Jason starts the show talking about a housing bubble burst in cyclical markets. He also discusses some other real estate markets that are in danger. Later on the show, Jason brings Edwin Kelly, founder & CEO of Specialized IRA Services. They talk about different ways to use your self-directed IRA to invest in non-stock market-related assets.
When you’re in your car and you’re listening to that podcast, you’re not really thinking about the fact that people are real and accessible on the other end, maybe you’ve reached out and you’ve gotten contact with an investment counselor. Again, they I wouldn’t say they have star persona, but they’re really not these tangible, real people. When you go to these events, all of these people become real, you get to look them in the eye and shake their hand. And then you’re surrounded by like people that have a passion for real estate. And it all becomes more real and it creates a sense of community. And so I would really strongly encourage people that have more than a casual interest about real estate that are wanting to do more than just be that passive investor through their investment counselor. And like you said, that’s a great if you’re doing that, but if you have an interest to do more, I really do strongly encourage people to come out and be in person. The experience is very different from when you’re listening on the podcast, and when you are In person, hearing the conversations
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:54
Welcome and thank you so much for joining me today. This is Episode 1140 311 40. Three. And of course, this is Jason Hartman as we dive into some more creative approaches to the self directed IRA, the SD IRA, and other qualified plans, whether it be a solo case, solo 401k, whatever you want to call it, we will talk with one of our upcoming meet the Masters speakers, Edwin, who is here to chat with us about that today. Then Tom wheelwright, who will also be speaking at our upcoming meet the Masters event in Newport Beach. We just had him on the show recently, and he talked about his ideas on self directed IRAs, or are really not self directed IRAs, but IRAs in general, or retirement accounts. And I’ll tell you, you can make them a lot better a lot, lot lot better by self directing those plans. So make sure you take advantage of that opportunity. I did so many, many years ago, and it has served me well. I use my self directed IRA to do all sorts of things, I can make loans with it. I’ve purchased a few different properties in my self directed IRA. More than a few Actually, I purchased some that I was just doing some trading on. Those were the land contract deals that we were talking about a couple of years ago. One of our meet the Masters speakers from not last year, but the year before last was there talking about the land contract opportunities, and those created some capital gains for me, but they really didn’t, because I did them inside of my self directed IRA, my SD IRA plan. So that’s very, very helpful. And that is something we will talk about today. Remember, the single largest expense any of us have in our lives is to Tax tax is the single largest expense and we must learn how to mitigate the cost of taxation. Of course, income property is the most tax favored asset class in America. How great is that? It is just wonderful. Okay, let’s talk a little bit about the housing bubble. times they are changing, folks. Now, National Mortgage news published this article recently. And it talked about how some of these less affordable cities have prices that are out of whack with the historical norms, and how housing affordability has declined pretty dramatically in some of these markets. And when I first read the article, I thought, Well, you didn’t even mention the markets where things are really bad. And I had to go back and look at the title of the article. It says 12 cities on the verge of a housing bubble in 2019. It didn’t say 12 cities that are already in a popping housing bubble, or where the bubble popped a year ago. And those would be the obvious suspects those cyclical markets that we don’t like that we don’t recommend that we really don’t touch course, the West Coast of the United States, my old hometown of Newport Beach, Los Angeles, Irvine, La Jolla, you know, all up and down the West Coast really way up to Seattle and really way up to Vancouver. Why not just go and I’m not talking about Vancouver, Washington. I’m talking about Vancouver, Canada, the poster child for bubble housing markets, but those bubbles already burst. So hey, that’s old news. Look at what’s going on in New York City.
