Real Self-Directed IRA Deals (Show and Tell with Mat and Mark)

Welcome everyone to the Directed IRA Podcast. This is live in studio from the Self-Directed IRA Summit. I'm joined by the great and powerful, the not so tall, Mark J. Kohler.

I've lost an inch here. Matt gives me the little boy's chair. You know, like he invited me over for Thanksgiving and I was sitting with all the kids on the little kid table.

I thought they would like you.

It was, it was a It worked.

It worked. We had extra mac and cheese over there.

Yeah, it was good. Yeah, I know. I loved it. I got all the brown meat. It was just awesome. You know, dark meat. Well, hey, I am so excited about today because this Directed IRA Summit has been a huge hit. Great turnout. Lots of fun. The team has been amazing and we're going to share some of our favorite investments in our self-directed accounts.

Yeah.

And notice how I said accounts because, you know, it could be anything. Plural. You know, well, I mean, all the different types of accounts. It's not just your IRA.

I like it.

All right.

Okay. Now, as we've gone through the day, if you've been on here for the Self-Directed IRA Summit, thank you so much for being here. If you missed this, by the way, and you're catching this on the podcast, get to SDIRAsummit.com. You can buy the recordings there. If you're a client at Directed IRA, you'll get access to them. And if you're not a client, you can be one. Open up an account already. So let's start doing some show and tell. What we're going to talk about now is just some deals we've done with our own self-directed IRAs. We've already laid the framework already through the whole day here. Mark and I have talked about these over the years, but should I go first?

Yeah.

You want to just get into it?

Yeah. Yeah, let's do it. You go first.

Okay.

All right.

I've got a video. So I said we're going to show a video. Now I'm going to— I'm going to set this up so everybody knows.

Okay. Now, who's that guy?

You're going to make this. This is Beard Matt. I had a beard era for a short time.

That's you.

It's not good. This is not a flattering video of me.

Right. Okay. Apparently. But okay. All right.

All right. Obviously. Okay. But okay. I went to Providence, Rhode Island. We just heard from John Ciccarci. Many of you have seen him at our events. He's on our board. I've invested a lot with my own IRA with John. And this is a deal he and I did together. Now I'm at the property that I lent money on, talking to the investor I lent money to. Her name is Natalie.

So let's roll the clip here.

Okay. So this is Natalie. She's the real estate investor I lent my money to out of my retirement account. Tell us a little about yourself. Like, what do you do besides real estate?

Well, I've been a hairdresser for about 16 years. Business owner. I have a general contractor company and I flip houses now.

Tell me about this deal. Like, what did you like about this deal for this house?

Well, first of all, the price. The price in the market that we have nowadays. It was great. It was a steal. I valued over double what I paid for it.

Okay.

So I paid like $216,000 for it. It's worth $530,000 about. I have over $200,000 in equity.

One of the unique things about this house is the lot.

The extra lot adds value to the house because it's a buildable duplex lot, which is worth about $150,000 in today's value, market value price.

Okay, so we're going to pause here.

All right.

So now you heard that Natalie, she is a hairdresser. Real estate investor, general contractor.

Yeah, I've never seen her before. This is fun.

Yeah, so this is cool. We actually went out, we were there, you know, we were—

yeah, Aaron was—

yeah, give a little shout out to Aaron Hall on the camera there.

Great video work, whoever did that. Yeah, okay, great.

And so, um, all right, so that was the deal. All right, she's a real estate investor in the area and she found that property Now, as she talked about that, this is a buildable duplex lot, which added a lot of value, about $150 grand of equity to the property in and of itself. Now, no bank would lend on that property because it was in such disrepair, but she liked the challenge. She wanted the project. All right, so, so I lent money, $100 grand from my account. John lent $100 grand. We were both on one note. All right, so it was one note and one mortgage. My IRA had 50%, John's IRA had 50%, and we both got 12% interest and 2 points. Okay, so I got $2,000 immediately, and then I get 12% interest over the term of the loan. Now, we had a 6-month loan on that. She paid us off in about 4 to 5. She paid us off early, actually, because she refied us out. She got a traditional mortgage from a traditional lender and ended up refiing us out. So now I got another clip on this one here that I'm going to show. There's this little second little clip here where John talked about why we decided to lend on this deal. Okay, so we got another clip here towards the end that gives a quick little summary on this and we'll talk through it and we'll go to Mark's example.

Okay. All right. So good.

All right. You got clip 2? Okay, let's go to clip 2. All right, Natalie, what's next for you?

Sky's the limit, baby. With you guys on my team, we're going to go forward and forward. Can't stop the momentum.

