Episode – 18

Self Directed IRA’s and Using Them To Raise Business Capital

Description

Ryan Fischer is a graduate of Villanova University and a self-directed IRA expert with Camaplan. Ryan joined Camaplan in 2011 where he is responsible for new accounts, transfers, inside sales and marketing, and customer service. He is a national online educator on self-directed retirement plans. He has taught about using Self Directed IRA’s to invest in real estate, private lending and many other alternative investments.


In this interview, Ryan does a deep dive into the self directed IRA (SDIRA). He talks about how to set up a SDIRA and the difference between a rollover and a transfer. He explains which investments are prohibited by the IRS. He talks about the misconceptions that people have about SDIRA’s and the benefits. He explains the difference between tax deferred and tax free. He discusses the benefits of a Roth IRA and why you should have one. He explains why Retirement funds are a great source of investment capital.


What You Will Learn
- Self directed IRA vs. Regular IRA
- Difference between Tax-Deferred and Tax-Free
- Which Investments are prohibited by the IRS?
- Myths and Misconceptions about Self Directed IRA’s
- How to Raise Capital using Retirement Account Funds
- Rollover vs Transfer- and much more


Connect with Ryan:
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Full Transcript

JP Maroney:

Well, hello there. Welcome everyone to the deal flow show. I'm JP Maroney, your host. This is my cohost Paul Nicoline. I'm the CEO and founder of Harbor city capital. Paul is our regional director who works with our investment professionals. That's our IAS broker dealers, advisor community. And, uh, we have a really special guest for you today on the deal flow show. It's someone that you have a background, his father, you said you played basketball. I did, as I go. So we have a great guest on the show today. He, his name is Ryan Fisher. He's with a company named Kayla plan. And you'd first heard about a plan from one of our strategic partners, right? That's correct. Yes. Yes. I know. Ironically, I ended up knowing who Ryan wasn't his dad, which was really cool. Yeah. Very cool. So, Ryan, it's good to have you here on the show and he's joining us. Where are you? You're in? Is it Philadelphia?

Ryan Fischer:

Ah, yes, we're just, uh, outside of Philadelphia in Ambler, Pennsylvania, but I'm happy to be here and I appreciate the invite to the deal flow.

JP Maroney:

All right. Going back a little bit. And I think I talked to you about this the other day. I did not know what a self directed IRA was until about 2015 and I was working with a client. This is just like a little personal story. I was working with a client who wanted to become an investor with Harbor city. I had known this guy for quite a long time. He had been a client of mine, bought all of my information and training products that I'd put out over the years. We've gotten to know each other and he was going to invest in Harbor city. And because the rate of return was so good, he was going to take money out of an old 401k and an old IRA and take the tax and penalty hit on rolling that or taking that money out, just withdrawing it.

And instead of doing that, I was having a conversation with a guy that I know who I found out, did self directed IRAs. And as I was talking to him, I said, what do you do? And he's telling me about them and how you can roll money out and do these things and how beneficial it is. And I said, wait a minute. So my client could, and I laid out the plan. He said, absolutely. And the guy ended up saving like $43,000 in taxes and penalties as a result of doing your best friend and became my best, my new best friend. So, um, that was a really delightful introduction to, but I also find that a lot of people have a lot of myths and misunderstandings about self directed IRAs. So as we back up just a little bit, I want you to tell us a little bit about kamma plan, the history of the company, and then let's dive into a little bit of what you guys do and how you do it.

Ryan Fischer:

So the history, uh, I grew up in Florida, uh, Paul's obviously aware of that. That's where I first met Paul, but my dad was a rocket scientist at the space center. So he was launching rockets and for most of his career, and then he decided to get out of that. And he went into business where there's sister Maggie, Maggie, Paula Sano. And that's how they, they started camel plan. They're there they're partners in that and still are. So that's kind of where they, they kind of teamed up and said, Hey, do we want to do this and start a business? And they kind of put those pieces together. My dad had been using self directed IRAs and was telling his family and stuff about them and friends when he was retired, because people had access to those funds now. And he didn't think there was anything, you know, better than it. Uh, he said, I mean, I can go from forever tax to never tax paid. It, he, you know, so it kinda, it kinda, it kinda grew on him and he was telling them when people kind of said, you know, well, why don't you just start a business doing this? And so then he kind of thought that out and he talked to his sister, Maggie and they've, uh, taken it to the next level now. And here we are today, you know, over 17 years later, um, with a plan

JP Maroney:

For the, yeah, for the average person that doesn't know what y'all do. Can you walk us through the model, the business model, the product it's per se, um, or service and how it works.

Ryan Fischer:

Yeah. So back up a little bit and make it pretty, pretty simple here. Um, self-directed is just an adjective in front of an IRA. The brokerage houses will tell you that you have a self directed IRA, but what they mean by that is, Hey, can, here's a list of stocks, bonds, mutual funds, et cetera. You can direct it into anything that you want that's on that list. So for example, someone says, Hey, JP, I'd like to invest into Harbor city, well, Harbor city isn't on their platform. So they're going to say, well, you can't invest in that. Or I want to lend John DOE money. Okay, well, you can't do that because John, Doe's not on their list. Or I want to buy one, two, three ocean, well, one, two, three ocean app isn't on their list. So all the rules are exactly the same.

An IRA is an IRA. They don't, um, all distributions contributions are the same. The only thing that's changing is the investment. So instead of buying, you know, a stock or a mutual fund or whatnot, you're buying into a private fund, for example, or you're buying a piece of piece of real estate. Um, there are rules that go along with that. Uh, the IRS never tells you what you can invest in only what you cannot invest in. And that's a pretty simple list, collectibles and life insurance, which includes booze and piece works of art antiques, that kind of stuff. Um, so as long as it doesn't classify as that, then most likely you're able to use your IRA to invest in it. The reason a lot of people don't know about this is because the brokerage houses, aren't going to tell you this, the really wealthy people, um, have been doing this since the beginning, right? I mean, this is nothing new. Uh, you've been able to do this since the seventies when IRAs were created, but not everybody had a big legal team or accounting team to tell them to do it. And for the average person, they're not going to do it when you have a billion dollars, they usually don't tell you no. Um, so the really wealthy have always been, um, able to do this and, or camel plan has done is help open that up to anybody else out there that, you know, wants to get into the alternative space.

