EP 466 – Next Generation Wealth Building with Derreck Long

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This is the no Closers show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host, CEO of We Close notes, Scott Carson.

Good morning, good afternoon, good evening, everybody. Welcome to this episode of the no Closer Show. As always, Scott Carson. Excited to be here today. We're even a little bit more excited. I have a first timer here on Money Mondays with Quest. We have our good friend Derek Long actually joining us. Derek works out of the Houston office, but he's in Austin today. Hanging out there. Woo. Woo. Go Austin.

Woo. Woo.

So, good morning, brother. How's it going?

Good morning, Scott. I'm excited. I've been really excited about doing this podcast for a while now, so.

That's good, man. Well, it is your first time. Everybody else has been hogging the mic and today's topic is all about kind of generational wealth building, stuff like that. And you're actually teaching a class on that in Austin, correct?

That's correct, yeah. Actually this Thursday, I'm going to be teaching a similar class to this one. It's really about just getting your next generation of people excited, right? The kids or the grandkids. So a lot of times people that don't know how to approach or get the younger people excited about being an investor.

Yeah, they don't. We get so busy working on our stuff. We often hear, hey, hey, let's get the kids stuff involved. You know, the whole like, I gotta pay for retirement, but Roy, I'm paying for your education kind of thing. But Derek, before we dive into it, share a little bit about your background because you've got a little different background than some of the other IRA specialists there at Quest.

I do. So I actually didn't always start at Quest. I've been affiliated with them since about 2009, but I was doing a lot of background work for them, computer work and website design and those type of things early, early on. However, while I was doing that, I was actually in the military and I spent a lot of time in the army was what they call a 15 Yankee, which is a fancy way of saying an Apache mechanic. So stationed in Fort Eustis, Virginia, in Fort Riley, Kansas. And that wasn't my direction I wanted to go. I joined the military because I started a small business on my own and I failed miserably and got out of the military. I was looking for something different. And honestly, it's kind of where I started finding notes and finding Quest and everything else. So that was just kind of a basic part about my background, but it wasn't always as an investor.

That's an interesting thing. An Apache helicopter mechanic there, huh? Pretty badass machines though, huh?

Hmm. They are. Don't get me. I will geek out. The podcast will turn about Apaches and their Hellfire missiles and their 30 mic mic cannons if people don't realize. But those missiles are going Mach 3 before they fully leave the rail.

Wow. They're already going three times the speed of sound. That's awesome.

Boom, baby.

Boom, baby. Well, let's talk about how to get some explosive results and stuff. And you've got a PowerPoint that you're gonna pull up and share here with a video. I'm telling everybody. Obviously for our listeners, you can go and check out our full video review either on our Facebook page or on our YouTube channel@YouTube.com weclosenotes. So, Derek, you've got your PowerPoint. You want to hit share pulled up there. And then you want to hit it. Put in PowerPoint presentation note.

Can you see it?

Okay, well, it's got all your notes to the side, so let's change that a little bit. Just to presentation mode. No, because we still see your notes. So do yourself a favor, close that out real fast. Slideshow. Okay? There. Now just go down there at the bottom. Hit that. Yeah, there you go. Hit there. There we go. Now we're cooking with Kris. Go. There we go. Awesome.

Hey, guys. So as Scott was saying, you know, I'm really here to talk about the next generation of building wealth. And this seems to be a very complicated issue for a lot of people. The main reason why is I'm gonna say anyone that's 30 years old and younger want instant gratification. And a lot of times as an investor, that's not what we need. That's not what we're looking for. It's really learning how to build wealth long term. And notes is something that can really provide that. And I know, Scott, you talk about that a lot. So I got a lot of information to go over. I'm going to kind of dive right on in. Always start with my little disclaimer that I'm only here for educational purposes. I don't provide tax advice, legal advice, investment advice, nothing like that. This is just for education. So if you guys have any questions. Scott, we have some moderators and stuff too, right? They can just yeah.

As people are watching this, definitely would be able to ask questions or if they text me and if they're watching this live.

For sure.

Yeah.

Excellent, Excellent. So feel free to hit up about your questions, but a little bit about me is I actually graduated college in Arizona. So I didn't grow up here in Texas. I more grew up, believe it or not, in Alaska, in a small town. And I've done a lot of traveling just because I was a military brat. I got my degree in global marketing with a minor in administration. I do speak pretty. I'm going to say a whole lot of Russian. So if we have any Russian clients out there, feel free to ask me questions. But ultimately, after I got out of the military, I was able to save up some money. And what I felt like was a lot of money was a whopping $5,000. I know that doesn't seem like a lot, but when you're younger and you're trying to save, especially on a military salary, which is very small, I felt like I was rich, and I was like, well, what can I do? Where can I park these type of funds? So I started looking at what type of investments I can do on my own. And what do you think I did? I Googled it. What can I do? And obviously, the first thing that comes up is always stocks and bonds. I think that one of the reasons stocks always comes up is just as a. If you're not a savvy investor, you're not a billionaire already or something, you know about the stock market. That's all you know. You don't know how it really fluctuates. So stocks came up. Real estate came up as well. Some money mutual accounts that seemed to give smaller returns, but it was really, really safe. And something called notes. Right. Which most people on this podcast are very familiar with. Notes. At the time, I was not. So these were just some investments that I was kind of considering. My big $5,000 investment. Well, I was still pretty young, and my dad told me, well, Derek, you should consider real estate. And I was like, dad, I know better because, you know, I'm 25 years old and I'm smart. Yeah.