Jason Hartman 6:01
Crash crash crash, right? So the real estate market is definitely changing. That is true of the cyclical markets. But we really do have kind of the tale of two cities to use the old cliche, and it’s really a tale of, well 400 metropolitan statistical areas, or MSA is not exactly 400, but close to it. And as we look at those around the country, this article was interesting to me, because it talked about a couple of different factors, the median sales price, the wages, the annual wages, and I assume that’s an average, whether they’re up or down in that market, the change in those wages and the gap between the growth in home prices and wages. Okay, so what is that gap and then the affordability index Now, why does it talk about both of those things? Well, because Of course, the gap in home prices and wages. Isn’t that meaningful, necessarily? Why not? Well, because people finance homes. And so what is the real factor that determines whether or not they can afford that property? Well, it’s the interest rate on the mortgage. So, one is the home price versus wages, not very meaningful unless you know the interest rate and what that mortgage payment would be. But then you have the affordability index, and the affordability index is comparing the payment versus the wages. Okay, so those are different things, home prices, not that meaningful. home mortgage payments, very meaningful. Okay, so we live in a credit based economy, and that’s what’s meaningful. So just to highlight A couple of these markets, really only one of them surprised me. And that one that surprised me was Columbus. Yeah, I was kind of surprised at that one. Actually, none of the others really surprised me. Very much. I mean to one degree or another, you know, Ogden, Las Vegas, Midland and Arbor Hilo. We even got Hawaii representing here. Mount Vernon, Flagstaff. Now Columbus that one does surprise me. Minneapolis Hilton Head, Providence or Washington right? Nothing there really surprises me too much in terms of being a potential bubble except Columbus. I didn’t think Columbus would be in the same category. We look at Hilton Head and we see prices are up 10% wages are down 1% the gap between home prices and wages 11 percentage points, housing affordability index at 95 and when it’s at 100, that means houses housing is very unaffordable. Okay. So I won’t go through all of these with you I will go through the place I lived for a brief time I lived there for a year and a half Matt of course has lost wages Nevada, the very attractive place for Californians fleeing oppressive tax rates to live in. I personally never liked Las Vegas very much I didn’t like it when I live there. I didn’t like it before I live there that I didn’t like it after I moved from there. But you know, hey, if I lived in the burbs in Vegas, I might have liked it better. You know, certainly a lot of my friends live in Henderson, if you live in Summerlin, they like both of those areas quite well. Just depends on your taste. I mean, hey, listen, Vegas. I’m not a fan, but it has a few advantages. It does have a good formula. Lots of entertainment, obviously. Very convenient airport. It’s got a few things going forward and hey, it’s actually four hour drive to Los Angeles. You know, not bad if you don’t have to pay any taxes and you’re fleeing the oppressive 13.3% tax rate in California. But what happened in Vegas median sales price $270,000 up 13% annual wages 48,000 and change up 2% gap between growth and home prices and wages 11 percentage points and the affordability index at 82. at the opposite end of the spectrum, you know, Midland Texas now let’s talk oil here, folks. That’s the only reason I mentioned this one. Midland 291,000 median price up 16% wages Hey, this is pretty good. $72,000 if I’m rounding correctly, that’s up 6% the gap between prices and wages 11 percentage points, housing affordability at 82. Nothing else to surprise on this list, really nothing to support. Well, Columbus Remember I said I was surprised about that one. median sales price $285,000 up 17% annual wages only up 2% gap, of course 15 percentage points between the two for 2 billion index at 87. So there you go take it for what it’s worth. I don’t think we have anything to worry about in the markets we like and, and really have mostly consistently liked for many, many years now. And those are those good prudent linear markets, the boring places. Hey, I thought Columbus was one of those but maybe not so much according to this article, at least. Nothing too surprising there. But do be careful because times they are changing. And we will keep you informed every day, five days a week, not on the weekends but five days a week here on the show. So that is something To know, all right, get your tickets for meet the Masters coming up in what we got slightly less than three weeks here, come and join us in Newport Beach, California for that. And without further ado, let’s talk to one of our speakers. And that is Edwin, who will be talking at meet the Masters about self directed IRAs.
Jason Hartman 12:21
Join us March 23, and 24th for the 2019 meet the masters of income property.
Jason Hartman 12:26
Let’s break this down and look at some of the strengths of income property. As an asset class, I found that this event is really helpful because I’m totally a newbie to real estate investment. And so I picked up so much information.
Jason Hartman 12:40
One of the great things about it is it’s so fragmented, right? embrace the fragmentation.
Jason Hartman 12:49
We actually been learning a lot about the tax benefits to real estate and a lot of I’ve been investing actually well over 10 years now, and I learned a lot of new things. today.
Jason Hartman 13:00
The other advantage of this weekend is networking, meeting new property managers meeting new area specialists and then seeing the product they have to offer that changes here by you. Register now with Jason hartman.com slash masters.
Jason Hartman 13:14
It’s my pleasure to welcome Edwin Kelly. He is founder and CEO of specialized IRA services. And I believe it’s specialized Trust Company. And he’s got some unique strategies, some innovative strategies on self directed IRAs. Of course, we’ve talked about this topic many times over the years, but it’s always nice to hear some new and unique angles and case studies on the topic. And that’s what we’re going to do today. Edwin, welcome. How you
Edwin Kelly 13:41
doing, Jason? I’m doing great. Thanks so much for having me. Where are you located? Well, we are located in New Mexico as of course right now I am sitting in the wonderful beautiful Washington DC area.
