Updated: Jul 11, 2020
Your IRA does not have to be invested in the volatile stock market. You can self direct your IRA into professionally managed, cash flowing real estate in high demand markets such as Northern New Jersey. In this episode Aaron explains exactly how to self direct your IRA into cash flowing real estate. Also, learn tricks of the trade to make sure your IRA grows faster and has more predictable returns than the stock market.
The Passive Cash Flow Podcast is for beginner or experienced investors. Subscribe today to learn how you can diversify out of the stock market, own a part of an apartment building & start earning Passive Cash Flow!
Peoples Capital Group has been helping passive investors build wealth in NJ real estate for 10 years. Visit www.PeoplesCapitalGroup.com to find out if you qualify to start earning passive income and pay less taxes via investing in real estate. IRA's and 401K's are accepted.
Aaron Fragnito: Hi, passive investors. It's Aaron Fragnito with Peoples Capital Group, one of the founders here in Berkeley Heights, New Jersey. We focus on investing in Class B and C apartment buildings and working with passive investors to do so. About a third of our investors self-direct their IRA into real estate. I'm going to talk to you briefly today about how to take your IRA, maybe it's in the stock market going up and down and up and down, maybe it's been controlled by another entity where you're not even sure what industries it's supporting or what it's really doing right now or what the value is, and take that IRA, take control of it and move it into tangible cash flowing apartment buildings, or real estate, in general.
We focus on buying apartment buildings in high demand markets here in North Jersey. That's perhaps something you could do with your real estate to build it stronger. It's not a way to pull from your IRA sooner. It's not a way to cheat the tax code, but it is a way to grow that IRA. We're going to explain that in depth today in this brief video, here with Peoples Capital Group. Also, be sure to hit that subscribe button, because we come out with a new video every week with real estate investment tips. Let's break into it here.
First step in self-directing your IRA is working with an IRA custodian. An IRA custodian, there's over 60 of them. Their prices do fluctuate a little bit so you want to make sure you're working with an IRA custodian that fits your needs. For the most part, though, their job is to take your IRA from wherever it is, say it's with Merrill Lynch right now, and you want to have your IRA custodian, once you select the right one to work with, and once you choose that IRA custodian, they're going to contact, say, Merrill Lynch where your IRA is now, for example, and then that company will move the IRA over to the IRA custodian that you've decided to work with.
Now, this custodian now allows you to do a couple of different things. Some people are just going to invest their IRA into a passive investment. They're not going to need access to the money very readily. In that case, say you're investing in an apartment building with Peoples Capital Group, and we're going to send you back quarterly cash flow checks back to your IRA custodian every quarter to build that value of your IRA, but for the most part, you're really just making one transaction from the IRA custodian into the apartment building.
Now your IRA custodian is going to tell you what you can and can't do with your IRA, but one thing you can do is invest in the structure we have to buy New Jersey apartment buildings, or you can also invest in other things like precious metals or different businesses. There's rules and regulations on what you can and can't do with your IRA. Now let's hit the brakes here for a second and recognize that this is not a way to pay yourself early, take a management fee off the top, get a vacation home and stay there for free with your family every Christmas.
The IRS has thought of that already, and this is not a way to cheat the tax code. However, it is a way to take that IRA and put it into inner-city areas where you can actually make a difference. Not only can you collect cash flow, build wealth over time, passively, especially if you're working with Peoples Capital Group, but you can actually put that money to a city or an area, maybe that you grew up around, and you can improve that area. We take mismanaged apartment buildings that are really often managed by scam lords. We come in and we make sure that the tenants are happy and satisfied and that the building is a place that's safe to live, where you can raise your family, and it smells good, and it's quiet and enjoyable living there. That's what we create for our tenants, that nice environment. People are willing to pay more for that environment. Not only does that improve the neighborhood, but you're also making a better return on your investment. You can really do a lot more with your IRA than just having it sit in an index fund and go up and down and up and down as the stock market does, with more and more volatility every day in the stock market.
A lot of people are recognizing that the best thing to do is actually take control of that IRA and take at least part of your IRA and self-direct it into real estate. Here at Peoples Capital Group, we can connect you with the IRA custodian to do that. We can even help you with the next step. If you want to create an LLC that's owned by your IRA and managed by you, you can do that. You can create an LLC that, once again, is owned by your IRA and managed by you. You can't take a manager fee off the top. Again, you can't buy a-- You'll put your kids to college.
There's rules and regulations on what you can do with the money, but you can go ahead and, say, flip a house. You're going to start that LLC. The IRA custodian is going to move the money into that LLC, and then you could do multiple things with that money at that time. Again, you have to follow the rules. You can't buy a house and have your kid live there for free. There's lots of rules and regulations. You could go flip a house, say, with half of your IRA, and then you could take the other half and invest passively in an apartment building, say, with Peoples Capital Group.
There's lots of ways to diversify your IRA. You don't have to take that extra step and start the LLC that you're going to self-direct your IRA into that's got a CheckBook IRA LLC account. The only reason you would take that extra step is if you're going to go ahead and be more active with the money. Say you're actively buying a property or flipping a property, then you're going to need access to the money much more readily. Now, if you're not looking to be active with your IRA and just invest passively in some real estate and work with a syndication and operators such as what we offer here at Peoples Capital Group if you're qualified, then you don't need to take that extra step and develop the LLC.
You can simply hire an IRA custodian. They're going to contact whoever holds your IRA right now. They're going to move the money to that custodian, and that custodian is going to move it into an apartment building with Peoples Capital Group that's going to be professionally managed, produce quarterly cash flow, produce quarterly financials, monthly updates, and you actually learn about what we're doing here to buy mismanaged apartment buildings in inner-city areas here in New Jersey, make them better, make them nicer places to live, and, in turn, make our investors great returns while improving these inner-city neighborhoods.
If you want to learn more about that, if you want to qualify as a passive investor, or at least apply to qualify, then you can go ahead over to peoplescapitalgroup.com where you can input your information. Our staff will get in touch with you regarding the next steps to qualify as a passive investor, so you could take your IRA, move it into a custodian, and then move it into a passive investment backed by an apartment building here in New Jersey that's going to produce a bunch of benefits, quarter-over-quarter, and allow you to build that IRA faster. Ideally, you could retire sooner than later, and that's the American dream.
Here at Peoples Capital Group, if you want to learn more, go to our website, peoplescapitalgroup.com. Good luck self-directing your IRA. Take that bull by the horns and build that retirement account today. Thank you.