Your dad just with Quest Trust Company, he doesn't know anything.

Right, exactly right. Who would listen to their dad who runs a billion dollar company? That doesn't make sense. So instead of listening to him, I decided to try the stock market, and I put my money in something called penny stocks. So a lot of people here have tried this. Right. Or if you haven't, don't waste Your time. Because pretty much what happened is I found some penny stocks on a platform that I was able to buy and sell quickly. When I say quickly, we're talking on average 45 minutes to an hour's worth of time. And I'd watch this market fluctuate. I took my $5,000 and believe it or not, I lived off it for a whole year, year only investing in penny stocks. I was getting pretty lucky and buy something, I'd sell it when it went up real quick and I'd do it again and do it again. And I was making honestly, a couple hundred bucks a week doesn't seem like a lot, but at the same time, I was still a full time college student. So this couple hundred bucks a week was actually covering rent, food and beer. So I was pretty excited about that. The problem is, after about a year or so of doing this, it was about 10 months, I. I made a bad investment and I lost it all. My whole $5,000 was gone. Now, believe it or not, as bad as this sounds, I wasn't upset. I just spent a whole year living off $5,000. So I was kind of like, well, that was really unique. But it did teach me a lot. One of the negative impacts I found out was I didn't have something tangible. I realized down the road I was gambling, I really had no control over these stocks. It wasn't something I was holding. When it went up, it went up. When it went down, it went down. I was strictly guessing and I was getting really, really lucky. Okay. Next thing was there's way, way too much fluctuation, right. I once again had zero control right when it was going up or going down. I didn't know. At the end of the year, something unique happened. Remember, I lost my $5,000, right? Because I lost it. And Fidelity, because that was the custodian I was using at the time, sent me a 1099 for all the money I made. Oh, I didn't expect that, right. I never had to deal with taxes up to this point. And I literally didn't know what to do. I didn't have any money to cover this taxation. And I was like, oh my God, what do I do? And I called my dad. I'm like, dad, I owe a whole bunch of money in taxes. It was like $1,000 that I owed really isn't that much. But as a kid, I was like, oh, this is rough. What am I supposed to do next Is I had zero training, zero help, no firsthand education. So not that investing in stocks is bad. I want you to understand that. I don't want you to take away that stock investing is bad. But in my experience, each one of the impacts you see on the screen is something that was true and what happened, right? No tangible assets, fluctuation, tax implications, and no training. And the training is honestly what really it came down to, you know? So I decided to finally suck it up and talk to the experts, right? And I went back to daddy. I was like, hey, dad, all right, I'm ready to listen. I lost all my money. What can I invest in? And he goes, well, you can't just start off being an investor. You first really have to understand money. And I was like, okay, well, help me out with understanding this money aspect. He says, 95% of people will make money trading time for dollars. Now, this isn't bad. Too many times. I think a lot of the motivational speakers and stuff, they talk about this aspect right here, and they point this out as being a bad thing, but it's not. And I'm here to prove why it's not. So 95% of people don't trade their time for dollars. This is your job, your salary, income, those type of things where you're literally. You show up to work, you have to do something. In exchange for that time, you receive some profit back, right? Which is your paycheck. Whereas 5% of people do something different and they earn money through residual income. Something where they do something once and you get paid over and over and over. Great. Example is a cell phone bill. Verizon has me as a client, right? I walk into the store once every two years, bug em. I say, my phone sucks. I want a new phone. They have to put up with me for an hour. And I'm a pain. I know I am. But after that hour of putting up with me, Verizon gets a check from myself every single month. So my dad said, that's the side of the fence. You need to figure out how to get on. I was like, all right, that makes sense. I get it. Residual income. But doesn't that cost thousands and thousands and thousands and hundreds of thousands of dollars? He's like, we'll get to that. Relax. You know, I was very anxious. I'm young.

No patience, right? No patience.

Zero. This is one of the hardest things to deal with, actually. A lot of the younger generation remember, they want instant gratification. Doesn't happen that way. There's different ways people earn income, right? Active income and passive income. He says the active income side that you see There on the screen is what 95% of people are doing. The passive income side is what those 5% of people are doing. Now, if we notice we have an employee self employed and an employee kind of on the left side. A lot of times people are like, well, I'm self employed. I'm a small business owner. Isn't that owning a business? I'm like, no, you still have to trade your time for dollars. If I run a donut shop and I don't show up tomorrow, my donut shop doesn't make any money. However, the goal is to hopefully open up, in that example, several donut shops open up several different places and have someone managing those. Now you can take some time off. Great example of this as well is when we look at something like Quest. Quest started off with just a few employees, four or five of them, right? My dad being one of them. My dad at the time was running a small business. He was growing it, growing it. Now whether he shows up to work or not, is that going to stop what Quest does?

No.

No. Is that going to stop people from investing in notes? Not a chance. Is that going to stop people like me doing this podcast with you, Scott? So my dad slowly moved to being the owner of a business versus self employed. Understanding as an employee, it's the same thing. I have no desire right now to quit my job. Quest pays me very well. Okay, so why would I quit? I make good money, but the amount of money I make, I need to start figuring out how to invest it and get on that passive income side. So I need to be part of both the 95 and the 5. Does that make sense?

Totally makes sense. It's the cash flow quadrant, basically.