Yeah, because when you pay us off, we want to lend on the next deal.

Exactly.

Right.

Hey, I'm already looking for the next deal. We'll do it and then do the same thing. We have 3 things: person, property, and exit strategy.

We already like Natalie.

We know she's a winner. We'll analyze the next property. That's easy. And then we'll want to make sure that she can get out and we'll get her prequalified with the lender. So it'll be a short-term bridge loan.

Perfect.

Looking forward to it. That's how you do it.

I just want to say John looks great, right?

I know. I mean, he's wearing a tie and everything. He really played that lawyer role. And what about me?

You look good. Did you loan on her again? Or did you let her down?

We have not loaned on her deals because I wasn't fast enough. Now, John has and some other investors have done other deals, but sometimes my money's out and she's got the next deal. So I haven't— the timing just hasn't worked where she's got a deal. Usually they want it funded in 2 weeks and I'm out on another deal. So, but Natalie's awesome and successful deal there. And what I'll say too is a lot of people are like, well, Matt, I don't know people to lend money to. Did you listen to what Ashley Cash said? She said she went to a meetup. She went online and she said, I typed in 3 words in Meetup, real estate investing, and I went and showed up at events. Okay, I met people, I talked to people. Just talk about how you kind of have to be a driver. You have to be willing to talk to people. Let people know if you want to lend on properties. Maybe you're looking to flip properties, whatever you might— your strategy might be. You're looking for buy and hold. Let people know what you're looking for. Let them know you have money. In an IRA, you will attract deals and opportunity when you do that.

Yeah, you'll be like a fly and whatever. I mean, like whatever those little metaphors are.

You're the honey.

Yeah, real honey. The bees come to the honey.

Yeah.

Anyway, so I will say this too. A couple of other tips on that. Be careful jumping on the first deal that comes your way. You will be swamped, swarmed, whatever. That's the point I was trying to make. When you start to say, hey, I'm ready to loan on real estate deals, you will be tempted on occasion, frankly, on a regular basis, to let down your standards. You're like, if you say I'm 12 and 2, I need a first trust deed, I got to have an appraisal, I need this, I need this. You stick to those religiously because there's going to be someone that comes along, typically a brother-in-law, that's going to say, oh, I don't have an appraisal, or will you do 12 and 1, or will you do— make someone else the bad guy. Say I've got a partner, I've got a whatever. Make an imaginary friend, whatever it is, but say no, No, I stick to these 7 things. I got to have all 7 clean and pretty before I do this. Another side note is Patty, my wife, she's in a real estate investment club. I think H.E.R.T. is that— they're all over the place. It's H.E.R.T. It's called H.E.R.T. Real Estate anyway. But there's— it's women only, a real estate club. And they all get together. They do hikes and walks and talks and they go do their little workshops and all this. And there's a couple of ladies in there that lend and a couple of ladies in there that borrow and blah, blah, blah. And Patty's dropped a hint, hey, I'll lend on a deal here and there. And we've gotten a couple of ladies that are like, hey, will you do this? But they're like, but we, you know, 12, that's a little high. Can you do 10 and whatever? No, here's our standard. So stick to your guns, people, because that's when mistakes happen.

Yeah. Yeah. So, so get out there, find the deals that you want to do. This is just an example of a deal. I've showed some of the other stuff I've done earlier. I've talked about the private companies I've invested in, the buy and hold rental properties, but I just want to show an actual tangible deal. The property I lent on, the person I lent the money to. This is why I like self-directing. I actually love it. I like that I met Natalie and that she got $100,000 of my money that she made money on. I made money on rather than $100,000 sitting in the stock market. Rather than getting a CD. That's just not exciting to me. And, um, but being involved with that, being attached to my money, knowing I'm part of whether it's successful or not, that's what gets me excited. And I think that's what attracts people to self-directing. So, you know, you can enjoy the actual— yeah, yeah, no, well, instead of just like the stress of the stock market and you have zero control.

Well, speaking of enjoying what you invest in, there you go, there we go. Thanks for that, Trent. Transition. All right. We got a little video here now.

I stepped on that.

