Making Your Own Private Money…
You guys continue to amaze me! In the last couple of weeks, ever since my team posted “Our Six Step Process to Private Lending” PDF, we’ve fielded a lot of calls from folks wanting to learn more.
Private Lending is an often-misunderstood category of real estate and self storage, but it’s n awfully handy one. But what if I told you YOU could be your own private money lender – for buying your own real estate and self storage assets?
Well, you can – and it’s not only perfectly legal, it can also be very lucrative.
Like, “generational wealth” lucrative…
Let’s look at two specific ways you can do this, starting with tools you likely already have, whether you are a real estate investor or not. I consider these to be among the most powerful tools any investor – or any person at all, in fact, could have access to, which is why I’ll spend so much time on these types of subjects at my Private Money and Syndication Summit on December 5, 6, and 7 in Austin, Texas.
First, you can use the current 401(k) you have from your employer and “supercharge” it. Now, full disclosure here: if you do this, you will no longer be involved in your employer-funded 401(k).
You’re going to lose the so-called “free” money they are “giving” you, but the fact is, if you do this the right way, your returns and contributions will skyrocket and suddenly, the 3% or whatever your employer is paying you will seem like pocket change.
Anyhow, you’ll convert that 401(k) into a Self-Directed/SOLO 401(k). Now, you’ll have the ability, as the owner, to dictate what and where those funds are invested.
If you are self employed and don’t have a 401(k), then you’re in an even better position. You’ll take your IRA and convert it to a Roth IRA.
Either of these two structures can be funded with qualified rollovers from existing accounts and there is definitely some fine print when it comes to compliance and the legal ramifications for self-funded investment, but the incredible returns you can create with these tools far outweigh the time spent in setting them up and managing them.
From there, using them is extremely similar to funding any other investment:
- Finding the Perfect Property for Investment
- Just like we’ve detailed earlier, you’ll do your due diligence, make your offers, and ensure you have funds available.
- If you need additional funding, the key is to use non-recourse loans in every case.
- Your SOLO or Roth Structure Owns the Property at Close
- Since you’re using a retirement entity to hold the property, you’ll have certain protections from bankruptcy and legal action.
- The SOLO or Roth will also pay for all closing costs and maintenance AND all the payments made by tenants and renters will be paid directly to the Roth or SOLO.
- Taxes can be paid now or deferred…
- If you’re using SOLO funds, taxes will be deferred, but in the cases of a Roth, you’ll have the added benefit of paying taxes now instead of decades from now when the tax rate has risen … again!
- Rental Income is paid directly into the investment structure since it owns the property. Your personal liability is drastically limited by the ownership structure.
Sound too good to be true? It isn’t! In fact, wealthy investors have been doing this for years and NOT telling anyone about it.
In fact, I consider this such an important part of investing and creating your own private money that my team and I take a deep dive into this exact process at my Private Money and Syndication Summit on December 5, 6, and 7 in Austin, Texas.