Exactly. Too many times people are trying to just go all to one side or the other and it doesn't work that way. You have to be playing both sides of the fence. I was like, all right, Dad, I get it, I get it. What else you got? He goes, well, we have two problems with this. And I was like, all right, what's the first problem? And he's like, well, it's taxes is one. Once again, remember when I was investing using my own funds, I end up with a bunch of tax implications. The next thing is tide. I don't have a lot of personal time to dedicate to being an investor. And I was like, all right. I mean, if you're trying to grow a small business, I can't really invest. I don't have time to deal with a rental. I don't have time to Deal with a fix and flip. I don't have time to deal with those. Not only that, but if you're an older individual, maybe you don't have time as far as physical time. Right, Left. You have to have some sort of solution. He's like, of course I do. The self directed ira. I've heard this term up to this point, right, As a kid, but I didn't really know what it was. I thought it was some sort of magical account. I thought it was something that only certain people could set up. And he's like, actually no, it's a made up term. My dad had to describe to me that a self directed IRA is actually just made up. It's what we like to call a marketing term. Pretty much an IRA with anybody can be considered self directed. So the difference comes down to the custodian that holds your retirement account. So moving forward, I'm going to replace the term IRA with retirement account, because that's really what it is. So when we look at the retirement account, is it held at a public custodian like Fidelity or like Charles Schwab? If so, you can invest it in public assets, stocks, bonds, mutual funds, CDs, etc. But if I take that same retirement account and I move it to what we call the other side, the self directed side, we can invest in private assets. Anyone listening to this podcast, Most likely it's going to be real estate related, but it doesn't have to be. Other private assets are small business gold and silver. A big one a few years ago was cryptocurrency. I didn't get it, but whatever, right? Those are all private assets. Not that it's better or worse, it's just different. Some of the benefits that we always like to go over is diversification. If all of my wealth that I hold is diversified in the public market, when stocks go down, what happens to the mutual funds? They go down and the CDs go down and everything on the public side goes down. So if all of my wealth is put into a public assets, I'm not diversified. I don't think you should move over your entire retirement account either. I don't think you should take the full thing and move it over to Quest. Now, as I'm saying that, I'm kind of hypocritical because all of my retirement funds are in the private side. But I like to be controlling of it. I'm a little more a stickler. I like to know what my money's doing.

You're a little more risk adverse yeah.

But that's just the diversification aspect. The next thing we like to think about is the tax savings. Guys, this is the biggest thing I can push today. Understanding. In my original example, when I was talking about penny stocks, I ended up with a big tax at the end of the year and I didn't know what to do with it. However, if I could have used my retirement account for those exact same investments, I would have had to pay zero taxation today.

But you wouldn't have been able to live off of it for a year, though.

Too. Well, we're gonna get to that because that's actually also a common misconception. So I'm gonna. I think I get to teach you something today, Scott.

There you go. All right, cool. Good stuff.

All right, so pros and cons. The other benefit is something that I like to refer to as investing in what you know best. I didn't understand why I was investing in the penny stocks. I really didn't. I Googled how to take $5,000 and put it someplace. Google wasn't my friend at that point in time. So I also didn't have anyone to help me. I called my stock broker. Is this a good stock to buy? Oh, that's what he always told me. That kind of sucks. But when I'm looking at a piece of property, if I brought you a note, Scott, and you're like, derek, that is the worst note I've ever seen. You probably shouldn't be lending money on that. You should be buying that. What does that probably mean, I shouldn't buy it? But at the same time, Scott, if I bring you a note and you're like, dude, that is a heck of a deal. Let's figure out what we can do. Let's joint venture, let's do this. Here's the exit strategy. That is nice. That's being able to take my retirement account and put it someplace where I can actually ask someone for real advice. So I think that's the biggest thing. Now, we have all types of plans that can be self Directed, trust traditional IRAs, Roth IRA steps, simples, 401ks, etc. But we're only going to focus on one today, and it's really going to be the Roth ira. Remember, we're talking about millennials, we're talking about your kids. We're talking about trying to get kids excited on how to be an investor. The whole purpose of this story was I was young, I was dumb. I had to listen to someone else for a minute to help myself out. And I still want to benefit today. So we're going to use the Roth ira. Before we talk about it, we got some minor restrictions. The first thing we investment restrictions. We got transaction restrictions and people restrictions. The only one on this whole list that we care about are people restrictions. We like to refer to these people as disqualified people. The first person that's disqualified from benefiting from an IRA investment is yourself. What this means is your IRA can't go and lend money to you to buy something. But it's not just you it can't lend money to. It's this big list you see here on the screen. Now, if you want a copy of this PowerPoint, just send me an email and I will gladly send it over to you so that way you don't have to memorize it. But I like to look at this list as lineal ascendants and descendants of an individual. Fancy term of saying you, your spouse, your parents and your kids.

I call that the ira. Macarena. Yeah, no parents, no kids, no spouses. Hey, Macarena.

