First off, congratulations on taking the steps that can put you back in charge of your financial future (instead of leaving it in the hands of the corrupt banks or even more corrupt Wall Street).
My goal in this report is to give you a few more tools and strategies to enhance your investing – read this report and study it and see how you might use these. If you’ve been thinking about growing your wealth with real estate this just may be what you’re looking for.
So, in the report you just read, I walked you through the deal – how it came to us and what our options were. I’m now going to show you the simple steps of setting this up and how I’m able to do deals with my son in his IRA.
Every deal is different and you can store this in your toolbox for when the deal pops up that fits the way you want to do it.
On this deal, I wanted to do it in my son’s Roth account but he only had $5,500 or so in that account at the time of the deal as he has only been able to make 1 contribution. (Hey, he’s a baby! ☺ ) So we split the deal between his Roth (which bought 15% of the deal) and my wife’s Roth (which bought 85% of the deal).
NOTE I’m not a lawyer or accountant and in no way shape or form am I giving advice here; just sharing what we have done on this deal.
Okay, so you’re going to need a couple things set up to do a deal like this.
You’re going to need the Roth / IRA / old 401k / cash… to do this.
A lot of ways to go about this but this exact flow was simple.
I set up my son with a Roth IRA. (For a Roth, they need to have earned income to set one up; and yes, my son earns money because he’s on my site and my marketing and gets paid as a model… Again, “Like father, like son” on the model’s good looks. ☺ )
If you do this in your kids’ Roth, you can pay them as much as you want based on the job they will be doing for you but they have to earn at least the amount you contribute. So maybe do $7k-$12,550 a year or so … this leaves money for taxes and such.
To set up the Roth, I use a company that has been amazing for us: www.SpecializedIRAservices.com . Or, you can use any other company that allows you to do Self Directed accounts. Equity Trust www.TrustETC.com is another company we have accounts with.
The company you pick to set up the self-directed account will help you with that process. It's fairly painless and pretty simple. I always pay for the VIP service where they pretty much do all the work for you. It’s not needed if you’re good at following steps (but I’m not and Mark III isn’t either ☺ )
Feel free to research the one that best fits your goals. Make sure you let them know that Mark Evans DM told you about them when you set the accounts up. (I make nothing from that… but it’s good to know where the great people are coming from.)
I’m going to outline the steps here in the blueprint that is needed for a deal to go down with this.
So, where do I find the deal?
There are lots of places to find a deal. You can find a deal from other investors, or it may even be listed for sale through an agent, or it may even be a property my company is selling, as we have many folks who buy properties this way with us if they want it done the easiest way possible.
Once you identify a property, you’ll need to ask for and review the contract. If you’re working with an investor / wholesaler (or even us, we use a simple 2 page contract). If you buy from an agent then be aware that will change things a bit – they’ll usually have around a 7-12 page contract, depending what state you’re buying in.
On this deal, we bought it from another wholesaler and closed the deal with a title company (I’d close ALL deals with a title company).
The title company will do all the fact checking and lien searches and such (the property we bought had 2 liens on it that had to get cleared before we closed… and always get title insurance. Even Mark III will tell you that and he can’t even talk yet!)
Once we were clear to close, we put together the paperwork to get the money in motion from the IRA companies to wire to the title company. Always wire money to title company, not to the seller.
Here’s what the self-directed IRA paperwork looked like for this deal.
You’re going to see 2 sets of paperwork – remember my wife did 85% of this deal and she has an account with equity trust and Mark III did 15% which is done through Specialized IRA Services.
This is the paperwork from my wife’s side that we used on this deal, as she owned 85% of the deal (you may recall I mentioned earlier that my son had $5,500 in his Roth and my wife had the rest in hers so we split the deal 15% to my son’s Roth and 85% to my wife’s).
This is known as a DOI, that’s short for Direction Of Investment. This is done every time you do a deal so that the IRA company knows how to deploy your money.
Now, my son’s DOI (he’s got an account at Specialized IRA Services) so their paperwork is similar. See below:
Mark III had a 15% interest in the deal so his total investment was $5,100, which brings the total to $34,000 all-in on this deal.
When rehabbing the property, REMEMBER you’re not moving in this house so fix up accordingly. I’ve seen many investors over-fix.
See below for a simple run of what they were going to fix. Note I put zeros in for the amounts (since every area is different and I don’t want you getting distracted by the price of repairs if it will be different in your area). Depending on your level of rehabs and such, you may want more detail etc. I used a handyman to do this job as we do many of these so I have guys that handle this stuff for me.
Remember I may have invested an hour or less on this side of things! (NOT always the case but this is the case on this deal.)
Now, the property is done. You can see the before-and-after pictures… looks great right? ☺ …
(By the way, after you check out the pictures, be sure to keep reading because I share some more insight, plus I show you which option Mark III decided to do with this property).
So my EXIT strategy that Mark III and I settled on was Option #3.
I sold it to a turn-key investor, I like to turn the money on this deal to grow my son’s account to 6-7 figures as fast as possible for compounding purposes.
Remember though… he was only 11 months when we did this deal and now he’s 14 months old (as of the time of this writing) so my goal is to “front load” his account and grow it and then let the cash flow keep growing.
In 5 years this account is going to be doing amazing things for him. (And we’re doing a similar thing with my wife’s account, too.)
When we sold, here’s what happened.
All parties are happy here’s the breakdown of the numbers for profit stand point.
Sold for $60,000.
I had around $2,000 in expenses to close the deal.
So we net around $58,000 (remember: we were all in for $34,000), which comes out to a net profit of $24,000 – not too shabby! Even Mark III approves and he usually only gets this excited when he sees a puppy!
I hope this blueprint has given you a vision to grow this piece for your family. It’s something I do daily and I‘ve realized the POWER this has.
Keep in mind the BIG ROI I’m sharing with you above is an Active ROI (meaning: I made the calls and spent an hour on the deal to acquire it, direct the contractor, and then sell it to another investor). I’ve been in the business a long time and I have various opportunities and deals coming at me daily, so this is possible because I have the knowledge, which I’m sharing here.
But that’s an Active ROI… and it’s not for everyone. Maybe you’re a busy professional or you just have money sitting doing nothing in unstable markets and you want to just buy simple assets and generate passive income. Then you might prefer to get a Passive ROI that is ongoing and requires even less work. (Expect around a 8%-10% ROI on your money, as this is a very safe and simple ROI that can be accomplished without risking the farm.)
So, this year moving forward, Mark III will have another contribution (and his profits from this deal) which will take him to 6 figures sooner than later.
Again, the key for me is to get the account to a good size and put a piece of it into passive turn-key environments that produce monthly income without lifting a finger and let the account grow.
If you’re using a CESA account, this could pay for all the computers, school trips, tuition, etc. that your children will need for a great education… so learn about this and enjoy the process and results as we have this type of account set up for Mark as well. When you talk to a self-directed IRA company they will be more than able to help you with this.
Now it’s your turn!
Mark, Mark III, Deena
I’ve just shared the simple strategies that we used to nearly double my 11-month-old son’s Roth IRA. These strategies can be applied by any investor to grow their IRA or cash or both.
I’d love to hear about your progress as you implement some (or all) of these strategies in your own investing. Keep me posted!
Bookmark the following page and send me updates from time to time so I know how you’re doing at implementing these strategies.
Your friend and mentor,
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