy regarding real estate financing or investment. And before acting on information on the program, you should seek advice from your own financial, tax, mortgage, or real estate advisor.  

Amanda Guerra: Welcome back to the Real Estate Cowboys Radio Show. Okay, John, so we’ve been talking about these self-directed IRAs. A lot of people didn’t know about them. You said you have some great examples of people who are wondering, “All right, convince me. How does this actually work?” 

John Larson: Yeah, I got a couple of examples of how the investments have worked for people. So I mean number one, you gotta get your account self-directed and Ben discussed how to make that happen. And Ben is the Real Estate Cowboy part of our team that can make that happen, him and his team, and they make it really, really easy on you. So number one, we got to get your account, self-directed, we got to play some money in a self-directed account, but I’ll go as close to home as my grandmother. Coming out of the crash. I was still living in the Metro Detroit area. The property values were just crumbling. Yes. And so she was able to get in and buy three pretty solid rental properties and yeah, I call him like a B class, you know, maybe like 100,000 dollar price point.  Um, she came in, got those, got them leased up, hired a management company to lease the properties, but renovated them, leased them. Um, and just recently sold them. OK. So this was just this past summer, just sold them. So she held them for about five years.  

Johnny Collins: Was she happy? 

John Larson: Um, well, you know, she had some situations where there’d be a vacancy here and there, but nothing to where she was like, man, why did I do this? You know, disappointed. But she sold all three properties. OK. Because now the market in Detroit, it’s just like the rest of the country, you know, it’s a seller’s market, very low inventory. So this high demand is causing this increase in prices. So she asked a real estate agent, a friend of hers,  “Hey, can you get an appraisal, you know, tell me some broker’s opinion on what these properties are worth?” They had all appreciated $50,000 to $70,000 in value. Yeah. So, so what she did is she planned to not renew the leases on the tenants. Went in, spruced up the houses put them on the retail market with her friend. They sold the properties, she got equity in each one, let’s just call it an average of $50,000 per property after commissions were paid and things like that. And rolled all that money back tax-free into her retirement account.  

Johnny Collins: Self-directed. 

John Larson: Exactly. So not only did she cashflow on the properties with some rental income over that five year period, sold them at the end, let’s just call it a $150,000 in tax-free equity.  

Amanda Guerra: If you can teach your grandma to do this, anybody can.  

Johnny Collins: Was he a hard sell?  

John Larson: Honestly, she trusts her grandson and honestly all this stuff, it starts with trust. Anytime you’re going to work with a team, then this team’s going to do something for you that you don’t necessarily know the ins and outs about. There’s gotta be a certain level of trust or we’re never going to make this work.  So my grandmother trusted me. And look at what, what has resulted with her retirement account. So that’s just one example.  

Johnny Collins: We’re going to have to get her on the show. 

Amanda Guerra: I know. And talk to her and then will find out all the secrets. But what I think, too is I think it’s the unknown for people. You know, they think, I don’t know anything about real estate, how am I supposed to get into it? Or even, you know a little bit, it’s just trusting yourself, trusting the experts in taking a chance. And it’s not that hard. You can do it.  

Johnny Collins: I mean, I think you hit the nail on the head. You know, people have a hard time switching from Dish network to cable, right? So let alone, you know, getting to the real estate industry, which is, for most folks, the biggest, you know, uh, a financial transactions they’ll ever have, so it can be a little intimidating. The whole point of this show is just to make sure that we provide you a safe place to first come and find out all of the information that you need so that you can make an informed decision based on your interactions with experts. Is that fair?  

John Larson: Absolutely. And that’s the goal of the show and that’s the goal of even, you know, go into the RealEstateCowboysDFW.com website, find out more information and it’s also, you know, take our investor quiz and find out what type of investor you are. Are you that single family home investor like my grandmother? Are you the private money person that wants even something more hands off? And just collect that fixed rate each year? Are you a person that likes the idea of a vacation rental because you like to take vacations to spend time with your family or you are retired and want a vacation property and when you’re not using it, you cash flow on it. Because you rent it out for you. Go and take that test and find out what type of investor you are. Maybe you’re all three, but that quiz will tell you. 