Jason Hartman 13:51
Ah, fantastic. You were talking to me a little bit off here about a case study and you’ve got a bunch of these by the way. Case studies of clients that you’ve helped over the years, do some unique and innovative things with their self directed IRAs. Right?
Edwin Kelly 14:07
Yeah, yeah. You know, that’s one of the things that that I feel kind of there’s multiple self directed custodians out there. But one of the things that I think separates us from some of the others that our clients find beneficial, is that we offer a lot of support services. A lot of people use the word coaching, I don’t necessarily like to work coaching. But you know, we work one on one with clients to help them actually create a plan, connect the dots, implement the strategies, and move towards the goals that they want. And so, in doing that, for well, over a decade, I’ve worked with I don’t know, I should have probably counted Jason, I never kept count, but I mean, hundreds if maybe not approaching 1000 different clients on a one on one basis at this point. And so it’s all about applying these accounts in the end the benefits of them to help people just achieve their goals. So yeah, lots of work in case studies. Okay, so before we go into some innovation in terms of strategies here We gotta ask the basic question for the five listeners that don’t know,
Jason Hartman 15:05
what is a self directed IRA?
Edwin Kelly 15:07
Good question. So a self directed IRA is an IRS approved vehicle that allows you and I to get complete control over our retirement account, invest in anything allowed by the government make money and protect it tax protected as we’re growing it and in many cases, depending upon the type of account you use, spend all the income, all the profits, all the capital gains 100% tax free. Okay,
Jason Hartman 15:33
that is just different from basic plan that the vast majority of people are enrolled in where they’re not self directing, they’re not making the investment choices within their plan. They have a plan, but you know, they’ve given that over to usually the Wall Street crooks Who are you know, managing that plan for them and, as I always like to say Wall Street does a great job of making sure the middle and upper middle class gets poorer every day. Yes, yeah. And they get richer. Wall Street gets richer. Well, they get
Edwin Kelly 16:06
somebody making money. It’s just not the client. Yeah, right.
Jason Hartman 16:08
Well, you know the old question right where all the clients yachts?
Edwin Kelly 16:11
Yeah, exactly. Yeah.
Jason Hartman 16:13
Yeah, really sad, really sad. Okay, so you can self direct into what kind of assets.
Edwin Kelly 16:19
So when we talk about self directing, you can invest into virtually anything you can imagine. And I always say, if you can do it outside the retirement account, you can pretty much do it inside the retirement account. That being said, What are the most common investments we see in self directed accounts right now? There’s a few that we see very commonly, real estate is a very big one. And we say real estate typically buy and hold, right because that’s one of the benefits of retirement accounts is that you want to create a future income stream, which rental properties work terrific. And so that’s one of the investments that we see pretty commonly another kind of spin on that is that people are partnering up and going in and buying a multi units or into apartment complexes together. And so they’re owning you know, a portion or buying initiative. syndication in commercial real estate. Another thing that we’ve seen a lot of is, is a lot of note investing and private lending between investors, that seems to be very, very popular and successful right now for many people, then, you know, beyond that, it’s interesting because cryptocurrencies have caught on and caught a lot of people’s interest. And so we see more and more interest in cryptocurrencies, but, you know, traditional investments that people have purchased inside of self directed accounts range from, you know, private equity deals, which is great for entrepreneurs and new business owners trying to raise capital, right to start a business or to fund their business and into a new phase. So private equity is an angle to you know, people actually buying and holding physical precious metals in their retirement account, to hedge against the dollar or, you know, inflation and those kinds of things. And so that there’s a lot of different cool ways that people are investing their assets and it all comes back to really what’s their key objective.
Jason Hartman 17:53
Okay, great. Well tell us about some unique strategies.
