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DisclaimerDisclaimer
Quest IRA, Inc. does not provide tax, legal or investment advice or endorse any products, services or investments of any type
All information and materials are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants and financial advisors before entering into any type of investment.
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Being a real estate investor means Being a real estate investor means understand the use of moneyunderstand the use of money
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Money means different Money means different things to different people in things to different people in different stages of life.different stages of life.
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In order to understand money we have to In order to understand money we have to understand peoples needs, and match the understand peoples needs, and match the
needs with the proper tools.needs with the proper tools.
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Eats is the main bucket. Eats is the main bucket. The one we all know. The one we all know. This is the most This is the most expensive use of money.expensive use of money.
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Other uses of moneyOther uses of money
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You need to match You need to match the need of money to the need of money to the proper tool that the proper tool that allows maximum use allows maximum use of the money.of the money.
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What is a “Self-Directed” IRA?What is a “Self-Directed” IRA?
An IRA in which the IRA owner directs all investments in the account. There is no legal distinction between a “self-directed IRA” and any other IRA except with a truly self-directed IRA the account agreement allows the broadest possible spectrum of investments.
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DiversificationDiversification
What are the benefits of self-direction?What are the benefits of self-direction?
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IRSIRA Investor
What are the benefits of self-direction?What are the benefits of self-direction?
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Social investing! Social investing!
What are the benefits of self-direction?What are the benefits of self-direction?
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Take control of your retirement and invest in what you know best!
What are the benefits of self-direction?What are the benefits of self-direction?
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• Traditional IRA– (including rollovers)
• Roth IRA
Types of PlansTypes of Plans
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Employer plans:
• SEP IRA
• SIMPLE IRA
• Individual 401(k)
• Roth 401(k)
Types of PlansTypes of Plans
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Special plans:
• Coverdell Education Savings Account (ESA)
• Health Savings Accounts (HSA)
Types of PlansTypes of Plans
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ALL of the above accounts
can be self-directed!
What types of plans can be self-directed?What types of plans can be self-directed?
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Restrictions on IRAs
People Restrictions
Transaction Restrictions
Investment Restrictions
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People Restrictions on IRAs
Disqualified Persons = Those persons who cannot benefit from or enter into transactions with your IRA or other plan.
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Think of your IRA as Mr. IraThink of your IRA as Mr. Ira
You Mr. Ira
People Restrictions on IRAs
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Disqualified persons may not enter into Disqualified persons may not enter into transactions with Mr. Iratransactions with Mr. Ira
You Mr. Ira
NO
NO
People Restrictions on IRAs
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Mr. Ira Fiduciary
Disqualified PersonsDisqualified Persons
People Restrictions on IRAs
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Fiduciary “F”(includes IRA Owner)
Member of F’s Family
Corporation “C” if F owns
(directly or indirectly)50% or more of vote or
value of stock
Partnership “P” if F owns
(directly or indirectly)50% or more of capital or profits
interest in P
Trust or Estate “T” if F owns
(directly or indirectly)50% or more of
Beneficial interest in T
10% or more
partner or joint
venturer with CF’s Spouse
F’s Ancestor
F’s LinealDescendant “LD”
LD’s Spouse
Officer or Director of C
Highly Compensated
Employee of C (10% or more of
wages)
10% or more shareholder of C
Person with management
or administrative functions of P
Highly Compensated
Employee of P (10% or more of
wages)
10% or more partner of P
Trustee of T
Highly Compensated
Employee of T (10% or more of wages)
10% or more beneficial interest
owner of T
10% or more
partner or joint
venturer with P
10% or more
partner or joint
venturer with T
IRA
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Prohibited Transaction RestrictionsProhibited Transaction RestrictionsAny Any direct or indirectdirect or indirect
Sale, exchange, or lease
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Lending Money
Prohibited Transaction RestrictionsProhibited Transaction RestrictionsAny Any direct or indirectdirect or indirect
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Goods, Services, or Facilities
Prohibited Transaction RestrictionsProhibited Transaction RestrictionsAny Any direct or indirectdirect or indirect
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Investment RestrictionsInvestment Restrictions
Life Insurance Contracts
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Investment RestrictionsInvestment Restrictions
Collectibles
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Collectibles are defined as:
• Any work of art;
• Any rug or antique;
• Any metal or gem;
• Any stamp or coin;
• Any alcoholic beverage.
An exception exists for certain U.S. minted gold, silver and
platinum coins, coins issued by U.S. states, and gold,
silver, platinum or palladium bullion.
Investment RestrictionsInvestment Restrictions
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What can I invest in with my IRA?What can I invest in with my IRA?