Amanda Guerra: So do you have any more great examples of how this has worked for people? Oh  

John Larson: Yeah, absolutely. So another great example I have is for a single family residential land development that we did down in Houston. And on the last show, I was talking about all the great things that are going on in Texas and Houston and Dallas in terms of new single-family homes being built. We’re leading the nation in that category. So huge demand from builders to build single-family homes because there’s huge demand from new people moving into the market. And um, so we back in 2014 saw that trend and said, you know, we want to go start developing a land to then sell to builders like Linar, you know, the largest publicly traded builder in the nation, and uh, everything’s been working out according to plan. And so those investors that came to the table and loaned us the money to go buy the land and put in the infrastructure, the roads, the plumbing, the electrical, all the stuff that’s needed to build a subdivision and start selling lots off to the builders.  All those investors pulled together money, loaned us that money in a private money lending program through a commercial lender. And now today we are selling lots. We’re dispersing those lots to Linar and some other large national builders and so those investors that got in with us back in 2014, they’ve been collecting. I believe what that deal they were getting from their lender, eight and a half percent fixed on that money annually. So that’s awesome. Super passive, right? And now everything’s proving out to where the builders are buying the lots, taking them down in a takedown schedule. I mean, it’s like a 550 lot development. And as those lots are bought off, we are starting to pay back the debt, which is our investors. So not only did they get that eight and a half percent, everything worked according to plan and they’re getting that initial investment back. 

Johnny Collins: And you can’t stress enough the lack of inventory right now in Texas. And it’s crazy because it’s in every market, It’s in every metropolitan market. 

Amanda Guerra: You can’t drive down the road without seeing construction on homes.  

Johnny Collins: Yeah. There’s cranes everywhere. You got bulldozers everywhere. And it’s just really because the supply and demand is at an all-time high right now. Organizations are moving in, you got more jobs coming into this area and people ideally have a lot of money to spend. And um, as long as interest rates are going to stay where they’re at, right? Uh, it’s going to continue. What’s funny about it is, as interest rates even start to grow, it may slow down a little bit, but the show will keep on going. People are in the buying mode right now.  

Amanda Guerra: So, I have a question and I think on this show we can be real with you. I think talking about money can be a little sensitive so somebody is retired, they have an IRA and maybe they want to do the self-directed IRA like you guys have been talking about or 401K and they’re thinking, OK, I like the sound of this. Maybe I do want to invest in real estate. How much money, if they want to be conservative, would you advise them to start out with?  

John Larson: What I like to ask a lot of my investors that come to me is, “Let’s make this experience tangible, right? Let’s make this tangible. How much money would you be willing to put into an investment that’s not gonna keep you up at night?” And let them tell you. You know, it’s not really a necessarily specific number, you know, on the private money lending side, you know, I will say that, and next week we’re going to have one of my commercial brokers on the phone that’s talking about private money lending opportunities, but I know from their aspect for like a large single family residential development, like I just gave that example, he’s going to want a minimum of $50,000. I would say to get into that deal because the issue is you don’t want a bunch of people coming in with $20,000, $15,000 here and there where you have a very large syndication. Right? So we want just $50,000, probably bare minimum on a private money lending opportunity.  

Johnny Collins: Yeah. And then there’s ratios too, you know, I always tell people no matter what you’re comfortable with. I personally don’t like for people to just invest it all. But it’s a matter of what you feel, what you’re good with. Like if you’re OK with it, if you’re a risk taker at this, this point, go forward. The difference here is, is the risk of sitting across from you on the dirt, so it’s a matter of, you know, the due diligence that you do, and how comfortable you are. Um, and then when you bring people like John to the table that have a track record or the track record that they have, that just helps ease some of your concerns. Does that make sense?  

Amanda Guerra: Absolutely.  

Johnny Collins: From a title perspective, of course, you know, our fiduciary duty is to keep everybody honest. You’re going to make sure the money’s going where it’s supposed to go specifically on the transaction. And uh, after that you’ll have somebody that could kind of steward you on into a successful homeownership.  

Speaker 2: Sounds good. All right. John and Johnny, thank you so much. You are listening to the Real Estate Cowboys Radio Show. Coming up, we’re gonna take some questions from our listeners. In the meantime, head to our website RealEstateCowboysDFW.com.  We have all of the links and information to what we’ve been talking about today. Also, while you’re there, take our investor quiz. Find out what type of investor you are. We’ll be right back. 