Edwin Kelly 17:57
So I’ll give you a really cool one. In fact, this was one that we worked out with The client just about a month ago, it was at the end of the previous calendar year in December. So what we did was she has most and this is not uncommon. So here’s here’s a pretty common scenario. A lot of people, you know, we haven’t talked about the difference between traditional and Roth, I’m going to assume that people know the difference. If not, we can talk about that and meet the Masters so that people really understand the benefits of the wrong off or Roth based account. But what happens with most people is most people have their money in a traditional or tax deferred account because they’ve been around longer. And so we have one client, Shana. And what happened was Shana was she was going to buy a property from a turnkey investor. So she was going to put about $40,000 down and finance the rest. The interesting thing about it is is that most of our money is in a tax deferred account. And so we sat down and I kind of went through the math with her and I showed her and I said, you know, here’s a pretty interesting thing I said, You’ve got this in a traditional right now. I said if you’re going to buy a turnkey property, and she hadn’t identified the property yet, but let’s just say that the property was going to be worth $80,000. That was a price who’s paying so 40,000 down financing for I said, you’re going to double your account value, like literally in one month, and you’re going to generate income off that for 20 to 30 years in retirement. So I said, that’s a big bill, right? When you think about distributing that from your tax deferred account, but I said, if we convert, then you convert, all you need to do is convert 40,000, you don’t have to convert your entire account. So let’s convert 40,000 to a Roth. And now finance and buy that property, the Roth, so you just doubled your account value, right funneling from 40 to 80,000. So effectively, you have a $40,000 gain, which you’ll never ever, ever pay taxes on. And that assumes no appreciation of the property at all. And every dime of income that you generate, you know, over 2032 year period in retirement, you’ll get to spend 100%, tax free and so we you know, we did the math, and we looked at the breakeven and the breakeven in terms of the conversion just on 40,000 was was a very, very short time frame i think is about three years if I remember correctly. So there’s all kinds of little cool things that we can do to really help somebody maximize income, minimize their taxes and make the right choices in terms of really dialing and stuff in.
Jason Hartman 20:04
Yeah, good stuff. So allude to a couple other strategies here if you would,
Edwin Kelly 20:09
so that you know that one is a is a conversion strategy. You know, one of the accounts that we use more and more with clients when they qualify is the Roth solo 401k. And you’ll hear it called different things individual solo, okay, I have one. So a solo k. a solo 401k. Yeah, bunch of names. Yeah, yeah, it goes by a lot of names. But that’s one of the more popular accounts we have right now. Because there’s so many cool benefits with with these accounts and things that you can do. But as an example, we set up an account a 401k, for a client, and his name is Rick, and he’s out of the New England states. Now, the interesting thing is, is that Rick is just getting into real estate investing. So he’s kind of new to it. But one of the challenges he had and what a lot of people don’t realize is that you can reap a lot of benefits from the retirement account today. And so one of the things that Rick had a challenge with which some people run into is He had run into a cash flow problem, he got into a situation where he racked up some debt. And between the credit cards and a car payment, you know, he was spending more than he was bringing in every month. It hurt his credit scores when he’s going out and trying to buy real estate right, the bank’s recording them higher interest rates are you know, that that kind of thing. And so, one of the things that we did with Rick, which is pretty cool, is that we structured a 401k loan. So one of the advantages of the 401k is, right, you can’t borrow from your own IRA, but you can’t borrow from a 401k, which is one reason why we’ll use those accounts. So here’s the really cool thing about it is that we borrowed money from the it was a little over $20,000, we borrow money from the 401k to pay off the car and pay off the credit cards. Now, the first thing that happened was that we saved him about $6,000 in taxes and $2,000 in penalties because the only other way you could have paid off that debt was to take a distribution from a retirement account. And because he’s not 59 and a half, he would pay taxes a penalty. So that was the first one is that we avoided giving $9,000 to the IRS who quite frankly does not need our money. Right. And so that was the first one. The second one is that he completely restructured the debt, eliminated the credit cards and eliminated the car payment. He increased his cash flow by $543 a month because the payment on the 401k loan was $543, less than he was paying on the credit cards and the car. So he freed up $543 in cash flow positive a month. The other thing that happened is that he went back into savings mode because there’s an interest rate attached to that loan, but he’s paying it back to his own account because you borrow from yourself, right if you’re borrowing from your account, so you pay the interest back to yourself. So now he he’s actually going to save an additional 30 $800 over the course of that that five year loan versus saying paying $9,000 in taxes in the distribution. Right. So so he comes out way ahead
Jason Hartman 22:52
your own bank, right. That’s basically what you’re doing here.
Edwin Kelly 22:56
Yeah, but you know what, one last benefit to that little strategy that we did for him. was the fact that his credit score bounced up about 100 points. And one of the reasons why that is is because the the credit utilization, right came back in down, right? Yeah, it came back in sync. And the thing is, is that with the 401k loan, nobody knows you have it right. It’s not reported.