Paul Nicolini:

My experience as a retail broker was, was people that were pre retired and retiring. So, so my experience with self directed IRAs was that for the first time in a lot of people's lives, they understood that, okay, I'm not with the company anymore. And I have this 401k, what do I do with it? How do I do something with it? Because you can, you know, all the cumbersome ways of a 401k, especially in a large company. And so could you just tell us a little bit about that? Transferring, opening up a self directed IRA, maybe retiring and moving your funds out of a 401k into your own self direct

Ryan Fischer:

Denier. It's quite simple. Um, you would just open up an IRA with us, like you would at any brokerage house, you can do it online from our website and about 15 minutes. Um, so there's two way, well, there's three ways to bring money over, right? Um, a transfer. So it's already in an IRA. You would just transfer it over, no taxes or penalties. Uh, if it's in a 401k or three, B or other qualified plans, it would be a roll over into the IRA. And then obviously you can make a contribution like you can anywhere else, but it's a very simple process. You'll fill out a transfer form or, um, a rollover form. There's, there's no taxes or penalties for either. Um, the transfers or non recordable events. Rollovers are reportable Ben, but no big deal, basically tax wise. That means whoever you roll it over from is going to give you a 10 99, we're going to file a 54 98 so they can see everything out. And, um, it's no big deal for people and it can be done within about a week or two time. Uh, they can have their truly self directed IRA up and running.

Paul Nicolini:

And I always remember that the checks that people got, they directly to the cleaner way to do it would be to have the 401k, send it directly to their new, newly established self directed IRA. Correct.

Ryan Fischer:

Right. Um, indirect rollovers, you're only allowed. So if you make it out to yourself, you can only do that once per 12 months then allow you to do more than once. But, um, yeah. It's so what you would want to do typically is just a direct rollover. So for example, you would make the check payable to cam a plan FBO that's for benefit of so camel plan, FBO Paul's IRA issued, the check would be made payable to sometimes they send it to the address on file, which is fine, which is your address. When you get it, send it to us. If they'll send it directly to us, have them do that. I will save you a few days.

JP Maroney:

Yeah. As you were talking, you were talking about your background as a broker. So the deal flow show is primarily targeted as an audience toward professionals, as opposed to the end retail user. You and I talked a bit, a little bit about that. So we have everything from a accounting, legal professionals, uh, people in with platforms, fundraising platforms, sponsors, um, issuers, you know, VCs, private equity, people watching this show. So here's my question. Do you find that even though we're all in some aspect of the industry considered a, an expert or a professional, do you find that maybe there are some myths are misunderstanding about how self-directed work from the professional side? Like if someone's bringing you a potential client to do a rollover, or maybe if they open their eyes and understood it better, it would allow them to bring in more assets for whatever their project is, et cetera. But do you find that there are some myths and misunderstandings within the professional industry?

Ryan Fischer:

Um, I do, uh, I kind of related back to something as simple as you know, when you're a, and you're trying to learn multiplication, it's tough, but once you understand it, it becomes really easy because most of the objections I see out there are it's complicated. It's difficult to do. It's risky. And a lot of people say that on risk. And it's like, well, I mean, is the stock market risky? What's, what's more risky, some tangible asset that I can look at and know that I can collect rental income on. Right? I mean, I at least have a margin of what it's going to be worth. I mean, you know, wall street, you can wake up and it can be worth 3 cents on Monday morning when it was at $33 on Friday, right. We have no control over what happens with these companies, what happens overseas.

So I think the goal is to mitigate the risk. And it's not complicated. It's as easy as opening a bank account. Right. You know, you go anywhere else and you open the account. Like I said, all the rules are the same. You're just changing the investment. Now we don't give any tax or legal advice. We don't tell the clients, you know, this is a good investment, or this is a bad investment that's that is up to them. But most of the people in this space understand, uh, what they're getting into and they can look at those details. They can talk to someone like yourself. They can talk to the other people in the network. They can talk to their attorneys and accountants and other professionals and analyze what they're doing. I mean, there's risk in everything that we do, but the goal is to take some of that out.

Like I know if I buy a property for X dollars, well, I'm only buying that property for X dollars based on the rent. Cause people will ask all the time. Well, how'd you guys do, you know, in Oh eight and Oh nine when real estate crash fine. I would say 99%. I mean, unless you were caught up in some big deal that went South, that I didn't even see that happen with our clients, but I don't want to say a hundred percent because nothing's a hundred percent, but our clients did fine because when you buy it with an IRA, it's an investment. You're not living in it from what I've seen in my experience and my family and friends and people, what are we overpay for? We overpaid for ourselves. We overpaid for, you know, the ocean view, the mountain view, our kids' school districts.

Uh, and we're willing to overpay for ourselves, but you and I both know if you buy a property, we don't care that it's not in a noisy road. Well, and we're only gonna pay what it's going to rent for. Economy does a little better. Okay? Maybe you raise the rent, does a little bit worse. Maybe you have to go down, but you have a range. You know, it's, you know, it's not going to zero. People need a roof over their head. And even in that time, actually our clients did, some of them did a lot better because people ended up upside down in their mortgages and they let their house go and now they needed something to rent. So it really depends, you know, on the, on the environment. And you know what a investment you're, you're comfortable with, obviously everybody is uncomfortable, uh, with certain things. So, but at least you get the chance to analyze that,

Paul Nicolini:

You know, to that point too, about the myths. I remember in my experience, people that didn't know what a self directed IRA was. One of the biggest things was, Oh my God, don't do it because the IRS is going to come after me. Right. How many times have you heard that? They felt like they put a target on their back. Exactly. Exactly. How, how, how true is that?