So if I have a retirement account, it can't lend money. Buy something from one of those individuals or sell something to one of those individuals, you spouse, parents, kids. Okay. Or their spouses. Now, we can dive into this topic and talk a lot about it. We actually have a 12 hour class on just this page right here. So if you have more questions, please let me know. Give us a call. 855-fun- IRAs. Okay, but we're gonna get past this point pretty much. If you enter in or do one of those transactions, we like to call it prohibited. It's a prohibited transaction. Well, fancy way, the IRS stopping your retirement account, they're going to tax and penalize you a whole bunch of money. So next we're going to really dive back to that Roth IRA and some misconceptions about it. One of them being I can't benefit today. So we like to always talk about making contributions to a Roth IRA for this year, it's going to be $6,000. Now remember, for this PowerPoint, I'm talking about the younger individuals. So if you're over the age of 50, it's actually 7,000. But anyone under the age of 50, you're at $6,000 is the most I can put into a Roth IRA. Okay? Now, there's a second bullet point on there. If you notice, I can pull out my contributions at any point in time without any type of taxation. Now, in my previous example, I was able to save up a whopping $5,000. It's not a lot of money. But it leads me to a question. Does anyone out there have a savings account? Are you really putting in more than $6,000 a year in a savings account? I don't think the majority of people are. Now, if I put money in a savings account, can I pull that money right back out? Very easily, you bet. If I put $6,000 in a Roth IRA, can I pull it back out? Very easily, you bet. No penalties, no taxes, nothing. So why bother in today's day and age, having a savings account, it doesn't make sense. So we're going to get to a quick case study. If you have any questions. All right, let me know. But this is a real case study I actually did with a friend of mine from the army and pretty much my buddy Brian. He found a piece of land. This is the exact picture of the piece of land that he wanted to buy. It was $9,500. So it's not a lot of money. Okay. Brian proposed to me that we buy this piece of land because it was getting ready to go commercial. Now, it wasn't commercial yet. It was still considered residential. And our original plan was to buy it and sit on it for 10 to 15 years. Couple problems Brian ran into is he didn't have $9,500. Okay. I was like, that's okay. I can help you out there. So we decided to go ahead and come together as a partnership. And me and Brian, actually, we came together, we both put our funds from a Roth IRA of for this deal. Now, if you read there in the yellow, this was the physical name on the contract when we bought this lane Quest Trust Company for the benefit of Derek Long's IRA has to an undivided interest of 50% and Brian's IRA has an undivided interest of 50%. This means that at closing, we each sent off a little over $4,000 to the title company. Very easy. Notice we're both fairly young, okay. And we didn't really have to come up with a lot of money, right? And our plan is to sit on this piece of land for 10 to 15 years. That doesn't sound like a bad investment to hold inside an ira, does it? However, something magical happened. If we see. Can you see the mouse on the screens there, Scott?

Yep.

That picture was taken right here, that piece of land. And if you see this thing, this is a golf course. Well, the golf course was actually trying to buy that piece of land from the seller for a long period of time. And they finally gave up and when they heard that we bought it, they reached out to our agent and made us an offer for $15,500. We literally sat on the property for a little over a month, got an offer, and we're like, well, we'll sell it. I understand that maybe long term, thinking I could have made more money. But remember, instant gratification, right? I'm young, I. I want the money today. Yeah. So me and Brian went, we decided to sell the property. 15,000, a little over $7,000 went back to each of our accounts completely tax free. Understand through this method, I don't owe any money in taxation, okay? Oh, but I can't benefit from that money today, can I? We'll get to that in just a second. But if we notice in this specific scenario, two people came together with their money, if we look at the percentage of return, it was a little over 58%. That is way better than I could ever get in a cd, a mutual fund, a stock, anything like that. I was able to do this with a friend of mine, but it can be done with your children. Imagine setting up a Roth IRA instead of that savings account for your child and doing a deal similar to this.

Okay, let's clarify that you're partnering with the ira. You're not borrowing the money from the kid's ira. That would be a prohibited transaction, correct?

That's correct. Notice on that previous slide when it showed the yellow name, that was a physical name, right? It was Quest Trust Company for the benefit of Derek Long's ira. That's a real person is a good way to look at it. Notice Derek Long did borrow the money. Derek Long's IRA used the money in there to buy a property. Last thing is, me and Brian were in control the entire time, right? To me, that's really what I was looking for. I had zero control when I had my money sitting over there in the stock market. So when can I benefit from those funds that I just earned? I always hear 59 and a half. However, as I already stated, right, we know the 59 and a half and you have that for five tax years. But I can always pull out my contributions any point in time, right? That's not all I can pull out. There's a few extra rules Roth IRAs have hidden within them that a lot of people don't know or realize. The really one I'm going to focus on is the first time home buyers method. Now I can pull out up to $10,000 in earnings to buy my first house. Okay, that sounds pretty good. You Know what qualifies the first time home buyers? Meaning I haven't bought a house in two years. That's it.

Wow.

So I could use this method multiple times. Right. As long as I haven't purchased a brand new house for myself in two years, I can pull out to $10,000 in earnings. Let's go through kind of a little example for my very first house that I was looking to buy and I bought it almost two years ago now. In my Roth IRA, I had a little over $7,000 in contributions at this point in time from investments. For me doing note investing and like that piece of land and things, I had a little over $11,000 sitting in there. So how much can I pull out to buy my first house?

Basically you could pull if you pull out your contributions plus the 10 plus. So you actually have a total of 19,300 in the account. Actually, because you have the 7,800 contributions plus the investments. I just want to make sure we got that right because I think you said you had total 11,5 in the last slide.

This is what I had from earnings from investments plus my contributions in total, the contribution method. I use my Roth IRA a lot. There's a lot of investments. But when I went to go buy my first home, this is what was available physically in there. So as a kid at the time I was 28. Is that a large down payment for a house? Oh my God. It is not only like I'm putting almost $20,000 down to buy my first home. Okay, Now I didn't pull out the full 17,000. I only pulled out really what I needed because I have a different plan in mind. All right, My plan is to now buy this house and I'm going to live in it for two years. The reason I'm living in it for two years is I get to avoid some capital gains tax. And after my two years, I can reuse my first time home buyers and I'm going to buy me another house and I'm going to rent out my current house that I live in. Does that sound bad?