Jason Hartman 23:17
Right. Right. Okay, so just to back up a little bit for some of the listeners. So part of your FICO scoring your credit score, which I’ve talked about on other episodes, is your credit utilization. So in other words, if you have one credit card with a $5,000 limit, another one with a $10,000 limit, you start to use more and more of that credit or if you’ve got you know more and more borrowing from a home equity line or whatever whatever lines of credit you have available. Creditors you know, that might lend to you. They want to see you using a fairly small amount of that credit because of course that’s lower risk. You know, you’re not gonna skip town or file BK when they’ve got a bunch of money lent out to you They see that utilization high. In other words, you’ve got a couple of cards with, say, 25 grand total, and you’ve borrowed 22 against them or spent 22,000 against them. You’ve only got 3000 left between your credit limit and the amount you’ve effectively borrowed, then your utilization is high, and the credit scoring doesn’t like that. So when you borrow from your own soul, okay, that’s not reported to a credit bureau. You’re borrowing from yourself, basically.
Edwin Kelly 24:31
Exactly. Yeah. I mean, so it’s a beautiful thing. So So for people who are looking to restructure, you know, impact the credit again, 401k is a way that you can use that today, right to get benefits today. It’s not just about retirement. Okay, good.
Jason Hartman 24:44
There’s some really good creative strategies you can use. What are some of the sort of the FAQs that a lot of people approach you with Edwin and you know, some of the answers to those I know you’ll elaborate on these when you’re speaking at meet the Masters coming up, but just go over any knows that you
Edwin Kelly 25:01
will obviously allow plenty of time for q&a, because usually when we get up and talk about this, so there’s a lot of questions that come up. So we’ll be at the event, obviously, the whole time and looking forward to meeting everybody. answer all the questions that come up. One of the questions that always comes up and it’s interesting is that people think that that self directing and if you’re new to self directed, like, you may be aware that it exists, but you may not have done it yet. You know, people often ask, you know, I’ve heard that it’s complicated. I’ve been told by my financial advisor, I shouldn’t do it, because it’s complicated, and I could make a mistake. You know, the reality is, of course, your financial advisors, they
Jason Hartman 25:33
tell you that because they want you to keep your money in those crappy Wall Street investments, they sell
Edwin Kelly 25:38
it as far as I know, that’s the only real segment I’ve ever heard that from, you know, how coincidental. Yeah. So, here’s the fact that people, you know, they say, hey, this, you know, I’ve been told is complicated. The reality is, it’s very, very simple. And, in fact, it’s three steps. And so you know, the one way that I explain the self directed processes Jason, I call it my triple D process, and so The first step is decide that you want to take control of your retirement account and self direct. And once you decide that, you establish an account, which takes all of 15 minutes, the second step in this process, the second D is deposit, you deposit money in the account. And so the reality is, you know, there’s a few different ways you can deposit money, you can contribute money, right from your earned income, you can transfer money from another IRA, you can roll over money from that’s the term that’s typically used rollover from a previous company sponsored plan, like a tsp or a 401k, or a 403 V, and you have money in the account. And then the third, third and final step is to direct that into an investment that you choose. And the reality is, is that a lot of people get concerned about rules and regs. But I’ll be honest with you, you know, most of the clients that we see putting together transactions really have virtually no concern and one of the reasons why is that they’re working with other professionals, which is a great way to invest your self directed account to get those investments done. So as an example if someone is investing in a turnkey property, it’s virtually impossible to trigger any kind of problem in the retirement account, because you have a professional investor acquiring the property, rehabbing the property, finding the tenant managing it through the entire process. So the self directed investor reaps all the benefits of self directing and buying real assets like real estate, and yet they don’t have any of the work or the time involved. Or you know, any of the potential risks in terms of rules and regs because they’re not actively involved in in the rehab or the management of the property. So it’s really not complicated at all. And it’s very easy to get into and start having a lot of success with
Jason Hartman 27:37
Yeah, make sense. Okay, good. What is the cost to do this? You know, I found this to be pretty different. It seems to vary a lot at one.