Ryan Fischer:

Um, well, generally speaking and I don't want to speak for the IRS, but really,

Paul Nicolini:

Really you don't want to, you don't want to speak for it. Come on there. You don't want to, I'm sorry. Go ahead.

Ryan Fischer:

IRAs are not audited. Very often. They have been audited. I I've been doing this for about 10 years now. I've only known one of our clients. That doesn't mean that there wasn't more, but I've only known one and he's a high net worth individual. And he gets audited pretty much every few years. Anyway. So there's, this was in one of them, everything came out clean, but the con to that also is, there's not a lot of precedent. So when somebody says, you know, Hey, can I do this? Well, I told you, the IRS said what you can't do. So maybe, you know, but go look at it because you know, like I said, we don't give them that advice. Everyone's able to look at the publications that the IRS puts out. We have them on our website as well. So it's not, it's not complicated. Anybody. You know, I can get them over that in two or three minutes and show them publications. You know, that the IRS says, Hey, here you go. And they define the republication five 90 and they define things, you know, in the word property, but they never tell you what you can invest in. You know, again, all we, what you can. So sure.

JP Maroney:

I want to talk a little bit about the mechanics of doing an investment in just a moment. But before I do, if you're watching this or listening to this, I'm JP Maroney with Paul Nicolini, this is the deal deal flow show. And if you're not subscribed currently to the deal flow show, you can go to the deal flow show.com. All right. So let's continue when someone wants to make an investment, because you said it's really just a different name on the investment. When someone wants to make an investment inside of a, I'm going to say a conventional self directed IRA. Cause we're going to talk about another layer of this in a moment, but in a conventional self directed IRA that you all put together for someone when they're ready to make an investment, what is the process look like?

Ryan Fischer:

Um, the prospect is basically very simply accounts open. The FA the funds are there to do the deal. Basically all we need is the investment paperwork. Obviously, if you're closing on real estate, it would be the real estate paperwork you're investing in, you know, a private placement. And you'll give us, you know, the subscription agreement, uh, in the IRA's name, camel plan, FBO Paul's IRA, right? And you're going to give us a form that we call our asset purchase directive, which instructs us to, you know, make that investment into the paperwork. Very simple. It's just like any other deal that you do. You're just doing it in the IRA's name. And yet the IRA is treated as its own entity. It's not you, it's going to get its own tax ID number by the way, because obviously if you were making money on your social security number, you'd be paying taxes. So it's just treated like a separate entity. Just like if you went and made an investment out of an LLC or the LLC made it well in this case, the IRA makes it

JP Maroney:

From that point of view of tax. I know you said this, I'm going to say this will probably in fact, Daniel want to put a disclaimer at the beginning of every show, since we're dealing with financial things, but we're not here offering any sort of legal accounting or investment advice. This is purely educational purposes and anything that said here, you should vet pasture or legal or a financial advisor. So my question is though, how is a self directed tax? You mentioned your father saying I can pay, what was it? How did you say it?

Ryan Fischer:

Forever taxed and never taxed. Okay.

JP Maroney:

And go from the forever tax to the never tax. I like that. That's it. That's a new headline for us that we need to put out there. We'll have to quote your fonts, but talk about how they're handled, how it's treated for taxes.

Ryan Fischer:

Absolutely. So the tax treatment is the same with us as is anywhere else, but there's, there's two sides to it. And then, and I know this, I might be getting ahead of you here, but you have tax deferred accounts, such as a traditional IRA, SEP simple, et cetera. And then you have, um, tax free accounts, Ross, HSA, you know, educational savings accounts, et cetera. Um, I'm a big fan. My dad's also a big fan of the Roth IRA. Um, so it really, and I kinda describe it as do you want to pay on the seeds or the crop? You're going to make the money in either account exactly the same. You won't pay any taxes, but you're going to get tax deferred money. And I'll just use the traditional IRA for example. Now, so let's say you take $50,000 in your traditional IRA and you turn it into $2 million.

Well, now let's say you're 75 years old and you want to take the money out. I'm just going to just say, take the whole $2 million out, for example. Well, now you owe taxes on $2 million at whatever rate it is when you're 75, right? If it stayed the same as it does today, you lose, you lose 40% of that. Right now, let's say back in 2020, you took that $50,000 and you converted it to your Roth. Now you do pay the taxes on that $50,000 today. Well, not today when you do your taxes, but for 2020, you'll pay the taxes on the 50,000. But now that 50,000 is worth 2 million, right? You actually take $2 million out and you put it in your pocket. You paid back in 2020 on your 50,000. Now you don't have to ever pay again. That's why I'm saying forever taxed and never taxed. I mean, I think it's one of the greatest tools out there for wealth building. I'm not saying that the traditional IRA is bad because you're saving all that. You're not paying any taxes, so you have more money to keep making money, but you'll, you'll pay at the end. That's why I describe it as, you know, pay on the seeds or the crop there.

Paul Nicolini:

Ryan, do you pay it up front if you open up a Roth or is there a time that you can pay, you know, pay the taxes over time? Or is it a one lump sum or, or is it a couple years you get to pay that tax? Um, no.

Ryan Fischer:

So, uh, conversions are done in a calendar year, so anytime, I mean, you don't have to convert it all at once. Um, and I'll give you a quick example when I'm second, but January 1st to December 31st, whatever you convert in that time period, whether it's, you know, every few months or one lump sum, you know, Yolo in April 15th of that following year. Right. But I have seen other people and it doesn't have to be half and half. I'm just going to give you an example here. I have seen people when the timing worked out for them and they had an investment, right. They'll go and they'll say, okay, well, all right, I'm going to convert half of my account here in December. And then come the first week of January, they converted now. They just, now they just split. Yeah. They lessened that they lessened

JP Maroney:

The liability over, over a two year period. Yeah.