Questions from Listeners and Weekly Words of Motivation

Amanda Guerra: Welcome back to the Real Estate Cowboys Radio Show. We’ve been talking today about self-directed IRAs and we have some questions from our listeners. So the first one is coming from Michael K. and he says, “I already have a financial advisor. Can I still do a self-directed IRA and keep my investment accounts?” A great question.  

Johnny Collins: Yeah, absolutely you can. I think you should have your financial advisor be a part of this process because they can kind of help you analyze whether or not if the deal is good or bad. At the end of the day, you know, it’s about return on life from a financial advisor’s perspective, it’s about the return on your money, right?  

John Larson: Yeah, absolutely. Now they’re your financial advisor might not be a specialist in setting up a self-directed account, but obviously, let your financial advisor know what you’re going to be doing with your money and just let him know because all a part of your portfolio course. This is what I plan on doing. I plan on taking some money out and putting it into a real estate investment or private money lending opportunity and if he’s a good financial advisor and has your best interest at heart, he should definitely promote that because you’re diversifying your portfolio. But um, you know, there’s specialists that do that and Ben Williams is one of those guys and so I would definitely recommend working with a person who’s very informed on how to set up these self-directed accounts and do it the right way.  

Amanda Guerra: OK. So the next question is coming from Kevin C, uh, he lives in Allen. So he says, “I actually have a rental property. It’s been very successful. I’m thinking about buying some real estate with my retirement money. Is that a good idea right now with the real estate markets?” I guess he’s saying with the prices increasing here, they’re seeing higher prices or he wants to know if you should wait.  

John Larson: Yeah, that’s actually, that’s a great question. It’s a question I receive a lot and I’m going to say is, is basically what I see in the market daily and what I see is 400 people a day moving into the DFW market, 400 people a day moving into the Houston market and 1200 people a day moving into Texas as a whole. So as long as there’s demand for property, prices are going to at least be stable or increase. We still are behind the eight ball in terms of inventory on the market. And that is because of the crash that we went through where builders just did not build anything for three or four years. So you also have to look at the businesses that continue to move into the DFW area and Texas as a whole. Dallas, Fort Worth, Dallas is on that list of 20 companies that Amazon could choose to move in and have their HQ  

Amanda Guerra: They’ve been here. I know from being on the news side, they’re coming to look at North Texas. 

John Larson: Exactly. So let’s say Amazon does plan to plant their flag here for their second headquarters. That’s 50,000 more jobs. And then think about all the service jobs that are going to spin off of that. And that’s 50,000 people, I believe that make 100,000 dollars or more. So, when you look at a situation like that, then no, it’s definitely not too late to buy. And there definitely is a lot of room for growth in a market like DFW in Texas.  

Johnny Collins: There are so many companies moving in and it’s not just Amazon. I wouldn’t even stop there. I think there’s great safety right now in buying homes because the demand is high and the supply is low. That is a great combination.  

Amanda Guerra: Um, OK. So, John, I have a quick question. So piggybacking on Kevin’s question, say somebody does have rental properties, obviously you want to have those in abundance, but is there ever a good time to sell those?  

John Larson: Absolutely. Right now would be a good time to sell them. I mean, prices are, you know, back at an all-time high. I believe it’s still a good time to buy, but I also believe it’d be a good time to sell for an investor who maybe wants to take that money and diversify into another investment opportunity, maybe a private money lending opportunity. Maybe if they want to put some money back in the stock market, the stock market has been doing pretty well, But if they want to sell to go then buy more properties with that money, if you’re buying outside of an IRA or 401K and have access to Fannie Mae financing with the 20 percent down, yeah, that’s a good idea. If you’re an IRA investor that is holding real estate in that self-directed account right now, you can’t qualify for that finance. So I don’t think it’d be a good move to sell your properties to then go buy more at this, the value that they’re currently at if that makes sense.  

Johnny Collins: You swapping money, right?  

John Larson: Exactly.  

Johnny Collins: There’s no gain there. 

Amanda Guerra: Alright, John and Johnny, fantastic advice. And now it is time for one of my favorite parts of the day. Johnny Collins, weekly words of motivation. Johnny, take it away.  