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What investments are What investments are you knowledgeable you knowledgeable about?about?
You can buy that You can buy that in your IRA!in your IRA!
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Investment ChoicesInvestment Choices
• Single family and multi-unit homes• Apartments• Condominiums• Commercial property• Unimproved land• Foreclosures• Limited liability companies• Limited partnerships• Unsecured/secured loans• Joint ventures
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Investment ChoicesInvestment Choices• Foreign property investments• Deeds of trust and mortgages• Tax liens• Options• Debt Financed Property
• Must be a non-recourse loan• Will generate taxes payable on the profit from
the IRA to the extent that the property is debt leveraged.
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If you are a investor you should have If you are a investor you should have an IRA so you can talk about itan IRA so you can talk about it
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Steps to Purchasing Real EstateSteps to Purchasing Real Estate Assets in a Retirement Plan Assets in a Retirement Plan
1. Open a self-directed IRA
2. Contribute or move funds
into the self-directed IRA
3. Locate an investment
4. Complete the proper documentation to purchase the asset
(Buy Direction Letter, Private Placement Instructions, Note, etc…)
5. “Read and Approve” all the documents prior to closing
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6. After your approval of all documents, Quest signs the closing
documents and funds your transaction
7. Asset is recorded in the name of your IRA, for example:
Quest IRA, Inc. FBO John Smith IRA #12345-11
8. All expenses come from your IRA and all income stays in your IRA
Steps to Purchasing Real EstateSteps to Purchasing Real Estate Assets in a Retirement Plan Assets in a Retirement Plan
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John Wood and his associate Jay Wright want to purchase an office condo for $250,000 within their SEP IRAs.
1. They each transfer $150,000 from their IRA brokerage accounts to their Quest SEP IRAs to purchase the property.
Case Study: Rental PropertyCase Study: Rental Property
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2. John and Jay make an offer to purchase the office condo in the name of their SEP IRAs, as follows:
Quest IRA, Inc. FBO John Wood SEP IRA account #12345-31 and Quest IRA Inc. FBO Jay Wright SEP IRA account # 23456-31.
3. John and Jay each complete a Buy Direction Letter (Real Estate). They send the Buy Direction Letters and the contract which has been “read and approved” by them to Quest.
Case Study: Rental PropertyCase Study: Rental Property
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4. Quest signs the contract and sends it to the title company along with an earnest money deposit of $10,000 ($5,000 from each account).
5. At closing, John & Jay review and approve all closing documents, then the title company sends them to Quest for signature.
6. Quest signs the closing documents and wires the SEP IRA funds to the title company to close (1/2 from each account).
Case Study: Rental PropertyCase Study: Rental Property
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7. The title company records the deed and the 2 IRAs are now the owner of record, as follows:
Quest IRA, Inc. FBO John Wood SEP IRA account # 12345-31 (as to an undivided 50% interest) and
Quest IRA, Inc. FBO Jay Wright SEP IRA account #23456-31 (as to an undivided 50% interest)
Case Study: Rental PropertyCase Study: Rental Property
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John hires a property management company to oversee the unit.
1. The property management company finds a tenant to lease the unit.
2. Rents and expenses are handled by the property manager.
3. Office condo has a positive monthly cash flow of $850 ($425 for each SEP IRA) which is tax deferred.
Case Study: Rental PropertyCase Study: Rental Property
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4. The property management company submits the net rent proceeds to Quest for the benefit of John and Jay’s SEP IRAs.
5. John & Jay track their accounts via their online statements.
Case Study: Rental PropertyCase Study: Rental Property
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Two years later, tenant offers to purchase the property for $395,000.
1. A sales contract is prepared for $395,000 and submitted to Quest for signature after having been “read and approved” by John and Jay, along with a Sell Direction Letter (Real Estate).
2. On day of closing, John and Jay review and approve all closing documents. Quest then signs the documents and returns them to the title company. Proceeds, after closing costs, are wired back into their SEP IRA accounts.
Case Study: Rental PropertyCase Study: Rental Property
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Realized Return for each SEP IRAInitial investment $125,000
Cash flow over 26 months ($425 x 26) $ 11,050
Gains from Sale ($187,500* - $125,000) $ 62,500
Proceeds to each SEP IRA after sale $198,550
* Net proceeds after closing costs
Tax deferred gain of $73,550 (59%) over 26 months!
Case Study: Rental PropertyCase Study: Rental Property
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Key Points to Remember
• John and Jay’s IRAs pay no taxes on the gains. They can reinvest the full amount of their profits on the next deal, free of taxes.
• If the accounts involved were Roth IRAs, Roth 401(k)s, or in some cases a Coverdell ESA or an HSA, the gain is TAX FREE FORVER!
