Mark Kohler shows how to buy rental property inside a self-directed Roth IRA through an LLC, so all rental income grows tax-free. The structure uses a trust, small business, and retirement account together. A Roth 401(k) lets you borrow up to $50,000 or half your balance, repaid with interest to yourself.
Chapters
I'm going to go to an IRA question. Is there a way to make a Roth IRA for real estate and still take money out from the cash flow? Generally, no. But there's a couple little exceptions. Let me throw this out, everybody. So when we build our structure, many of you know what I'm trying to do is the trifecta. Your trust is down here. You own your small business, whether it's an S corp or an LLC or a sole proprietorship, you're kind of building your side hustle. You may have a day job and your income's all flowing down here to your 1040. We're off to the races on this side of the equation. You might have a Roth IRA, you might have an old 401k, you might have a solo 401k, a traditional IRA. So what we call this is self directing and deshagra. Here you can open up an LLC owned by your Roth. Very common. I have several LLC like this. We do set these up every day around the country. So the Roth could go out and buy a rental property. The profits from this rental are going to go back to the llc. And if the profits, whatever profit goes into the LLC is really that of the owners, and you're not the owner, your Roth is the owner. So when you go to sell the house, any profit, any cash flow, all that stuff is going to go into your LLC and then down to your Roth down the road. You can take this money and move it somewhere else or retire and cash in and all that. And you young people, please, please, please start investing in Roths right away. I teach so many little classes on acorns and robinhood and stash and getting that money rolling so you can start building a future pot of gold. And we meet with so many clients that are in their 60s and just say, I'm starting to save for retirement. What do I do? And they're scared to death. You don't want to be caught like that. Dave Ramsey's message of getting out of debt and saving right away. Love him, he's right on it. Okay, so the money goes to the Roth. And De Shock was like, well, I want some of that money. You think you do, but you don't. I want you to leave the money here, let it grow. Build a future tax free bucket for the future that you don't touch right now. Now it is true. The little yes that I was going to say is you can take a Roth and any contributions to the Roth always come out tax free and penalty free. But the profits have to stay in the Roth or they're going to get penalty and tax. So any contributions can always come out penalty free and tax free. And also if you're in a Roth 401K, which you can have, you can have a roth inside a 401k, you can borrow from it up to 50% or 50 grand, whichever is less, and pay back interest to yourself tax free. So there's ways to access the Roth money, but generally you're not living on the cash flow. You're going to be plowing it into that Roth ira.