Not at all.

So understanding as a kid. I want some instant gratification. Being able to pull out money from my retirement account today for a down payment is huge. Next, I can use this house now as a rental once I find a secondary house to go move into and live in. So now I'm building up nice portfolios. Right. Hypothetically, if I did this just once every three to four years, by the time I'm 50 on paper, I'll have Over a million dollars. Like that is awesome. So this is just the first aspect of it. The next thing is understanding how to bring in other people like my friends and family. I found actually a very unique borrower recently and I just did this note back in March. Okay. So they're a good friend of ours. They're actually out here in Austin and they found a house. They bought it, but they needed money for the rehab. Only 45,000. It was a first lien position. I didn't charge him any points, but I was going to charge him 12%. Now I'd like to point out the reason I didn't charge points is I made them cover my quest fees and my attorney fees. So people are like, oh no points, that's awesome. But if you count the quest fees and the attorney fees, it kind of equals a point right there. Yeah, but this seems like a pretty good deal, right? However many people see the 45,000 and they think, great, I'm going to earn me 12%. Once again, this is about teaching other individuals. So the next thing that I did was instead of me putting up the full amount of money from my account, I want my girlfriend to get excited about being an investor. Not only that, I want her parents to get excited about being an investor. So if I can get her parents and my girlfriend both excited, I'll end up with a lot more capital to work with, whether I'm buying notes, buying physical property, doing fix and flips, etc. Okay, so I had this great idea to bring them in on this note. Alright, so let's help the family, but through baby steps. So what I did is I used my Roth IRA and it had a little over $24,000 that I use to put up front. I also used a health savings account of 1000 bucks to put into this deal as well. But I use my girlfriend's account of $8,000. Talked to her parents and I wanted to make them feel comfortable. So they each set up their own Roth IRA and put in $6,000 each. Now notice if we add all these up, it equaled 45,000 that we did a loan to. The loan started in March. Now as near the end of March, they actually as of May 1st got their first payment of 12% on 12 grand. It was really 1% because it's 1% a month, but they were excited. Now the house just went on the market. I want to say it was yesterday, it might have been Saturday. So once the house is sold, they're going to get all their funds back and what do you think they're already telling me, Scott, let's do it again. Oh my gosh. And now they start to feel more comfortable. If you look at the method that we utilize, understand I use my own money and I took the majority of the note. The reason why is it really made them feel more comfortable. They see that I'm putting up half of the note, more than half, so they're like, alright, they don't feel so scared to put up their $6,000. Not only that, I'm showing them that I'm teaching their daughter. So now their daughter is getting excited about being an investor and doing these type of things as well. So I'm building trust, building relationships, and ultimately when this deal pays off, man, are they ready to do the next one? So they're actually going to be a part of your next notes seminar as well, Scott. So I like to just say it's building wealth for years to come. It's understanding I'm not just trying to build wealth for me, trying to build wealth for the family. And if I can get everyone else involved, gives me a lot of capital. It helps take care of everybody and overall it really, really makes sense. So that's kind of my presentation. I always like to go over little ways to build your network. Things that helped me when I first got started. Business cards. If you don't have business cards, man, you're being silly. I show up everywhere. If you're around, Houston especially, you'll see me at almost every single real estate event, whether I'm speaking or not, passing out my business card, passing out folders and flyers, collecting what I can to build my list. Don't be shy. Believe it or not, before I started working at Quest, I was a little bit of a shy guy.

What?

I know, crazy with the big ears and everything. I was really, really shy. But I learned that if you want to be an investor, say it loud, say it proud. Scott, if you were shy, do you think you'd get half the deals you get?

No, not at all.

You got to just be excited all week. Have an elevator speech. Everyone knows what this is. Something that I can say in an elevator. I always like to say, hey, I'm Derek. I got some money to lend. What do you have? That's it. It's really basic, really simple, straight to the point. Go to local RIAs, go to local meetups, find podcasts like this. It's a great place to meet people. The other day, my girlfriend actually found a unique house from watching one of the podcasts. And it was really funny. She was on Facebook Live and people were commenting and someone made a comment about how they were having issues with this house. And my girlfriend responded and said, hey, great, what's the issue? Where's the house located? Da da da da. Striked up a great conversation. It's a unique way to find deals and make those contacts, which leads me to the last thing of traveling to educational events. All right, so ultimately, that's what I have for you today. If anyone listening to this podcast would like an IRA, please give us a call at 8:55 fun IRAs. We'd love to talk to you about this more, guys. We have a great expo coming up in August that Scott, you're speaking at, right?

I believe so, yes.

Okay. I was like, I hope I didn't put you on the spot. We also have a bootcamp coming up called our Financial Independence Day Boot Camp. So if you'd like to go ahead and bring on some family members and listen to the boot Camp live, it really will help people. We have, I think, 10 to 12 speakers coming on with moderators all there to help you out. Very similar to this. You get to interact with each speaker, and each person is going to be talking about something different. So if you're interested, come see Quest, give us a call, let us know what we can do for you. Scott, I hope I didn't go over.

No, we still got some time, so don't be going nowhere. All right.

No. Yeah, none.

So we got some questions here. Judd Tomko asks is, what are the max incomes for being able to contribute to my Roth ira?

So the max that you can contribute if you're under the age of 50 is 6,000.

No. What are the max incomes as far as what he made?

I love that. That's a great question. So a lot of people have bad misconceptions, think that if I make too much money, I can't contribute to a Roth ira. And that's actually not the truth. Okay. No matter if you make a million dollars a year, you can still make contributions to a Roth ira. You just have to add what I like to call an additional step. Some people call it a backdoor conversion or backdoor Roth. What we do is we put the money in a tax deferred account, we fill out a little one page form, and then we can convert the funds over to a Roth. So it really doesn't matter how much money you make. Anyone can make a contribution to a Roth ira. So if your CPA is telling you otherwise, tell them to either get a better CPA or really read the tax code.

Yeah. Because it could be. You could, you could start a traditional IRA for 1000 bucks or 500 bucks, make the conversion. You're gonna pay the taxes on whatever you contributed to at that point, right?

That's correct.

Then now it's a Roth. Now you can still contribute to it on an annual basis of six grand a year.

Yeah, actually, so we do have some clients that they utilize both accounts. They make way too much money and they're self employed. Right. And they pay themselves from their business. So they actually set up two different tax deferred retirement accounts, one being a traditional IRA, one being a SEP IRA. Now, the traditional IRA, remember, it's either 6,000 or 7,000. The SEP IRA, though, is unique. It's up to 25% of what you pay yourself. So as an example, if I pay myself 100 grand a year, I can contribute 25,000, and I can immediately take that 25,000 and convert it into my Roth IRA. Plus the other 6,000 I put into the traditional. Put that in the Roth, allowing for very, very large contributions. If you want to dive into that topic, we can, but I think it'd be better if you gave me a call or just talk to one of our IRA specialists.

Yep, he's responding. Joe says, oh, a traditional account and then convert it. Yep, Joe, exactly right. Wayne Brinside doesn't have to be a taxable income to set up an ira.

You do have to have what is considered to be earned income to set up any type of retirement account. Okay. Earned income being 1099, W2, Schedule C. Things that people always ask those questions on, hey, does this qualify or does this qualify? One of the things that really seems to come up is Social Security. Social Security does not count. Okay. Nor do maybe dividend payments. Those don't count unless you claim them as outside of investment income. So if you have questions about that, let me know. But remember, W2, 1099 or Schedule C. Those are the three main things that we like to see in order to make a contribution to any retirement account.

Now, Derek, you gotta tell me a little bit about this new thing you've got going on, this new online event. When is this about the 12 experts? Sorry, I haven't heard about this.

Oh, yeah, so interesting, because I think you're on it.

When is it slated for?

So it is going to be June 29th. Okay, well, it's the week prior to July 4th. And what we're doing is it's just gonna be Another online bootcamp, but it's for our financial independence, believe it or not. Quest is really big with, I'm gonna say the community, with our vets, with everyone else. And so we wanted to put something together just for the independent stays and everything else. So we're doing a financial bootcamp. We're calling it Financial Independence. And ultimately the plan of it is to bring in as many students as possible. Like I said, 10, 12, 15. Let each of them talk about different topics. Right. We'll have you come in and talk about notes. We'll have someone like John Hyer come in and talk about the 401k. We'll have Nathan go on and talk about him doing his own investments, those type of things.

Is there a cost for it?

It is. It's going to be $100 for a ticket. However, if you sign up for an IRA today, what we'll do is we're going to give you a discount on that ticket of 50%.

So if you use the code CARSON19 at C A R S O N. 19 was what Ingrid told me is a discount code across the board. So it is a discount on your registration fee for the event or if you're signing up for a new ira, should be getting a bit of a discount off your.

Anyone listening? If you're one of Scott's students, we do have permanent coupon codes for you guys, such as that Carson 19. You also have your own hotline and things, so let us always know just when someone answers. Guys, we do a lot of work with Scott. All you have to do is say, hey, you're one of Scott's students and you're going to be patched right through to one of the top experts.

We call it the IRA line. Instead of the bat phone, it's a green phone. I'm glad I have to put something on my calendar. I did not know about June 29th. I guess it's from what, nine to five, something like that. Or is it two day thing or.

Just one day thing. It's going to be kind of like nine to five or ten to four, something along those lines. It could be right in the middle of the day. It's going to be a set. So you can sit home in your underwear, you can drink some beer, you can grab some lunch, listen to the people that you want to listen to and ignore the ones you don't. I always like to think that in today's world you need to have continuing education. Unfortunately, a lot of our younger generation, they know better. Right? I knew Better. And if you're not open to always learning something new, I don't think then your mind's going to keep expanding and you start to get closed off, which is when you start making bad decisions. Be open to listening to new speakers. Be open to listening to new podcasts. Be open to working outside of your comfort zone if you want to be a real investor. I think that's one of the big keys that gets back to that being shy. You can't be shy. You gotta be loud. Have fun.

Well, that's the thing. You just have to get the word out of secret. I always make the joke that you can't be a secret agent in real estate and succeed.

Oh yeah, I like that term.

Yeah. So let's see here. I'm scrolling through here on your website because you've got so many events. Here we go. The Financial Independence Online Boot camp. It's Saturday, June 29th from 10am to 4pm this Independence Day themed event is focused on how Americans can take control of their future and work towards true financial independence. We've hand selected this grouping of expert to guide us during this one day event. So yeah, see on their website there you have. You go to quest trust company.com. it's under the events thing to scroll down a little bit here. I'm going to click over here and see if we can't pull up who they've got as the thing on there.

If not, I can share my screen and do it. But did you get it?

David Phelps, Jeff Watson, Eddie Speed. Oh, I see. Yeah.

All right. Oh God. Oh God.

Kristen Gerst and more speakers to be announced. That's awesome. That's awesome.

Besides that, the Financial independence one. I do want to bring up our expo. Scott, you were at our expo last year. How packed was that thing?

Yeah, you had 500 plus people at it. You had a bunch of vendors on both floors. It was a great event. I'm excited because you know, you're doing it in Houston now, your home territory versus Dallas. And it is slated for August 23rd, 24th and 25th. We had over 80 of our mastermind members in attendance who came in and hung out and brought their spouses or other people along the way as well to hang out for three days. For two days last year. But you've expanded to three days now, Friday, Saturday, Sunday for the event, correct?

Yeah. So we did that based off of some people's topics from last year. We like to always take comment cards, figure out what we can do better, what people like and it Made more sense to spread it out evenly and allow for longer breaks in the middle for people, you know, bathroom. We're doing like 10 minute breaks and people are like barely funneling out of the room before the next speaker was going up. This year we have it planned to a T. We're expecting close to 1,000 people. Understand that last year when we did it in Dallas. That is not our home base. We have an office, Dallas team, an awesome Dallas office, A gorgeous classroom if you ever have a chance. They do classes every Wednesday up there. But Houston is our headquarters. We have like 110 or 115 employees or something like that. Just out of that office alone. It's huge. And we are really, really looking forward to it. So the Expo is going to be the biggest thing. It's August 23rd, 24th and 25th. So it's right at the end of summer.

Yep. And you basically got tickets online as well. If you go to questexpo.com this is gonna be held at the Royal Sonesta Galleria.

That's correct.

There is a room block involved there, guys. So if you wanted to jump on it, I would do it quickly because that will sell out. The room block will fill up quickly like it did last year. And once again, you can buy. They've got kind of different set of tickets. You've got your regular general admission early bird right now. And then you also have the early bird vip. So you want to take advantage of the. Especially getting the early bird discounts that expires May 31st on that. So take advantage of. Once again, if you use the code Carson19, it should give you a discount off of those tickets as well.

50%? Yep.

Best discount out of anybody. That's what I've been told. And some people are like, well, I'm not a Quest client. Do I still be something I've come to? Well, first of all, silly, yes. If you're not a Quest client, you're only hurting yourself. Because Quest is the best customer service in the industry. They're so willing to jump on the phone and walk you through different things. Even if you're not a client, you'd still want to do it. Plus the fact is that the ability to close quickly, you've got the online portal, which is really rock and rolling along there as you guys build it up there. But who, where else are you going? To the opportunity to come rub elbows with potentially a thousand other investors.

If you have any students here in Austin, like I said, we're doing a class this Thursday here. Great for networking. We also buy you lunch. Can't beat that.

Lunch and learn this Thursday at Quest Trust Company therefore. But you guys are doing lunch. You're doing a lot of lunch and learns across your Houston, your Dallas and your Austin offices. Right, Derek?

That's correct. Every Tuesday, Wednesday and Thursday, each office hosts the lunch and learn. So Tuesdays in Houston, Wednesdays in Dallas, and Thursday is in Austin. Now not only that, the second Tuesday of the month, we do a big mixer in Houston. The third Wednesday or the third. Yeah, third Wednesday of the month in Houston or Dallas. And then the last Thursday of the month in Austin, we do a big mixer in the evening.

I like that.

It's a lot of fun to come to because there's a bartender and there's.

Free booths, there's wine, beer, most of the food. I like it. You rotate it Tuesday, Wednesday, Thursday, Tuesday, Wednesday, Thursday. So you know exactly which city is handling what they're to make it a little simple for you.

Oh, yeah.

So literally they could come in and spend some time and just drive those areas and spend a great day networking with people. Because usually the trillion dollar mixers I know in Austin are getting 60 to 70 people. The Houston ones are getting 80 to 100. Dallas have not made it to. But they've also a great space up there with Rebecca and Haley managing that office.

Actually the last trillion mixer that they did in Dallas, they had a little over 100 people at. It was awesome.

That is nice. Very much so. Derek, let's bring this back down a little bit. Bring it back a little bit. Got some great events. Yes. Sara, who Shabba? Who Shabba. You provide some great stuff out there. I think it's one of the big things that people get. I will totally admit that I goofed up and was like, oh no, you can't use it for yourself. You can't live off. But I forgot that you have the ability, especially from college, to be able to pull money from your Quest Trust self directed Roth account to use it for educational expenses. What are some of those educational expenses that students can use in college so.

They can pull out up to $10,000 right. From their retirement account strictly to use for education expenses. And it's labeled as higher education. So what is higher education? And so could this be used for books? Some people would say, yeah, typically what we'll see it used for though is really the tuition. When you think of the $10,000 in earnings from it, dude, you can fly through that in a tuition expense, right? We do see people Use it for trade schools, you know, like a mechanic school, a hair school. But remember, it's labeled as something that's for higher education. All right? So being able to utilize a retirement account for your school expenses, but also for any other personal needs, such as the first time home buyers, a medical expense, those are really, really benefit beneficial.

So, so what do they classify as a medical expense? Is it just that somebody, you go into the hospital going for a copay? I mean, no.

Yeah, so a medical expense is a little bit more defined, such as it does have to be like a real, like, hey, I ran into some major medical issues. Here's the surgery bill, right? It's not like an hsa. So we do have two other accounts, an ESA and an hsa, that cover more tuition and more medical expenses. So the esa, the Education Savings Account, if you're under the age of 18, can be used just like a Roth. Understand, you put money in it, you can pull it right back out very easily, but it grows what we call tax free and the earnings can be pulled out for any school expenses. This is huge because unlike the Roth ira, where it has to be for higher education, school expenses are backpacks, school supplies, laptop computers, tuition, and more. The Health Savings Account is the same thing, but for medical expenses. So if you qualify for a Health Savings Account, you can put money in there, believe it or not, you get to take that money as a tax deduction, plus you can pull out that money completely tax free, plus the earnings, tax free for any medical expenses. Over at Cinco de Mayo, we had some fun, we partied, and the next day I had to go to Walgreens to buy some Tylenol. Instead of me using my personal funds, I end up using a Health Savings Account to buy those. So understand, medical expenses is anything you can relate back to keeping yourself healthy. So for me, that was Tylenol at the time. This could be hand sanitizer, this could be Kleenex, but you're basically, you're using.

Personal funds and then reimbursing yourself from your HSA for those expenses though.

You bet.

Yeah, yeah, you're not going there. Hey, I got a debit card for my HSA account. That wouldn't work that way. But now question for you. Could you use your Roth IRA to pay for sorority or fraternity dues?

I'm gonna say no. However, when we look at the distribution form, it asks you, why did you pull the funds out? And you say, for higher education, there's a little box on there that's as far as I see. And I know, however, when you physically ask me, like, I'm gonna say stick to the higher education, like actually covering the real Twitter, if you can argue one way or the other, maybe you can get away with it. But it does state in the IRS tax code for higher education.

Yes. Not lower education, not lowering your education. We've got any questions, Jones, that are out there watching, like Wayne or George or Ingrid is watching. Hi, Ingrid, Darnell, Austin, Steve, what other questions you guys have out there? Hey, Julianne. Hey, David. Hey, Leah. Hey, Rob. Hey, Ra. Good stuff out there. Good morning, Tom, Perry, a lot of people out there.

Hi, everybody.

You know, we got, we got a few peeps that like to follow us in note nation out there. What's the biggest mistake? And I think I already know the answer to this, but what's the biggest mistake you see from young people or the millennials or the people that are kind of coming into their age is going to the workforce. What's the biggest mistake that you see, Derek?

So it's actually not going to be probably what you think. All right. But I would definitely label not taking action. Scott, how many times do you work with someone and they're just scared to take that next step? I don't know why. And it's something that's very hard to get people to overcome. It really, really is. Especially when they have someone else whispering in their ear that supposedly knows better, but they're broke. I've run into that issue a lot. Someone says, oh, that doesn't work. Here's what works, is you work really hard for 50 years, put money in your 401k, and then you retire. It doesn't work that way.

Yeah, the 4040 club doesn't work. You work 40 hours a week for 40 years, you're retiring 40%. That's not fun. And I'm glad that you brought up the cash flow quadrant, because I think a lot of people, and don't get me wrong, a lot of people, hey, when you start off, you're exchanging your hours for a paycheck.

Once again, there's nothing wrong with that. And one thing, like I said in the beginning, is I think too many people look at that aspect. They take that and that terminology, oh, that 95 is bad. I don't want to be part of the active income side. No, no, no. It gets you to the passive side. And it's not something that happens overnight. I even built a full Excel spreadsheet proving that and going it over. Actually, I could almost share that with you.

Let's not right now because it won't show up very high on the screen. We'll say that anybody wants that, they can reach out to you, though. But let's talk about what's the best ways for people to get a hold of you again. What's the best?

I'm going to give a. It's an 855-fun- IRAs. But guys, that is a non automated line, okay? We have 15 or 16 IRA specialists on staff, right. That can answer that call. So it's non automated, which I think is really unique in today's day and age. Remember, if you're one of Scott Carson students, use his coupon code, Carson 19. All right, we'll help you out. We're here for you guys. Remember, we answer the phone immediately. We return emails. If you want to send me an email, the best email is iraspecialiststrust.com that'll.

Go to all your IRA specialists, though it won't just go to you, it'll go to. Everybody can reach out immediately, right?

That's correct. But you can just address my name. So I'll respond to it. But like I'm getting ready to go on a cruise for a week, so if you email me personally, I might not see it. So I always like to give that email out because it reaches out just in case, for whatever reason, if I'm not available, someone's there to help you out. And that's really how we work. We're not here to sell you anything, guys. We're here to help you.

Love it, brother. Thank you so much. Great stuff for sharing and great presentation.

Scott, thanks for having me on. I really do appreciate it. This was a lot of fun. I'm looking forward to doing it again and we can really focus on. There's a whole slew of topics we can cover.

Definitely. Definitely. Well, hey, man, have fun in Austin and you got a great group down there. Make sure to tell Ingrid and Katie and Michael out there to keep rocking and rolling out there. Tell Michael, give him an elbow and say, go Dub Nation. He's a big Rockies fan, right?

I definitely will.

All right, man. Thanks so much, Derek.

Thanks, Scott.

All right, guys, that's going to wrap it up for this episode of the no Closer show. As always, take action. You heard it from Derek. That's the biggest mistake, people not taking action and going out, putting these things into process.

Start it.

You don't have to put a little ton in there, but just start building those habits, building those great saving things. Start paying yourself first. And before too long, you keep planting those little trees, you keep putting that money in the bank for yourself, you'll look back and like, oh, my gosh, it's bigger than you ever expected to be. So go out, make something happen. Everybody. And we'll see you all at the top, Everybody. Bye, Sam.