Case Study: Rental PropertyCase Study: Rental Property
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Key Points to Remember
• John and Jay are in total control of the process from beginning to end, but Quest is the actual buyer and seller of the property.
• John and Jay did not take money from their IRAs to buy property and put the money back into their IRAs – the IRAs simply bought an asset and later sold it at a profit.
Case Study: Rental PropertyCase Study: Rental Property
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Key Points to Remember
• IRAs can partner with other IRAs or even non-IRA money.
• All expenses and proceeds must be split in accordance with their ownership percentages.
• John and Jay could have had the checks deposited directly into their IRAs instead of hiring a property management company.
Case Study: Rental PropertyCase Study: Rental Property
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O.P.I.O.P.I.Ways to profit NOWWays to profit NOW
OTHER PEOPLE’S OTHER PEOPLE’S IRAsIRAs
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Create your own private financing source
Borrower’s Perspective:Making Money NOW
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There are TRILLIONS of dollars in retirement accounts!
Borrower’s Perspective:Making Money NOW
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At every gathering there are MILLIONS of dollars available for investment.
Borrower’s Perspective:Making Money NOW
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“Let me help you recover your stock market losses with loans secured by real estate.”
Borrower’s Perspective:Making Money NOW
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Emphasize that as a real estate investor you are Emphasize that as a real estate investor you are helping the economy recover by improving helping the economy recover by improving property values and that their investment is a property values and that their investment is a socially responsible one.socially responsible one.
Borrower’s Perspective:Making Money NOW
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Provide the prospective lender with the details Provide the prospective lender with the details of the transaction, including your price and of the transaction, including your price and comparable sales to show value.comparable sales to show value.
Borrower’s Perspective:Making Money NOW
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Have a “success book” available!Have a “success book” available!
Borrower’s Perspective:Making Money NOW
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PartneringPartnering
Ways to profit NOWWays to profit NOW
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SalesSales
Ways to profit NOWWays to profit NOW
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Investment CapitalInvestment Capital
Ways to profit NOWWays to profit NOW
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Spread the knowledge,
then use their money!
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The big problem when startingThe big problem when starting
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Special offer! VIP programSpecial offer! VIP program1) Real Estate • Check vesting on sales contract• Makes changes to sales contract – correct vesting and address• Contact title company to introduce our selves • Contact title company to get information on closing make ourselves the point of
contact• Help client review the title commitment • Help client review the closing documents.• We make sure the closing documents are correct before we send them to the client.• Fill out the Direction of investment for them• We tell them where to sign read and approve. If they don’t want to write read and
approve, we stamp it and create a line for them to sign • We email the FED REF# to the title company as soon as we have it so they can track
the wire info• Be in contact with the client’s RE Agent for communication purposes• Execute and overnight the original closing documents prior to closing• Follow up with the Title Co./Attorney’s Office to make sure the recorded Deed is
mailed back to Quest
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Special offer! VIP programSpecial offer! VIP program2) HUD Real Estate• We do all of the above for Real Estate plus• Get on the phone with client/ realtor to make sure offer is placed correctly on HUD website• We contact HUD immediately after offer is accepted to make sure everything is correct and where we need to
send contract and earnest money• We spend more time with HUD clients to make sure nothing is dropped because we know how easy it is to
lose a deal because of HUD
3) Notes• Fill out the Direction of investment for them if they need help• We review the promissory note to make sure vesting, maturity date and interest rate all match to the
direction of investment.• We review the deed of trust note to make sure vesting, maturity date, interest rate all match to the direction
of investment• We make sure the property matches the direction of investment• We contact the title company to make sure they have the docs and if they have any questions• We help the client review the HUD and make sure our fees are on there• We email the FED REF# to the client/title company/ borrower as soon as we have it so they can track the wire• We follow up with the Title Co./Attorney’s Office to make sure the original Note and recorded Deed of Trust
is mailed back to Quest
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Special offer! VIP programSpecial offer! VIP program
4) Private Entities • Fill out the Direction of Investment for them if they need help• We review the Operating agreement to make sure they are no disqualified
individuals to the IRA. • We review the subscription agreement and check for vesting, managing members,
address, tax identification number
• We try to help out with the questionnaire but of course, we can’t provide tax, legal, investment advice.
• We contact the company they are investing in to introduce and see if they have any questions
• We email the FED REF# to the company as soon as we have it so they can track the wire
• We mail the signed original agreement to the company along with the private placement instruction letter via USPS the same day we fund the investment
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How can I get more information?How can I get more information?
www.QuestIRA.com
800-320-5950
For More Information:For More Information: