Hey, did you know that when you are going to buy a piece of real estate using your self directed IRA, sometimes you don't always have to have 100% cash to complete the deal. You can actually use leverage inside of your self directed ira. But keep in mind there's only one loan that you can get and it's called the non recourse loan. Come on inside the cafe today. Join us on this episode when we sit down with Ryan Hughes with non recourse loan and he's going to give you all the parameters to consider when leveraging inside of your self directed ira. See you then. Hi everyone and welcome to another episode of the IRA Cafe powered by American ira. I'm your host Kyle Moody with the business development team here at American ira and we are so glad that you decided to join us on wherever and whenever you listen to your podcasts today, you're going to get some great information but very honed in information on leveraging using your self directed ira.

What do I mean by that? Well, a lot of folks will invest in real estate when using their self directed ira, but they might not have all the funds to cover the entire purchase. The there are avenues that someone can take to complete the transaction. But today we're going to be talking about when you are leveraging using a non recourse loan and we're going to tell you about that. And you're going to meet our guest in just a second. And for anyone that's listening to this podcast, hang in with us here for the next few minutes and at the very end I'm going to also give you an offer that you're going to be able to use if you are finally ready to set up your new account with American ira. And if that is something that you've been considering, please feel free to visit our website@www.americanira.com. there you're going to find out about all the different account types that we offer, whether that's going to be a traditional or a Roth. Well, everybody's heard about those.

Are you a business owner with no full time employees and you're looking to set up your own Solo 401? You're going to learn the differences between the IRA and the Solo 401k here shortly when using non recourse loans. So make sure that you stay tuned in with us here for the next few minutes. How about those accounts that don't always get the attention? An hsa, a Coverdell for anyone starting for their kids when they're going to be going to school in the future. How about a spousal account when one spouse works and the other one does not? Inherited. That's right. You can actually inherit the more traditional form of an IRA and then you can actually self direct that. Any questions on these or other accounts that you might have looking to do any investment in all the different asset classes out there, please feel free to give me a call and visit with me. We'll go over your scenario and look how American Iraq can really be a resource for your investment objectives and I look forward to that conversation for this podcast and any other podcast that you'd like to get information on.

Also remember our YouTube channel at American Ira LLC. Just do a search for us and subscribe. You will hear all of this information and much much more. Whatever your asset class that you're looking to learn more about, we welcome you to watch any and all of the videos here. We always make sure that we fill this time with guests who are bringing their absolute best knowledge from their field and always remember that you are able to utilize their knowledge with your self directed ira. So without further ado, want to bring in our guest for this episode in the cafe and that's Ryan Hughes who is the founder of Non Recourse Loan. So welcome into the cafe Ryan.

Good to be here Kyle. I appreciate it.

Absolutely glad you could take some time out. I know that you're traveling right now, so Ryan is actually carved out some time and actually carved out a corner of a building that he's in right now. So we really do appreciate your time. Ryan has actually got an extensive background in banking and not only that, but how it has played a vital role into the non recourse lending aspect, specifically when it comes to self directed IRAs. So Ryan just want you to give us a little bit of your background there, what you've been doing the past couple of decades and how it has led you to become the founder of your company. Sure.

And one thing that you know, I wanted to go ahead and bring to light here, obviously there's going to be a lot of seasoned investors that are listening or watching this podcast today, but hey, you know what, we really structure these for everyone. No matter where you are on the spectrum of your investment journey. We have, we might have folks that are listening today and this is your very first, first podcasts that you've listened to. You may be brand new, taking your first steps after visiting some real estate investment associations, listening to other programs out there and you're ready now to get into in real estate investing. And if you're also brand new to using your self directed ira, the reason why Ryan is here today is just so you know, things are going to be different when you're using a self directed IRA to buy your real estate. Okay now and what I mean by this is can you purchase real estate 100% cash from the retirement account? Yes. Are there lots of folks out there that cannot also. Yes.

I can't tell you over the years though how many people think that you must buy the property 100% in cash and you do not. It is not a requirement. There's many different strategies and structures that you can use when purchasing your real estate from your self directed ira, but in this case we're talking about leveraging with a loan, whether that's going to be from a banking institution, whether it's going to be something that's owner financed, whether it's going to be something that you were getting funds from a hard money lender. Okay? The point is, is that it always, no matter all the different ways that you can structure your deal, it must always be leveraged with what's called the non recourse loan. Now you're going to listen to Ryan here throughout the day or throughout this session rather talk about all of his knowledge when it comes to the non recourse loan. But we're also going to have him talk about why the non recourse loan from our perspective on the self directed IRA end I will tell you it's merely because that property does not belong to you and because of that you cannot be the guarantor on the loan. I'm going to switch it over to Ryan here and let him explain why someone, why the person, why the individual cannot be the guarantor of the loan when leveraging within their self directed ira Ryan

So thanks God for the background. So what the thing is, you know, and this is, you know, what Kyle mentioned is not just what we're saying. This is, you know, these are obviously out there. The IRS put these rules in place when they, when they allowed the 401k to purchase alternative assets. And with that there are certain prohibited transactions like how I mentioned, you can't, you can't guarantee when you buy a traditional home just when you're owner occupied, you sign, you personally sign and guarantee it goes in your credit. If you don't pay it, the bank can file, you know, judgment, they can go to a lien against you, they can take the asset, they can come after your personal, you know, other funds in your bank account, maybe possible garnish, wages, so forth and so on. With these, there is no reporting to your credit, there is no personal guarantee. You can't, you can't co mingle, you know, you can't have your personal side, you know, signing as well as your IRA putting down the down payment.

So that's where these rules are set. And a lot of lenders, unfortunately, when they get, you know, and we'll talk a little bit about this later is some people get into this situation where they put a, they put a, you know, offer on a property and then they have a loan in place with their, you know, same lender they went through on their owner occupied or their investment property. But then like, oh wait, I Didn't know I had to sign personal guarantee. And they can say, you know, they can come on me personally and that doesn't work. Sometimes they kept beforehand other times, and we can talk about this is the, they find out afterwards or their estate finds out and they're maybe they're, you know, they're, when they pass away and it goes into probate or whatever and then they realize the bank's like, hey, you need to pay us and you have a personal guarantee. They're like, whoa. So those are some of the, the gotchas that you just have to remember to ask, you know, make sure it is not recourse, there's no personal liability to keep it simple. You're not personally guaranteeing the loan is also what that means non record.

And so if I'm clear Ryan, and you can really expand on this one, I always tell folks and, and I think they might be looking for the catch. But you know, these are the, one of the things that I say to folks and, and by the way folks, before I say this, if this is one of the first times you're hearing this, remember we're not fiduciaries. I, I am not, I am not permitted to give any tax legal or financial advice, suggestions or opinions. What I'm able to do is give factual information and education for you then to be able to speak to your trusted professionals with some sense of a knowledge of the playbook of how the investment is truly going to work. And in this case, what I tell folks is that, well, the non recourse loan basically means that the only remedy a lender has in the event of a default is to take back the property itself. And someone might say, well yeah, that's just like any other conventional loan. Well no, not exactly because they can come after that type of lender can come after the remainder of your retirement account or anything that you personally might have to make themselves whole. And that just really is not the case when doing a non recourse loan in a self directed ira.

Right Ryan?

Correct. That's exactly right. Now you say that and we always got to read the fine print. And it's one thing I know we're all probably bad at doing is we don't always read mean. I don't know, the last time I read an entire lending package or bank package or you know, it's, I mean there's a lot of legal jargon and you, and you hopefully it's, it's pretty standardized but you know, sometimes people do slip things in there or One pager that oh yeah, it's not recourse, you don't have to worry about it. But then all of a sudden there's a personal guarantee or there's a little carve out that says bad boy carve out. And oh yes, we can come after you if this, if you do the X, Y and Z. So it's just, you know, trust but verify and you know, I'll try to talk to the beginners and then also the experienced, you know, investors.

It's ultimately this when you're looking at an asset, you know, you want to analyze it the same way except with the non recourse or with an IRA you may not be so concerned about cash on cash return because you're looking for a long term investment appreciation. But it still has the cash flow. So it still has, it still has to, you know that property has to cover the debt load of the loan and that's, you know that's called a debt service coverage ratio which there's a lot of those loans out there on regular lending and that's ultimately like. So people ask can I buy land? Can I, can I purchase? I'm like well no, it has to be income producing. Maybe if there's a working farm on it or not necessarily, but there's income producing it's possible. But typically land does not qualify for these and these type loans. Again check with the lender on that. Just want to throw that out there.

Can you do fix and flips with a non recourse?

So there are, yeah, so we do some, some fix and flips. It's, you know, it's going to depend on, you know it's very similar to standard, you know, investment property. We will consider those or some different parameters how we do it. You know you're typically, you're going to need to be safe. You'll probably want to have the money that's going to be for the fixed part. So you'll need down payment for the asset and then you're normally going to want to have some additional money for the fixed part of it. So on a typical fix and flip loan most lenders will lend you 100% of your rehab cost or 90% with a non recourse. Normally you have to bring that money and then there could be possible once the work's complete then we could, we could re like basically replenish that investment

with the different types of self directed accounts out there. As I mentioned earlier, if anyone needs to leverage or even wants to leverage, they can absolutely or they Absolutely have to use the non recourse loan when leveraging like this. Is there any difference, say between a traditional and a Roth that somebody might want to consider something when using the non recourse?

You know, I always tell people from a lender perspective, not so much but from a growth perspective, if you know you're going to knock it out of the park, would be great to have a Roth, of course, but you know, for bed from, from us, not really. There's not a, we don't look at them any different if it's a Roth traditional. You know, they're not considered any from our, from, from a lending standpoint.

Now how about this, Folks might not understand this. I, I, I have seen this in the past where folks have come to use American IRA because they might have been at a competitor out there. And when they learned that they could use their self directed ira, the one thing that they didn't realize is that there actually is. Now they're using the self directed IRA because they want to make a real estate investment and avoid taxation. One thing that they didn't take into consideration or they did not know about or it was not explained to them is that when you are investing in real estate with a self directed IRA and you have to leverage well now it's possible that there might be a certain taxation that you will realize but on the back end. So in other words, maybe not when you receive, when your retirement account receives the funds coming in the loan itself, but you're going to realize it on the back end on that profit, on that rent, that annual profit you're going to make on that. So really simply there is a type of taxes that, that you could realize as long as your note is still in place, that loan is still in place. And it's called a udfi, an unrelated debt to finance income tax.

Ryan, tell us a little more. Tell folks expand on that, how UDFI comes in, why it comes into play, what it is and what they can expect with it.

Sure, sure. So that, so it's under the, it's under you, you know, ubit. So, so then this is part of ubit. And when you, when you have a leverage asset, if you're say you're buying $100,000 property. Well, two things, let me clarify this. So when you're doing an ira, this is, it's definitely going to apply when you're doing an IRA LLC, purchasing and using debt, you know, you have 50,000 in your IRA and you're going to borrow 50,000 from the bank that 50,000 is leveraged. So when you sell the asset, that's where, when you, you sell the, say it's a hundred thousand dollars asset and you acquire it, you sell it for 200,000. Well, now 100,000 profit.

Well, 50,000 of that profit is going to be, that's going to be applied to the, to the udfi. So that's, that's the, that's the amount of the leveraged. The leverage amount. So you're going to take half the money. Obviously doesn't, you know, you put down 50,000, but the other, the other 50,000 is going to, is going to typically have that UDFI tax and it's changed this year. I mean, I don't want to quote that, but that's, you know, that's where your accountant would come in. It's like 20, 24%. But I don't want to, you know, put an actual number on that.

So you do want to consider paying that and you do have to pay that when you file your taxes, the assets sold. And then you're, you'll calculate that with your account, your CPA for how much you're liable for paying taxes on that, on that leverage debt. So that's. Any questions on that, Kyle? I can kind of go to a little more detail, but it's.

No.

I mean,

The fact that it came from a bank, okay, that still has all of its rules and regulations and parameters and so on and so forth forth does not matter when it comes to those funds coming into a retirement account, because now it is outside monies. The money inside of the retirement account is true retirement account funds. 60% of this purchase price was not so loosely put. I let folks know that 60% of those profits could be subject to that UDFI. So if the property makes $10,000 at the end of the year, well then you could realize you could be subject to taxes on 6 of that 10,000. That's how I really put it in there, Ryan.

And that's right. And if there's, we can go into more detail. I mean I'm not a, obviously we're not a fiduciary tax. I'm not a tax attorney. But you know, if you're, there's some questions, there's formulas that we have on our website that you can kind of look these do you know, they do change, you know, a little bit. But you know, I have in there also on our site, I think it's up to 37% is the actual tax tax could be tax, the taxable amount on that, on that 6,000 you mentioned. So there, you know, that's what you could be. And then of course the, you know, you have to file that 990t and I don't know if you guys help your clients with those as well or that that just goes through their tax, you know, their cpa.

But that's the form you would file when you are reporting that on your taxes.

Yeah, good point. And that is a form that we do have. We will not complete that form. We can supply it for them, but that is going to be something that they will complete with their tax professional. Now switching gears for a second after you've heard us talk about udfi, part of the UBIT here for the past five minutes, did you know that there actually is a self directed platform out there that if you utilize it for leveraging. Well, guess what? You aren't going to be subject to the udfi. Ryan, if you wouldn't mind, for those folks out there who either already do have the Solo 401k or qualify for the use of a Solo 401k if you'll tell them why they might not or would not be subject to this taxation when using that type of retirement account.

So there's an, there is an exemption out there. It's under the IRS code, I think it's a 514C, don't quote me on that, but it's in there and basically it exempts, typically exempts the solo 401k. So when you qualify for a solo 401k, obviously that's where American IR comes in and they can see if that's something you qualify for. But typically a sole proprietor that has no employees or certain rules. I Don't want to, you know, that's not something I want to completely, you know, advise on. But that's where you would talk with, you know, Kyle and his team, you know, because if you do qualify for a solar, highly recommend going that route, especially if you're going to be acquiring real estate inside your, inside your retirement account. So that's a, that's because then you could avoid that, that tax some. But I do want to add some people will ask, well, why do I want to pay the tax? You know, why don't I just pay cash for the property? This is when you don't have enough cash.

You want a $500,000 property, maybe you only have 100, some, you know, 100, 200,000 in your IRA and this allows you to buy that asset. And then I have some other examples where clients were able to purchase three properties versus just one property. So ultimately that appreciation is significantly higher. Plus you diversify your portfolio. Instead of putting all your money into one property, you can spread it across different assets. So it's always good to diversify that as well. And this allows you to do that.

Is there any difference in underwriting when someone is say, going at it alone just with their personal cash as opposed to when they're using the self directed account?

There, there is, there's, you know, typically the personal money, when there's personal guarantee, there's higher leverage. You can, you know, you know, obviously because there's a personal guarantee they can cross collateralize, they could potentially, you know, look at your personal reserves and you know, personal liquidity versus just your retirement liquidity. So with an ira, normally it's a, it's a higher, you know, down payment. So less, you know, less leverage. You know, it's a, you know, anywhere from 50 to 70% of the asset and then it's where you're doing, you know, personal money. Normally you can go up to, I mean you can get up to 90% attention on your experience. So you're going to need a little more money down. And you're also, we also look at the reserves in that IRA or that 401k to make sure you have enough.

It's not that because we can't look at your personal funds. You could have tons of money in there, but you can't use those personal funds. It's commingling. So you can't use that money if something they see breaks or the tenants move out. And you can't get a, you can't get another renter. I mean, there's unforeseen expenses. So we do want to see a reserve buff buffer and that's mainly to protect you as the IRA holder. So you, you are able to actually take care of that.

You know that, that repair.

One of the things that your program will help folks understand whether they're the sophisticated investor, but really somebody who's starting out then I mean it could be said an investor is an investor, but it's ways to mitigate risk. So explain a little bit what you mean by mitigating the risk when leveraging inside the self directed retirement account.

So. Well, you're saying when you go out and you're mitigating because you're saying when you're across different assets or different markets. Is that what you're referring to?

Yeah. So one of the things here is that when investors are really putting deals together, but they might not consider everything and a deal is going to fail, one thing that using your program or will actually do is actually help folks mitigate certain risks that are going to be associated with the, with the real estate deal by using the non recourse loan.

Yeah, got it. And sometimes I end up selling myself out of a loan because I'm trying to look out for the industry, the self directed space. And the last thing we want is a client to acquire an asset and then, then all of a sudden they lose all their retirement or, and especially, or they have to pay tax on their, especially an ira. If you do a prohibited transaction and it gets audited, well then we all know that that entire IRA could be liable where that is obviously on a solarcade. One thing about UDFI, the UBIT, but also with, if you do that with a 401, it's just that asset, which is, which is also another advantage. If you could do a 401. Okay. But a lot of things, you know, incorrect vesting.

So there's, you know, some you would, you don't think about it. But if you have the wrong vesting when you buy the property, maybe you put in Kyle Moody, but it should have been, you know, American ira, FBO Kyle Moody. So you know, it's, it's those little things that you have to, not it's not just us as a lender, but it's also, you know, the title company, the insurance, making sure that it's structured correctly because you know, maybe the insurance they want to, they want to put in your personal name, not your ira. You know, all there's, there's other nuances just to be aware of. And so we try to, we Try to. I try to. Not just about helping with the loan, but also, you know, I want to. I want our clients to grow.

I want the space to grow. It's not just about this transaction. It's about the next 10 transactions. So for me, it's more important to startups. Run, build it, get a good foundation, then keep growing from there. And that's why I have a lot of repeat customers, because they're able to do that and then the asset appreciates and, and they're able to leverage and pull cash out, buy more properties. So that's. That's a big thing.

They don't want the realtor. It's a bidding war, and they're like, oh, I just got to write the check and, and we'll figure it out later. You know, those kind of things. You know, I just. It happens. I see it, you know, fairly, you know, not often, but it does happen. And, you know, there's ways to, you know, kind of handle that, but it's just. It's better off not doing it.

Getting all set up ahead of time versus waiting until you find the property and like, oh, I want to go, go, go. It takes time to set up the llc, the property proper structure, the bank account. It takes time to do all that. And usually the contracts for 30 or 45 days. And if we spend two weeks getting the structure set up, we're. We're behind the eight ball on getting that closing, you know, meeting that close date now.

And I'm actually glad that you brought up the use of the llc. One of the things that people like about using American IRA is that we do have our sister company that can set up that LLC as well. But one thing I tell folks is, you know, hey, look, when someone says, hey, look, I need to hurry up and get my IRA set up, because I've got to get my LLC completed so that I can move forward And I always like to ask folks, well, you know, just, just really quick, I mean, if you want the llc, we will definitely put it together for you. Whatever you'd like, we're going to make sure that you have, it is your account. I'm not going to counsel you on what you, what you should do because I'm not permitted to do that. But I do like for, I do like to know if the LLC is right for them. Because keep in mind, when doing real estate inside of your ira, it is not a requirement when a lot of people think that it is. Now, are there certain parts of doing a real estate deal where an LLC could make more sense? Absolutely.

If you're doing a buy and hold, you're not necessarily going to, you know, really be needing that llc. But if you're doing fix and flips, where time is of the essence, contractors do the work, they want to get paid immediately. An llc, you could be encouraged to set one up and put that together. If it's tax liens or something like that, where time really is of the essence for, you know, foreclosures, the race to the courthouse steps, LLCs are the way to go. The reason I want to bring that up is because if someone knows, hey, look, one way or the other, I might be needing to leverage. Is there any difference when leveraging directly from the ira? So from our custodial admin doing the work, let's say, or if they have their funds in an LLC and once they move those over there and then they're doing the investment, you know, we're really not privy to what they're doing. Is there anything specifically that someone might need to consider when leveraging from the LLC as opposed to leveraging straight out of the IRA that we are custody?

So I'm glad you bring that up. It's really the same transaction, just the titling. But also I always tell people, you want to let your custodian know what you're doing. Just make them aware of the transactions, the cost basis, you know what, when you acquire the property, the value of the property, if you sell the property, like those are things that American IRA, they'll need to properly file if there's a 5,500 needed. Things like that. Now it's self directed for a reason and you ultimately can control what you do. But going through, we can do the loans through if it's just an FBO custodial account versus an llc. So that, that is, that's not a problem.

Some lenders out there, you have to have an llc. And you know that's, they just, that's the only way they'll do it. They don't want to, you know, because they want the reserve. You know, there are certain things they want and they want to have the reserve account, the operating account with the lender or bank. So they, they want to have the actual, an LLC established. So that's not a requirement with us. But again just double check when you're out there, you know, when you're reaching and discussing getting pre approved, you know, with a lender, what's required, you know, if they understand it. Because I remember I came in this as a banker before and then well lender but then a banker and self directed and then open up the non recourse platform so for lending.

So it's, it's, I'm going from a banking perspective with lending experience but then also the knowledge of what's needed for not recourse. So just when you're talking to your loan officer it's, it's helpful to know that they understand what you're trying to accomplish and that's important at the beginning of how you're growing. Do you want inside your, you know, inside the custodial account like how said if you was buying a holding. Yeah, it's the same thing as putting into a syndication. You know, pretty much you buy and, and you just, it's there and you don't have to do much. If you're doing a lot of them, then yes, you probably. And that's when you really might want to have that LLC account established. And so just those are things to consider.

And you know, one of the things that we're not doing here folks, we don't want to, you know, scare you into certain things. I mean one of the things that Ryan could talk about is deal killing mistakes that people run into. Gosh, I don't know about all the LLCs. Look, we will help you understand all of this. I don't want it to be a fear tactic. We just want you to have the knowledge that hey look, if you know what investment you want to make, but you might not have 100% of the capital inside of the retirement account. Well, guess what, you have an answer to that. And he's joining us today.

So he's talked about a lot of different topics and things that are a need to know, really a wealth of bullet points out there that can't be covered in just this podcast. And so we're going to make sure that you also have his information that you can probably even schedule some time with him to really go through with a fine tooth comb. One of the questions somebody might ask is well, if I'm doing a non recourse loan out of my self directed IRA that's so different than conventional loans out there, is there a down payment price difference to that? Ryan, can someone see much higher down funds on the front end?

And I mentioned a little bit about that earlier. So yeah, so typically you know, you're looking at additional 10 to 20% down payment depending on, on what type of asset, you know, the cash flow, you know, that's. So you will look at that, you know, from a, from a down payer perspective. It is required and that's mainly because of the, the non recourse personal liability. So traditional, you know, 10 to 15% down on a traditional investment property and then on non recourse you're looking at 30 to 40% down payment. So it's got about double what it looks like. And then also like the terms, normally, you know, there's a 30 year amortization, you know, on a traditional, on these typically it's 20, 25 year amortization. Normally they're on a adjustable rate mortgage structure versus the 30 year fixed on traditional lending.

So those parameters, they are different. There are some fixed options out there but they're normally a 20 year fixed versus a 30 year fixed. So those are just some things when you're looking at it like oh wow, your payment's going to be higher. So you have, you know, you have to figure that in qualifying.

Well, someone, you know, when they're, when they're using their self directed retirement account, they can move in, you know, larger sums of funds in transfers or rollovers. Somebody, you know, leaves their, leaves their job. They've now got a sizable 401k and they've just now brought in the money to where they might be able to pay this loan off. Now I mean are there any penalties? Can someone pay off a non recourse loan as quickly as they want to?

Definitely check that. That's something that you, those are the things personal liability. Make sure that's not in there. Check if there's a prepayment penalty. There are typically prepayment penalties. Usually it's a three year prepayment penalty. It's a normally like a three to one, we call it. So 3%, 2%, 1%.

That's each year 3% first to second one, the third. And that's based on the unpaid principal balance. So you do want to check that. We have Both options for prepay or no prepay. And then so that's just be aware of those, you know, that's what you want to check is mainly those two things is is there a prepay? How long do you plan to keep in the asset? Normally it's not a problem because most of these, unless you're doing a fix and flip there wouldn't be a prepayment penalty obviously on a fix and flip. But if you're doing a buy and hold normally there is going to be a prepayment penalty.

Gotcha. We're here, ready to wrap up here. But you know someone has listened to all of this. They've probably listened to an in depth call with me that they've had and they're in their really just trying to put all this together. Ultimately we want them to know that they can, they can meet their objective. Objective, okay, they want to be able to use self directed funds to buy a piece of real estate that is going to be an income producing property that is in turn going to flow back into their retirement account. They know that they might not be able to do this 100% in cash. So they, but they also understand that they can utilize a non recourse loan.

That's where they are at this point. What really is tell someone how smooth of a process it can be. What do they need to know when they're going to start working with you?

It's, I would say it's a, it is a smooth process. But when you have a contract on a property and you have a timeline that's where it gets difficult because this is slower because you are dealing with additional people. You're dealing with a custodian, you're dealing with the lender, the title company insurance and it's all. And if you haven't done it before, it's making sure they all understand how it's structured because they have questions. They, you know, it may a title coin, they may have never done this. So it does take a little longer. I mean I say we can close. I mean I've closed loans in 22 days but normally you want 45 to 60 days, especially if you're not set up yet.

So the one thing that gets people in trouble is they, they put a contract in like I mentioned, possibly using their personal money to put the escrow, you know, you know to go and get it secured. And then they're like oh hey Kyle, I need to open up my, my IRA and I move money over from X, Y and Z, you know, company. Okay. And I'm. I'm under the gun. It takes, you know, it takes time to get this established. You got to get the ein. You know, you have to get everything established and then also get the, you know, the appraisal order.

Those take longer because we have to do. It's not just. It's not just a regular appraisal. It's. You have, you know, we have to look at the, you know, the actual rent schedule and, and comparable. So. And, you know, so you have to think about all those. All those extra added time versus saying, hey, I'm gonna do this now.

If you have the cash, what I tell people is, well, if you have enough cash, go ahead and take it down with the cash if you have to, and then we'll go ahead and do a refinance and pull the cash back out so that way you can do it again. So if you have the money, you can just pay cash, and then we can give you more leverage. So I have a prime example of one of those customers. They, they had 500,000, the retirement. They bought a bunch of assets, they rehabbed them. Year later, they were much, you know, the valuation was much higher. We pulled out $2 million on these assets. There was 23 of them.

Allowed that person to go purchase 15 more assets in the same area, doing the same thing. Now we're pulling another 1.5 million out of that second 15 assets, and now he's purchasing a multifamily project. So it's. It just. You can see how this can snowball. You know, that. That's a very. I mean, one of the best success stories that I've.

I've seen over the last, you know, almost nine years in this space is taking 500,000 and a 401k. And now that same 500,000 without any additional money is worth close to 8 million. So that's. That's a win.

Well, one thing I want to close with here, and this actually brought up a summary of things that I talk about multiple times a week when I'm on the phone with somebody. Ryan actually just set up a scenario that I let folks know all the time. He and I accidentally. I mean, this was an accident that we both tripped across. This last point that I'm going to make here, I think all too often. I mean, I'm. Look, I'm. I mean, call it.

I'm in the sales department. Right. But, you know, like you, Ryan, where you said sometimes you may have, you know, lost a loan because you want people to have the correct information well, in this I always let folks know, the most important thing is that if you know that, you know that you're going to use a self directed ira. If you don't have the property picked out yet, if you don't know exactly what you're looking for, but you know that you're going to use this account, go ahead and get the account opened, at least fund it with the bare minimum that we require here at American IRA of $750, because we're not going to charge you the annual fee until your first movement of funds. Okay? And the reason that I do that is not just say, oh, hey, one more account, you know that I got in there for the month, go ahead and open, open, open. No, it's not. That is because I understand the timeline and Ryan just told you how long this can possibly take. Do not, do not, do not wait until you find the property before you set up your retirement account.

And the reason is in this case, if you know, there needs to be leveraging. But somebody also, this is an off market deal and somebody wants to close this thing and they need their money in 17 days. Guess what? You're not going to be getting that property. You're not going to be getting that property. If you could do it 100% in cash because you're not going to even have the money from your outbound custodian yet. Ryan just told you plan on at least 60 days. And I even tell folks, look, if you're doing a cash deal, if you know that you've got something that's going to be happening in the next 45 days, we need to go ahead and at least get this account opened, because it's not how fast you can get it opened, Right? Remember, you gotta have it funded with something. And that can take anywhere from two to four weeks for us to receive the cash from your outbound custodian.

Then you start adding in the onion layers, kind of what Ryan's talking about. If there's gonna be non recourse loan leveraging done on this, that's a whole different level. Now that you know, they're gonna find two to three to four weeks. Okay, so. So, you know, with Ryan's actual help on this, this actually, you know, bolsters when I let folks know if you know this is the route you're going to go and you don't even have the property picked out yet. Perfect. You do not, you should not have the property picked out yet before you set up your retirement account. Because what it's going to do.

It's going to cause a rush and a lot of frustration and you might find more. More times than not you're going to lose that deal just because you hadn't done the foundational parameter work that's needed when using a self directed ira. Things are just going to be different. Well folks, as we're getting close to the end here of this episode of the Cafe, I want to say thank you to Ryan Hughes one more time. He's been a good friend over the years, good colleague to draw upon. We've sent a lot of business his way and vice versa there. So Ryan, Ryan, we always appreciate your knowledge and how you can take care of folks when they are considering the non recourse loan.

I appreciate it Kyle. Yeah, you're definitely a great friend and you're an advocate for the space just as I am. So I love that. And we want it to grow. We want more people doing it and doing it right and building their legacy.

Absolutely. And you know what? We're going to help you meet your investment objectives. But Ryan just said it. We always want to make sure that you have the education and the information to do it the right way. So I tell you what, for the ending of another episode of the IRA Cafe powered by American IRA I'm Kyle Moody and I'm on behalf of everyone here at American ira. We'll see you next time.

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