Ryan Fischer:

Right. Gotcha. Um, so people should look at that, you know, especially if they have losses or they made less income, uh, there's other, people's say either, you know, accountants or professionals, you know, well, how much can I convert before I go into the next tax bracket, for example. Right. So they can, you can slowly start getting that money over. I mean, I've also seen people, you know, um, about a year ago I had a doctor come in with close to 2 million. Um, but he knew what his return was and what he was investing in. And he's like, I'm not going to pay on all that later, but not everybody's in a position to convert, you know, a million bucks and pay have the money and he's sitting in their pocket. He was in that position and he didn't want to pay, you know, later on because he knows what his return's going to be on, the stuff that he was doing. And, um, you know, so

JP Maroney:

Very good. So let's talk a little bit about professionals. Again, this is the deal flow show after all. And we're constantly talking about in the deal flow process, where does your business set, where, you know, whether you're an attorney or in your case, self directed IRAs. So if I'm a dealmaker, I'm somewhere in the capital stack of raising money, facilitating capital, raising IPO, whatever, wherever they're at in that whole process of raising funds, how does the professional or the issuer or the money raiser, how do they look at this as sort of a tool in their tool belt?

Ryan Fischer:

Well, I think it was one of the greatest tools. And from my experience with Anne, I'll just stick with someone raising money, for example, uh, from what I've seen, um, professionally, someone who hasn't raised money using self directed IRAs, it's, you know, a gift from God because what, when we go back and we look at it usually more than 50%, you know, 60, 70% of the money that they raise, once they start doing it ends up coming from IRAs one, they raise it a lot more quickly, and this is just a general statistic, but they say people have seven times more money in their retirement accounts and they do. And discretionary funds, uh, obviously that's not for everybody, but generally speaking. So when someone says, Oh, well, you know, JP, I only have $50,000. I can lend you. And then you say, well, what about your IRA or 401k?

They say, well, I have a half a million dollars in there. Sure. I'll give you 250 out of that. It makes, or they might do both. I've seen plenty of people do it personally. And, and people use their, their, their IRA. And that also helps when people have, um, minimums as well. Okay. Well, you have a hundred thousand dollar minimum. I don't have a hundred, but I do have the a hundred thousand in my IRA. So now you didn't just lose an investor because you gave him another option and most people don't know what I tell. And I'm saying this for your audience. I tell people to get that right there in their paperwork. So when somebody says, okay, well, how do I invest? Well, right in your subscription agreement, it says, okay, you're investing personally, you're investing, you know, through your LLC, you're investing, you're in, you're investing through retirement account.

And then they say, Whoa, wait a minute. I, I can do this. I can take my brokerage account and take it out of stocks and mutual funds and put it into this deal. It just puts it right there in front of them and makes them aware of it, because then they're gonna ask questions and they can look it up, you know, and they can talk to me and I can help them and answer any of the questions that they have, but it puts it right there. I mean, if you talk to anybody that hasn't raised, money was self directed IRAs, and then does they raise more money and they raise more money quickly.

JP Maroney:

That's a good point, really is such more than putting it on a form, putting it on the form and knowing, telling the client investor it's available under qualified funds. Not only that you need to share back with the team and the sales team and Betsy and everyone else to make that part of a scripting say, so how are you intending to invest where you're going to invest with cashflow and Anne, were you intending to use your investment account to invest? That could be a great part of that script question. I'm going to give you a free copywriting headline of Ryan, no charge, no extra charge for this. All right. This is a JP Maroney special. So this is for issuers and sponsors out there that are raising capital. Here's the headline, a little known source of new capital for your business or project that seven times larger than the average discretionary fund. There you go. Great.

Ryan Fischer:

Well, I will also add this to it. I'm assuming you're probably aware of it, but there's trillions, not billions, trillions of dollars in retirement.

JP Maroney:

I want you to, I want you to, okay. I don't want you to just throw that because I was going to ask you that number, if you had some sense, because you're in the industry, is there a quantifiable or is it just a thrown about number? Is there something that's quantified that we can, uh, can know

Ryan Fischer:

There is, I don't know the exact number off the top of my head, but it's in, it's in the trillions of dollars.

JP Maroney:

All right. If we, if you can find this statistic, get it to us and we'll have Jesse put it up on the screen right here at this point. So guys y'all look right here. Maybe there'll be a number here, but I'm very curious about that because I hadn't heard that I had heard the T word as well, that there were trillions of dollars log and I consider it locked up because you're, as most people do. Yeah, really you're at, you're literally at the mercy of whoever's pushing the buttons on the other side, and this doesn't happen everywhere, of course, but you're at mercy of potentially someone who's going to churn your money, right. For commissions. That's how they make their money by making investments. So if you've got a pile of cash sitting there potentially you're, you can be a victim to that. And in many cases, fees, um, there, do you have a rundown because we wanted to talk about that. In fact, Jesse has started a storyboarding, a documentary about self directed IRAs. And one of the things we were talking about was the menu of fees, both obvious and listed as well as sort of hidden drag on the performance of a traditional retirement account. Can you speak to that at all?

Ryan Fischer:

Yeah. I'll give you our fees basically, but one of 'em, you know, you've probably known, um, mr. Bogle was started Vanguard. Um, he did a great documentary year, years ago on how the brokerage houses make money and how it depletes money out of what you're getting with the fees and everything. Um, it's, it's actually pretty creative. It was, it was a, it was a great, um, it was, it was a great documentary that he did. Uh, most people don't know how they're getting fees and what they're, you know, the brokerage houses are getting kickbacks and stuff on. I don't want to quote anything, but, um, it's, uh, it's kind of crazy how much money the average person loses. Cause he did a little graph with, if they didn't take it out, how much more, um, you would have. And it was, and it was really crazy amount that they did there when Carl and Maggie started the company, they are investors and they wanted it to work for investors as well.

They use these accounts themselves. Our fees are all transparent. There's nothing hidden. There's nothing tricky about it. I mean, it's unfair, you know, when the brokerage houses will say, okay, well you lost 10% this month, but then next month they say you made 15%. Well, you made a 15% on 10% of your losses. So you lost that money. So what, what did you really make? Um, so they, so they make it a little bit con confusing. Our fees are transparent and they can also be paid cam a plan fees can be paid outside of the IRA, or you can take them out of the IRA, but they're straightforward. It's all on one page, there is no hidden fees. You know, we have two ways of doing it asset-based which is $275 per asset. It doesn't matter whether you buy a $50,000 investment or $50 million investment. It's $275. We don't do any more work to push that paper through whether it's 50 or 50 million. Um, so Carl Maggie didn't believe in charging summary more. Um, a lot of our competitors will charge you more based on that, but we do also have a value based method and you can always switch between those. And that's based on the value of the account times a multiplier, depending on how much is in there and whatever whatever's best for you. We want people to have options and we wanted it to work for people. That's right.