Yeah. Well, on this note, I— for those of you that are catching the podcast and were not here at the Directed IRA Summit, please get over to the website, watch the recording. Tons of information today. Well, in that I talked about the health savings account and how my health savings account invested in a rental property out in Chicago, and I showed pictures of it. I actually showed the REPC, the real estate purchase contract. And I've actually this week been in touch with Chris Albin and he's found a buyer for it. So I've held this rental property for 12 years. No, 8 years anyway. But I'll be selling it and using the money for, I think, some ranching, some cattle, some land. Out in Utah. So let's roll this next video and I'll show you, uh, what we're doing here. So Patty and I were so excited to start Kohler Brick Cattle Company in Utah, in what's known as Wasatch County. Here's some of our cows fattening up on grain. This is our rancher Greg. You'll maybe see him here in a moment. Here's our granddaughter and Patty and I at Roundup. So this is, uh, some real cowboys pushing the cows for Roundup. What we did is we have these 20 cows. We lost 1 calf last year, but those 10 moms got pregnant again, if you guys don't know how birds and the bees work. So the 20 cows, 10 moms, and 10 calves went through the Roundup this last year. This is the roundup. I actually got to help be there. Again, I can't work on the ranch or manage the cows because that would be prohibited. But we moved the cows down to livestock area. That's my little granddaughter helping out. And these are our cows in the LLC. We invested in 10 moms, 10 calves for a total of 20. And then we'll sell 3 of those calves this year and The 10 moms got pregnant. So we're building the herd and it has been an incredible experience growing that herd inside the cattle company and creating an incredible rate of return. And it's been something we are passionate about and super fun. So I hope you guys can see this little operation grow in the future as we share it here at some of our events. Thanks. Okay, pause it there. So that, oh, we have to go back to the, there's a couple scenes here that were awesome. That's me. On the dark horse in the middle. I was trying to— and, uh, back when we were pushing the cows around, for those who watch Yellowstone, those cutting horses where they kind of push the cows around, yeah, super cool. Uh, those are very expensive horses, 4-6 horses. But, uh, no, it was fun. Those cowboys, we hired them to help push the cows, and they're like, well, you can ride along, just stay out of the way. I'm like, all right. So, uh, anyway, so Thanks for showing that, Tristan. But I think there's a— I like Matt's last point of doing something you're passionate about and fun and getting involved with.

That also makes money.

Yes, but that's why I was just going there. It makes money. So I've got it projected out for the return on the investment with these cows. I think we're going to average over 3 years about 24%, 25%. ROI, because you don't make money in the first year when you buy the cows, and then it's the next year when the cows have another round of babies. Then you start selling— or calves, and I've got to call them the right terms, my rancher's always working me out for that. But then you get more calves and then you sell part of them, and it's called a cow-calf operation. Again, I'll reference Yellowstone. In the last season— spoiler alert— when Kayce starts to buy his own herd, he said, yeah, I'm buying 300 pairs. That's 300 moms with calves next to them. Well, the first year you're just trying to keep them alive and fed. And then the next year, when those moms have calves again, that's when you start to make money. So anyway, it's been a lot of fun and we are going to— we've made our contributions to our HSA this year. I'm going to sell that rental property I referred to earlier to help create more cash available for the account. And so because you did those with these, you did these with your HSA. Yeah.

Yeah.

So sorry if I missed that part. The health savings account, Patty's HSA, my HSA partnered in that LLC.

Multi-member, multi-member HSA LLC for you guys. We talked about that earlier today in the summit.

Yep. And I'll be a little more specific briefly. Just we— back last year, the cow cattle prices have gone up dramatically. A pair right now is costing us about $4,500. Last year they were $3,500. So we bought 10 pair for about $35,000. So Patty and I contributed to our HSAs for about 3 or 4 years. So between us, we had about $40,000, $45,000 combined in our health savings accounts because we didn't reimburse ourselves for medical. We want to let that money ride. And so we took the $45,000, $40,000, started the LLC, bought $35,000 worth, those 10 pair. Now we have a rancher down the road. He's like, You see a lot if you, if you're into this, you're going to meet other ranchers and they're like, I already got a herd of 100 cows. You're going to throw your 10 cows in with mine. All right. I'll charge you $500 a month just because they just eat grass, you know, hay, and they're not that hard. So he's like, throw them in my herd, you know? And I'm like, all right. And so we pay him to manage them. And so by the time you do the math this year, right now, those calves that we got last year, I can sell them for $4,000 each. So I just made— if I sold them all, I'd have $40,000 on a $35,000 investment. But we're going to build the herd. You got to build the herd. So when you go to the diner in the morning on Saturdays, you know, how big is your herd?

Yeah, you got to get some— you need to get some street cred on Main Street. And, uh, yeah, I want to be Highway 40.

And that's right, I don't want to be all hat, no cows. I got— I gotta have some cows.

That's what I used to— I used to call Mark, you know, he's all hat, no cattle. And now I can't say that anymore. No, no. So when I throw it on Biscuits and gravy.

I'm, I'm serious.

Yeah, he's got the hat and the cattle to prove it.

So, so exciting. But we've had all sorts of people do fun things. We've talked about it before. You've got a soccer—

yeah, we have a—

yeah, tell me about that.