Johnny Collins: Thank you, Amanda. Thank you. You know what? I have a life coach and one of the things he’s really big on is metacognitive. That’s when you think about what you’re thinking about. And one of the things that John and I really want to do with his radio show, get people thinking in a different fashion. Get people thinking about making money versus watching their money lose money. Does that make sense? You want to position yourself with tangible assets that are going to help you grow. I love what Socrates says, I can’t teach you anything, but I can make you think.” The thing that’s so great about real estate is that you can take real estate truly and make it your own. If you find someone like John, it’s going to give you a platform to get involved in a turnkey product and you just continue to do that and you do it as many times as possible and you look up 10, 15 years down the road and you created an empire that’s going to provide you the opportunity to go live the way you want to live in retirement,. Or you know what, maybe it’ll provide you the opportunity to live the way you want to live while you’re still working. Whatever it may be, it is your opportunity to do what you want to do. Real estate has given so many people the opportunity to do whatever it is their heart’s desire. We often talk about limiting beliefs and making sure that as adults, we don’t put limitations on our children’s dreams. What I’ve learned is it’s up to me to make sure that I tell my baby girl and my son that whatever it is that you want to do, don’t worry about the money. Mommy and daddy’ll take care of that.  You go do what you want to do. And then a lot of that for me is coming from the real estate industry, so we want to make sure that people know real estate is not just a place where guys that have random commercials and get on radio shows and talk crazy. You know, make money is a place where you can make money. The person who considers themselves average and ordinary, you can make money in this business. Go to our website, RealEstateCowboysDFW.com, take the test and figure out where you fall in the matrix and let us help you. Can you do that? I hope so.  

John Larson: Yeah. Johnny, powerful message. Um, just to kind of elaborate on that, you know, the reason why we’re doing this show the Real Estate Cowboys. Yes. I love real estate. Yes. I love the Dallas market. Yes. I love Houston and the Texas market as a whole, but the show is also to empower our listeners to take that step to, you know, take control of their financial future. And real estate has always been a tool for people to do that. You know, real estate really has made more regular people wealthy than any other investment option out there. And so all we’re trying to do is just give you the education to take effective action. We’re trying to give you the tools and the knowledge to make an informed decision on if this is something that you’d like to do or not, you know, and, and so on our website, RealEstateCowboysDFW.com, we have a lot of information there. You could go back and listen to past podcast educational videos, informational packets on how to get started with single family investing in single-family rentals. How to get started with a private money lending, how to get your first vacation rental and, you know, the show, we really try and advocate, you know, leveraging other people, honest people, good teams to make this a more passive experience for you. Because, you know, I do active real estate investing myself. I flip homes, I buy these rental properties and deliver them to my investors turnkey. 

Johnny Collins: You’ve even done a little interior decorating.  

John Larson: Yeah, yeah, I’ve done it all. I mean, you know,  yeah, I just finished up a $2,000,000 house here in Highland Park where I did the entire design of the actual, the finish out of the property and it was almost a year-long process. So what we’re trying to do is basically just accelerate that process for our investors by allowing them to leverage our skills, our expertise, our knowledge in this space. And that’s why this show is just completely designed around, you real estate investing, but real estate investing passively because what do we like to say? What is your return on life?  

Amanda Guerra: Alright John and Johnny. Thank you guys so much. An incredible show today. So next week we are going to have a really special guest on here. We’re going to talk to Brian Grantham. He’s a commercial real estate broker who specializes in private money lending. In the meantime, we ask that you had to RealEstateCowboysDFW.com. John, you love this quiz. A lot of people who’ve been going there and taking it, they can find out exactly what type of investor they are. Just take the quiz, figure it out, maybe you’re one, maybe you’re all three. Take it for fun! People like quizzes. So again, the website is RealEstateCowboysDFW.com. You guys have a great day.  

Spokesperson: Get your cowboy hat on and talk passive income investing in the real estate market in North Texas. Every Sunday morning at eight here on KRLD with your experts, John Larson and Johnny Collins. I’m your host, Amanda Guerra. The preceding was a paid commercial program, paid for by American Real Estate Investments LLC and does not reflect the opinions of KRLD or Intercom Media Corporation.