Paul Nicolini:

Great. That's great. Ryan, can you tell us about borrowing against your account? Alright,

Ryan Fischer:

So you're not BARR, you're not borrowing against your account. Um, there is no self-dealing and I encourage everybody, um, or other sponsors or money raisers to, uh, familiarize themselves on our website under, um, resource centers, prohibited transactions. Uh, you should read through that. Uh, it only take you a few minutes, but your IRA can get alone. It can get a non what they call a nonrecourse loan. A lot of people want to say, can I buy a property and get a mortgage? You know, mortgages the wrong term. Your IRA can get a nonrecourse loan. Um, it can get it from institutions. I can give people those. If they ask me or email me, uh, cause most likely, I mean, I don't want to speak for the banks, but most likely the big banks aren't going to entertain that idea. Uh, should I just quickly kind of define nonrecourse loan?

Paul Nicolini:

Sure. Yeah, because I was going to ask you to explain it.

Ryan Fischer:

Okay. Um, well it's pretty straightforward. It's used in real estate all the time. Uh, so I'm going to back up a little bit, like I was telling you before the IRA is its own entity. You can't personally guarantee anything for it. You can't give a benefit for it. They're not running your credit for it. The is the IRA, right? It's its own entity. Basically the nonrecourse loan basically States they, if your IRA fails to pay the lender back, the lender is going to take the property, which happens anyway with mortgages and stuff too. But there is no personal guarantee. They can't come after you or your house or your car or your boat. They can only come after the asset, that's in the IRA. Um, and most people understand that, uh, your IRA does not have to get it from an institution. So I'll give you a quick example, say JP, you were buying a house for half a million dollars and you said, Hey, Ryan, I'm going to put, um, $250,000 in from my IRA.

Would you lend my IRA, the other $250,000 to purchase this property? Let's say the numbers and everything made sense. Okay, great. Pay me 10% or whatever. Right. Whatever we, we, we agree on. I would feel pretty comfortable with that. I can lend that out of my pocket, right. Or I can lend that out of my IRA to your IRA as well, but I'm pretty sure that you're going to do, I mean see that, that I don't find as a risky situation to me. Um, you put 50% in, I mean, me, I grew up in real estate. My dad was in real estate stills in real estate. His parents were in it. So I'm really comfortable with real estate. I would really be sitting there saying, I hope JP doesn't pay me back because I'm going to get, I'm going to get the property for, you know, 250,000 and is worth half a million.

I'll take that all. I'll take that all day long. So I'm pretty sure that JP will do whatever it takes to make sure that I get paid. So people just have to kind of understand it. We won't go into too much detail on this, but I do want to mention it. Um, you may have heard before of UBIT and UDFI UBIT is unrelated business income tax. If you're running a business out of your IRA, you would, even though it's an IRA, you'd pay some taxes. And then again with UDFI unrelated debt financing income, for example, if your IRA gets that non-recourse loan, um, you do end up paying taxes on the borrowed money. Um, and your accountant will take care of this for you. So it's a simple equation for them, but now that you're paying taxes on the borrowed money, you do get depreciation on the borrowed money, for example, there. So that's a topic for another time. I just wanted to mention it that there are ways to pay taxes if you know, depending on the deal. Okay.

JP Maroney:

Excellent. All right. So we're going to get into a Roth versus a traditional IRA in just a moment before we do once again, if you're watching this or listening to this, this is the deal flow show. I'm JP Maroney. This is my cohost Paul Nicoline. And um, so here's our next question. Roth IRA versus traditional IRA. Can you give us kind of the rundown on each, how they compare what the uniqueness is?

Ryan Fischer:

Yeah, like I was describing a little bit before the traditional IRA is tax deferred and the Roth IRA is tax-free. So I'm kind of go back and think of this as, as a, as a bar graph. Um, I present this graph a lot. Um, maybe I'll send it to you. You can put a visual up for this, but I'm gonna use three different accounts to show you the power of these, right? So $50,000 in your traditional IRA, $50,000 in your Roth, IRA, $50,000 as you personally. Okay. There's each one. So three accounts, you do the same deal. You're making the 10% return, right? And I used a 30% tax bracket, um, for this graph that I did and I stretched it out to 40 years. Same thing, no different investment, 10% return. Your Roth IRA ends up with 2.2 and change. I'm not, I'm just going to round off here.

Your off area is 2.2 million in it. Your traditional IRA also has 2.2 million, but you have to pay uncle Sam back. And like I said, we'll say everything stays the same. And I did it with 30% tax bracket. Um, so you ended up with 1.5 million in your traditional IRA, and then you personally end up with 748,000. So 748, 1.5 and two point that's, that's a really big difference. So that's how you can be the extent that you can grow your wealth using these accounts because you're keeping all of the money. And that was obviously assuming that everything was invested at 10%. You know, it won't be exact, but it's just to kind of, uh, illustrate the point of the power of using these tax deferred and tax-free accounts. Ryan, just curious, how many Roth

Paul Nicolini:

Accounts do you guys have as opposed to just the traditional self directed IRA? Um, because I feel like people, aren't people, a lot of people maybe haven't heard of Roth, so they're not educated enough. Do you find that?

Ryan Fischer:

Well, that's actually a good point. We do a lot of education on it. And like I said, I speak about it all the time and it makes sense to people. We have, we have a lot of Roth accounts. Yes. We have people that have converted and had, you know, a traditional and Roth. And the only reason they have that is so, you know, so for example, there is a myth out there that if you make too much money, you can't have a Roth. Now everybody can have a Roth. Um, you might not be able to contribute directly to it, but everybody can contribute. And we have clients that do this, um, word on the street, you know, you'll hear backdoor Roth. It's not necessarily backdoor, but, um, that's kind of the name it took on. So basically if you make too much money, you can, you contribute to your traditional IRA.

Then you fill out the conversion form when we converted the next day. So the money goes in the Roth, the IRS changed that back in 2010, they were only supposed to do it for a year, but then they got caught up doing other stuff and they left it there. So everybody's been able to do it, you know, with those contributions, but you've always been able to, uh, convert granted you do pay the taxes when you convert, but if you remember that guy Mitt Romney, when he was running, he, uh, you know, disclosed and, you know, he had over a hundred million dollars in his IRA. So, you know, it's any, anybody, anybody you can have these accounts. I think that was an oops moment.

JP Maroney:

Who was it? The Swift that really stopped me. Um, alright, so here's, here's the next question. Now when I was first exposed, as I mentioned to the self directed RAs, my client was introduced to a concept that some people call, um, an LLC are a self directed IRA or checkbook are a or S checkbook control. I hear different terms that are out there, but as opposed to being introduced in the very beginning to the concept of IRA, my very first exposure was to that version of it, which I think has some really interesting aspects to it. Some probably benefits and drawbacks, both, but I'd like you to talk about that a little bit about what the difference is, what maybe elements of complexity adds and costs, but also maybe some of the benefits that it brings as well,

Ryan Fischer:

Right? There is pro there is pros and cons to this, but basically what the checkbook LLC, which, you know, you said, you've heard it referred to a few different ways. Checkbook control checkbook, LLC. It basically gives you control what you're not supposed to have for your audience and for you as well. They can look up Swanson versus the IRS. There was four points. I think they want on two of the weakest points. I think if the IRS comes back and looks at it, they might change that rule. However, they've been it's plenty of people do them. I don't necessarily encourage them. It does put more responsibility on the individual with the account because when everything is run through camel plan, you're going to have a record of it through, you know, our account, obviously. But basically when you do the LLC, the LLC is the investment.

You'll give us the paperwork, showing that the IRA. So the owner of the LLCs cam a plan, FBO JPS, a IRA, for example, right then you'll say, okay, we'll transfer it to the checking account that you opened up for the LLC. And now the LLC can, don't make the purchases without became a plan's involvement. That's great. I mean, yeah, you might save $95 on a fee or $150, you know, here and there, but everything is now run through that and you just need to understand the rules. And I encourage everybody that does that to get their accountant and their attorney and everybody on the same page, because you're going to want a working relationship. I wouldn't say go set something up online and say, here it is because you're going to have questions. If anything needs to be filed for the LLC, you know, we're not doing anything for the LLC, right?

So you do have a responsibility to make sure that you're running that correctly. So, you know, you should have a relationship and, you know, talk to your professionals, uh, when doing that. And I'll just give you a quick example as to a simple mistake, right? So when these IRAs, I said this before, um, no, self-dealing, you're a prohibited person. So if you think you can just go to, you know, home Depot and, you know, buy the lumber, buy a refrigerator or whatever it is, and just swipe your credit card and then say, Oh, well, I'll just write myself a check from my LLC. Well, we're never going to know you did it, but if the IRS audits you and looks at that, well, now you just, you just messed up your whole IRA because you paid yourself and you're in, you're a prohibited person. And if you're under 59 and a half, you're gonna have a 10% penalty on the taxes from the time when you did it.

And maybe even some penalties out, if he did that through Kayla plan, and you said, Hey, you came, uh, you know, I bought the refrigerator. Can you cut me a check? We're going to say, Hey, no, actually can't do that return and get the contractor to do it. And we're going to send you, you know, w and we'll pay the contractor. So it's, it's simple things like that. Like I said, as long as you understand the rules and most people who do do the LLCs are not saying this in a negative light kind of control freak. So they're aware of it and they understand that, but it's not for everybody. I mean, you just want to look at it and what's the best way to do it. I mean, if you're going to invest into a private fund, right, are you gonna invest into Harbor city?

For example, that's easy. Do it out of the IRA. There's no need for an LLC. Some people will say, well, I'm going to be doing, you know, real estate out of this number. You paid a bunch of people in this and buying multiple properties. I want to be in control of it. So I don't have to say, you know, Kayla plan send it, send the check to him, which we do a lot of real estate out of the IRAs. It's not a problem. Um, people understand that when you get someone, Hey, this is coming, you know, they're, they're, they're sending a check or wire or an ACH. It's not difficult. We, you know, we do it every day, uh, search it's really a preference, a preference thing for the individual. Uh, the other thing is from accountants and attorneys that I've worked with in the past LLCs and unsecured notes, get audited more often, like I said, I don't know that it's great, but supposedly the ILCs and the unsecured notes get audited more often.

JP Maroney:

I should still do the reporting at the end of the year

Ryan Fischer:

On that. Okay. Yeah. I mean, basically what the individual would do while they're required to do is give us fair market value. And that's for any asset, whether you're holding a piece of real estate, you'll tell us what it's worth. If you're holding an LLC, you'll say, Hey, here's what my LLC is worth. And we do the reporting for that. Yes, correct. Okay.

JP Maroney:

So this is the deal flow show, and, um, we're going to be working actually on a book called dealmakers deal breakers. So I want to kind of shift gears a little bit away from the mechanics of your profession and talk a little bit about the deal flow process, because as our guests want to know, um, you know, how do you keep your pipeline for, how do you do good deals? How do you continue to work with the best people in your industry? Things like that. So I want to talk a little bit about deals for you. And as you think back over the years of doing what you do, any particular deals that are memorable or stand out and, uh, that we could talk about a little bit, just as kind of a framework of this, then going into some of these deal related

Ryan Fischer:

Questions. Yeah. I've seen some pretty interesting deals out there. I'll just start with, um, our most popular investments are physical, real estate, private placements that includes, you know, no funds, real estate funds, et cetera. There's plenty of space in that area. Um, precious metals, that's physical bullying stored in a, and then, uh, just straight up private lending. Private lending has been pretty big for people, especially with the banks being tight over the past few years and things. Uh, but it's kind of funny. I mean, we had, we had a girl, you know, she had llamas in her Roth IRA and they got shaved. Heard of that before. I've actually heard of that before. That's funny. Um, I think, uh, I had client buy, like one of those big, a commercial dump truck that gets rented out to, you know, like big commercial projects are the ones big wheels, like in mine, mining, stuff like that. Yeah. Um, so there, there are some random things, you know, coffee, beans and Costa Rica. Uh, it's actually funny. You asked me that today. I talked to a guy which I haven't heard. I mean, I've seen this before, but I haven't seen someone do it and he's going to do it out of his IRA. They build these like really fancy a tree forge. He's doing it up in the Catskills. And he's like, it's crazy because he's like, they're there they're booked a year and a half out because they, you know, people want, people want to stay in these. And I was literally earlier this morning that I was talking. So there are unique things that, that, that people do. I mean, I think we've had people, you know, invest in Christmas trees and stuff. So, um, those are more one off deals, but I always tell people, you know, as long as it's not as a life insurance, most likely you can do it.

Um, a lot of the time too stuff comes down to, you know, structure, how you're putting it, how you're putting it together. And you know, most of the time you can accomplish what you want to accomplish cases where I see people can't is, and I get this all the time. People want to lend themselves the money. And they're like, well, is there a workaround? No, there's not a work around and you can't lend yourself the money or you're a prohibited person. So I've seen, I've seen that. And then, well, I'll, I'll buy, you know, a house for my son or daughter in college and you know, no, they can't live there. You know, you can't do that. Um, with that being said, though, just elaborate real quick. Cause people get confused. Everybody gets confused with people talking out there. They're like, Oh no family, family, no, that's all prohibited.

So it's linear a cent and decent. So stemming from you, you, your spouse, parents, grandparents, kids, grandkids, or any business around any you own 50% or more of, or have control of is a prohibited person or entity. You could buy a house and rent it to your brother, sister, aunt, uncle, cousin. You could, if your brother's a contractor, you could hire your brother to do the contracting work. If your dad's a contractor, you can't hire him because he's a prohibited person, right. If you're a contractor, you can't hire yourself because you're a prohibited person. So that gets there. We have a nice chart under prohibited transactions that people can look at on that. But that's definitely a misconception out there as to, you know, prohibited people. What about franchises? Um, you can, you can do franchises. We've had, um, we've had people do that. Um, again, you want to look at the structure, you may be paying that UBIT tax if you're running a business, but I also have had people lend money to someone who's buying it. And then it's just a loan. Um, and they wouldn't have that, but yeah, no, it's definitely something you know, that they can do.

JP Maroney:

Very cool. You're in business development account executive, you called it, um, sales. By the way, I have one of my favorite phrases. My mentor said this to me years ago, and I say this to a lot of people. In fact, I told that to Daniel who just joined our sales team in the last couple of months, sales is the only profession where you get paid. Exactly what you're worth. That's true. Think about that's right. Think about that. So here's my question for you. The deal pipeline, keeping the deal full dual pipeline full, whether it's strategic alliances for y'alls business, whether it's clients wa continuing to, to make that happen. What is your process or what are some of the things that you do to keep that pipeline full?

Ryan Fischer:

Um, we do. And obviously I'm part of it. We do have a little sales and marketing department. Obviously marketing helps us with videos and content. So we have, we have two sides. We have people with investments like yourself, for example, that we'll need clients to open up self directed IRAs. And a lot of those people work exclusively with us just because it's easy. They got to get fair market values. Instead of giving them the five different people, they can just give everything to camel plan. It can get updated. So we have a lot of contacts that we work with and we, we like to work with good people. We make friends slowly. Again, we can't tell a client, you know, whether it's a good deal or bad deal or anything, most of the time, if they're, if they're working with you, they, you know, I've already gotten those details and understand what they're investing in.

And the IRAs, just a simple part of where they're going to be funding it from. Um, but we do also get a lot of, um, retail business of people that, you know, just for example, Hey, I buy single family homes and I heard somebody told me I can buy it and not have to pay taxes. I don't need the money. So they start doing it out of their retirement accounts. Obviously we're always trying to work and keep that pipeline going with content. And we're on a lot of different platform. I'm sure you probably are aware of like bigger pockets and stuff. So we just try to make our presence as well known in social media so that we can get more of the information out there. And this is good information for you and your audience. This has a lot of potential and a lot of space to grow, which is great for us as well and great for investors like yourself. Somewhere around 3% of the country uses truly self directed IRAs right now. So that has a lot of room to grow. That's a market.

JP Maroney:

Let me think. Trillions of dollars, only 3% market penetrations. Maybe that's something sponsors and issuers should pay it and money managers should pay attention.

Ryan Fischer:

Yeah. I mean, the thing is the brokerage houses aren't gonna, you know, tell their clients that they can do this, or most people aren't going to say, because that takes, that takes money out of, out of their own, their own pocket. So people have to kind of stumble along this, you know, and, and then there's also a little bit of a learning curve. They have to check it out because I've literally seen this happen. Hundreds of times, probably someone would come over and say, all right, well, I'm going to try this out. I'm going to do an investment for 50,000 or 150,000, whatever it is. And six months later, a year later, I talked to them, you know, and they have a half a million dollars. They're like, Oh wow. I tested it out at work, which is actually pretty cool. So it's out there.

There's books, there's articles. It does get on TV. If you're probably up at two in the morning watching a one of those intro ads. But the, the, the information is there. It's nothing new. It's been around since the seventies, you know, when IRAs were created, but really only the really wealthy, you know, had access to it. When you have a billion dollars, they don't tell, you know, so I don't want to say that a brokerage house won't do it. Um, but they definitely don't do it for a common person. And they don't like to do it. They don't want to do it. It's not in their wheelhouse, but they have done it. I've also gotten assets transferred from big brokerage houses to came a plan because they don't want to deal with it anymore anyway. And they charge a lot, um, to do that. Cause they're, they have a special, a special team, uh, that has to handle that. And most people aren't that familiar with like the alternative space and what they're doing and how to do it. So they have to have a little dedicated person to figure that out for them.

JP Maroney:

Couple of more questions. And then we're going to let you go. These are again, deal related questions once again, if you're listening or watching, this is the deal flow show. I'm JP Maroney, your host with Paul Nicoline, our cohost here at Harbor city capital. Alright, so deal makers, deal breakers. Let's talk about deal makers. What are some of the things that you're looking for in a relationship with someone on the other side of the deal table? What are the positive characteristics or behaviors are elements to that person or the deal that make you go? This is something I think we need to look at.

Ryan Fischer:

Um, yeah. W like, again, we, we can't quote unquote analyze the deal or anything, but if I don't have, like, if I don't trust someone, I don't want to work with them because we want our clients to do well. I don't, I don't want to, I don't want to have my name next to, you know, Bernie Madoff's right. So we do our best, not like, obviously nothing's, you know, a hundred percent proof. Um, but you know, we like, we like to kind of get to know the person, you know, when someone's making their payments and they've never missed a payment, that's a good thing. If someone misses a payment, you know, well, what happened, what happened here? What's going on. And sometimes there's, there's a reason for, for something like that to happen. But now we want to work with good, honest people. If you know, you've started a fund and then you never paid anyone back and it's in the newspapers. And then you say, Hey, I have a new fund. You know, we're going to be raising money for this. Um, that doesn't make me feel comfortable. How do I know that you wouldn't do that again? So, so we just look at, you know, want to work with, uh, with good bid, honest people.

JP Maroney:

Excellent. Anything else? Questions? I have one last question, but anything,

Paul Nicolini:

No. Well, I was going to say to that point too, other than the gut instinct, which I get, because that's, you know, you want to work with, you know, honest people and what have you, but did you guys have a due diligence kind of protocol? You know, do you have a, sort of a structured due diligence that when you might get involved in a deal that, you know, these people have to check certain boxes? Um, no, we're not. We're, we're not allowed

Ryan Fischer:

To, to, to do that, but I mean, we don't have to take business from people that we're not comfortable with. I mean, we do get all the, you know, we're not going to do a deal with someone if they don't have all their paperwork. I mean, for example, with a PPM, you're going to give us articles of incorporation, the operating agreement, and then obviously for each client or give us a subscription agreement. So there are required documents, you know, that we'll need to see, to be able to, uh, you know, do like people make investments into that. But, uh, we can't do, you know, the due diligence on John DOE. Okay.

JP Maroney:

Alright. Once again, deal flow show JP Maroney, Paul Nicoline. We've got Ryan Fisher with us from cam a plan. And as we finish up this interview and thanks for spending a little bit of extra time with us, Ryan, as we finish up this interview, um, I'm a big believer that the more you give, the more you get, but you got to give, give, give before you get, get, get that's law. And so we want to give to you, and we want our audience to have a chance to give to you. What kind of people or opportunities would you like to connect with that would help you and cam a plan as y'all grow your business? Um, we love to work with

Ryan Fischer:

People that have an investment, right? Um, if you're raising money, we can help you. And I think, I think a, I think it's a win win for everybody out there. Um, it opens up access to more funds and obviously it helps came a plan. And I did want to mention too that I'll give my contact information here, here at the end, if you don't mind JP. Uh, but yeah, anybody that's looking to do that, but even if it's a single deal, uh, I won't go into this in detail and we can talk privately on this, but you're not just limited. Your IRA can also partner into deals. It can even partner with you. Like I said, you're two separate entities. I don't want to confuse you there with self-dealing though. Um, but say you and your wife wanted to buy a property and I'm just going to say 50 50.

It doesn't need to be 50 50, but it could be Kim, a plan, FBO, JPS, IRA, and cannon plan, FBO JPS wife's IRA 50% and they can buy it. Or they're, you know, I have people that include their kids and stuff in it. Uh, so there's, there's, there's a lot of ways. Um, and on our website@camelplan.com, there's a 20 ways to fund a deal underneath resource center. So I'd encourage people to look at that because it just can help, you know, in the back of your mind for whatever deal that you're looking at, uh, there's multiple ways to, uh, to fund a fun deal. And that gives you 20 of them.

JP Maroney:

Excellent. Any last comments? No, I'm I'm good. This has been, Ryan's really hit it out of the park here. I, man, I really appreciate you. And on behalf of our team here at Harbor city, our video genius, Jesse McMahon, Daniel [inaudible], who helped set this up and laid a lot of the groundwork. We really appreciate you and your team, your family there at cam a plan, being a part of the deal flow show. If you're watching our listing, this is JP Maroney. My cohort here, Paul Nicoline, we're from Harbor city capital. And this is the deal flow show. If you're involved in the capital stack, if you're involved in the deal making process, if you're involved in raising capital, deploying capital on the legal side, on the accounting side, if you're a service provider, if you have a platform like cam a plan, you have a fundraising platform or some sort of platform that facilitates, um, anything that's involved in that whole deal, making process administration, everything, and you have a story to tell and you have information and value to give to our audience. We want to hear from you, reach out to us. You can go to the deal flow, show.com the deal flow, show.com and get us your information. Um, one thing before we go, why don't you give out your contact information for us, Ryan?

Ryan Fischer:

Sure. It's Ryan Fisher. That's R Y a N F I S C H E R. And my email is R Fisher again, R F I S C H E r@camelplan.com. That's C a M a P L I N. Dot com. I can be reached at (215) 283-2868. Get that it's (215) 283-2868. And there's a lot of resources that you can do research on from our website and under Cameron Academy as well@camelplan.com. Uh, thanks for having me here today, guys. I appreciate it. And

JP Maroney:

Look forward to the future. Absolutely. Our pleasure and Paul Nicole, J P Maroney take care of it. One, go out, fill your pipeline and do your deals. We'll see you in another episode of the deal flow show. See you again.

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