Edwin Kelly 27:46
Yeah, there’s various options. If you look at what Wall Street firms charge it, they typically charge about one and a half percent on average on assets, right. So on $100,000 account, just to give a perspective, somebody might be paying about 1500 dollars a year right? Now they could be paying more, they could be paying a little less, but the 1500, or one and a half percent is about the average. So, you know, what would it cost to have a self directed IRA if you had $100,000 in your account? Well, again, depending upon some of the options that the client elects and what they do, probably an average range would be about $600 a year.
Jason Hartman 28:23
So one of the one of the other benefits to self directing is that clients instantly save money on fees, when they self direct versus, you know, with a typical financial institution. What are you saying that might compare to maybe one and a half percent where they’re spending 1500 dollars a year and that’s right.
Edwin Kelly 28:41
Yeah, exactly. So people typically save at least half typically at least half on fees versus staying on Wall Street.
Jason Hartman 28:48
But what if they have that money in a in LLC that they set up within their IRA, this is kind of a discussion about what they call checkbook
Edwin Kelly 28:57
control where you can really We, you know, run the LLC and sign up for your your IRA. There’s many custodians out there that don’t like that we were talking about this off the air too, right. Many custodians don’t like LLC inside of retirement accounts. So they don’t like that that term, you know, Ira checkbook or checkbook control. Our philosophy is specialized my philosophy has always been one of the big benefits of self directing is that you the client get to choose what’s best for you. So as long as it’s not prohibited, right in the rulebook, we basically allow a client to do it. And so if you want to set up an LLC and hold assets and an LLC, or any other type of legal entity that’s not prohibited and the retirement count, we allow those arrangements. Again, I think that’s something that clients should be free to use. And there’s times where it’s very appropriate to use an entity inside of a retirement account.
Jason Hartman 29:48
Does that save them on fees, though? Do they have to pay the fee on everything within the LLC? Or is that sort of considered like a flat fee for that entity?
Edwin Kelly 29:57
Again, it kind of depends on the options that That the client chooses, in some cases, it can save a little bit on fees. It doesn’t necessarily save a ton on fees, but it can save some. And that’s also a relative thing. And here’s what I mean by that, is that if you have an LLC in California, right, well, gee whiz, I mean, what does California charge are
Jason Hartman 30:17
going to charge $800 a year just for the privilege of being in the Socialist Republic, you don’t want to set it up in California, exact business friendly state in the country. But say you have an LLC in a more desirable state. You know, we’re not worried about the state fees. I’m just talking about the fees on on your end,
Edwin Kelly 30:34
right. And that’s why I say I mean, you know, somebody might say 50 or 100 bucks a year, if they had an LLC, but that’s why I say it’s usually not substantial savings. That’s why I was just saying the thing about the state fee, because like, depending upon you know, what the state fee is, you may or may not, here’s the thing, I tell people, there’s reasons to have an LLC, if you’re worried about fees, you’re probably not going to save that much money having an LLC so really the considerations would be the type of transition Actions you’re doing. Are you concerned about asset protection? Here’s a great example. I have clients. In fact, it’s very common because we teach this will speak more about this at the meet the masters. But you know, there’s there’s several deal structures that people are not aware of, but one of them is partnering. That’s pretty common, particularly between spouses or among family members. So let’s just say, you know, you have two family members, they want to buy a turnkey property, but they don’t have all the money to buy it in one account. Well, they can actually partner those two accounts. The challenges is that when you partner those two accounts, right, they have to split the income, they have to split the expenses between the two accounts. So that can be a little bit cumbersome if you’re talking about issuing two checks or receiving two checks right from the property manager. So the way to clean that up is to set up an entity and have each account be a member of that entity, and then the money goes into that entities bank account. And now you’re back to one name on title which will be the LLC, right, and all the expenses and income are received again by one entity. And then at the point that you know, the client wants to distribute money to themselves, they never spent it from the LLC. They distributed back to the retirement accounts and then requested distribution from the retirement account. Like I said, there’s there’s places where LLC is make a lot of sense, particularly transactions like that.
Jason Hartman 32:12
Yeah, very interesting. And you got to be careful because you can run afoul of this. And you don’t want to do that. And hey, and create a taxable event for yourself, of course, right.
Edwin Kelly 32:22
Yeah, exactly. Good stuff.
Jason Hartman 32:24
All right, and we’ll look forward to seeing you at our upcoming meet the Masters event. Thanks for joining us today. give out your website.
Edwin Kelly 32:31
So the website is www dot specialized. Ira services.com. Edwin, thanks for joining us, Jason. Thanks so much, man. I appreciate it.
Jason Hartman 32:43
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