Professional Mexican soccer team, owns like 5% of it. Um, we've had clients' IRAs invest in racehorses that have been at the Kentucky Derby. We've had clients' IRAs invest in public— sorry, private companies that have gone public. Um, so many just interesting things that are cool. And I honestly kind of think like like the individual loan or that rental property in Indianapolis is cool too.

Yeah.

You know, I'm like, there's somebody who lived in there that was the tenant that was paying me. There was a real estate agent, a friend of mine that worked on that deal with me. Like, it's kind of like, it's just feeling connected to it and involved in it. And I know it can take some work, but if you like that stuff and you're entrepreneurial and you, you, that's like speaks to you, I mean, you're the person that should be self-directing your IRA. And I'll even say this, if it doesn't, you're like, "I want something passive." Well, private lending is more passive. You can invest in a private fund or a syndication of other people doing those things too. Okay.

I've got a good one here too. Yes. So I had a client, he literally, I almost want to say he made his living, but it was more of a side gig, but he did really well. He would buy and sell concert tickets. So I've got a client too buying and selling water rights, but concert tickets is a big one. He'd go on the day concerts are released, he'd pick up tickets as quickly as he could, then wait about, a week before the concert, go on StubHub and Ticketmaster and resell them and double or triple his money many times. So I, I then I taught him about self-directing and he started buying some tickets in an LLC and he was doing that deal. But I just want to let you know, I bought tickets for this the day they came out. They sold out in 2 hours. Metallica at the Sphere in Vegas. They're going— they're coming in October. So I thought, I'm going to buy 2 tickets for me and Patty. I bought them for $900. I went back on an hour later, they were already selling for $1,300. So I was like, I'm gonna buy 2 more. So I bought you 2 tickets. Now if you don't want them, Aaron will take them. Yeah, I mean, you still—

me and Matt are going.

When you go, you got Metallica tickets too? You got them? We're going with you. You're going with me?

Oh, okay.

I was like, what are you going to Wizard of Oz next month? You said 2.

We're going.

1, 2.

I liked it. You were trying to create a market there and a little auction.

I was trying to flip them.

Yeah, you said you bought one.

Well, actually, what we did, we bought 2 tickets for the second weekend in October and 2 more for the third weekend because we're like, I don't know if we're traveling. So I've got 2 and 2. So I might have to send you guys separately, you know, I guess. I don't know. But it's awesome. Yeah, we saw, uh, U2 there, people. Incredible. So, but you can buy and sell concert tickets in your Roth IRA.

We've seen people do that.

And I had a client buy 2 seats when the Raiders stadium was announced in Vegas. He bought 2 seats, season ticket, season ticket holder, whatever seats with his Roth IRA. And then he resold the next season all the seat to the tickets that came for the 10 games or 15 games, whatever it was. And all that money went back into his Roth IRA LLC. So he did it with—

it was— now those can have UBIT. So you'd use the blocker. So that's like a But these are just creative things. And like, if the return's there and you're only paying that if you're making money, so, um, and that, that can totally make sense. So there's lots of creative things that you can do, um, and that's what the self-directed IRA taps. And we just want to make sure today, you know, and you feel empowered that you don't have to just buy a stock, bond, or mutual fund. We've been brainwashed that, and that's fine. Those are— could be good things. I'm not saying don't invest in that. I'm just saying That's not all you have to do. All these other assets that are out there in the world that are investments that you can invest in, that people have grown and build wealth on. You can use your own retirement account, these tax-advantaged accounts, to grow and build wealth. So we hope today was helpful in illustrating that. Remember, this is recorded, so you can get to sdrisummit.com to get the recordings if you're listening to the podcast and you didn't catch this live. Um, and, uh, thank you, Mark, for for speaking 3 times today. 3 slots today.

Well, you know, I'm a team player here. I love Direct and IRA, you know, serve on the board and just so excited about what you and the team have accomplished on a day-to-day basis. It's just incredible. And thanks to all of you that regularly listen to this podcast. Please share it. Give us 5 stars, 2 thumbs up. You know, yada yada, little hip hip hooray, whatever. And we'll see you next week. Every week we have an episode on the Directed IRA Podcast trying to help you build your American dream. And thank you everyone for listening. A quick disclaimer and reminder: this presentation does not constitute an attorney or CPA client relationship, and it is always in your best interest to consult competent legal and tax professionals when conducting your own personal transactions.

We also want to make sure you know this is not investment advice or financial advice. We're just trying to give you education, ideas, and strategies you can take to your professionals or conduct your own research on. We'll see you next time.