High Speed Podcast #4 – The High Speed Podcast with Dr. Forrest Bryant: Adam Barr, CPA Interview
In this episode of the High Speed Podcast, Dr. Forrest Bryant interviews Brandon Rooks.
The Following is a transcript of the podcast audio.
Welcome to the High Speed podcast. The official podcast of the High Speed Alliance taking you further, faster together. We are setting our course for freedom and legacy through mastery of business, finance, family and lifestyle.
FB: Welcome to the High Speed podcast. Sponsored by High Speed Alliance. This is your host Dr. Forrest Bryant. And I am pleased to have on our call today Mr. Brandon Rooks. How are you doing today Brandon?
BR: Doing fantastic, of course. How are you?
FB: Doing great. Doing great. Thank you so much for being with us today. Brandon is an incredible businessman. And he is a real estate professional. That I’ve personally done business with. So I can attest to that. I’ve seen his work ethic personally and I’d like to just kind of get that out there. He’s also a personal friend. And he’s one of the hard working guys that I know. So, he’s got a work ethic like no other. So, let me tell the audience a little bit about you Brandon. He’s the CEO of Rockstar Investments, LLC. He’s a navy war veteran so he served with honor and distinction. And we appreciate your service Brandon. Thank you for protecting our country and our freedom.
BR: Thank you and you’re welcome.
FB: After he got back out of the navy. He was in several different sales position through several different companies over period of time. And he was always one of the top salesman wherever he went. Then he’s been in the real estate for the last 16 or 17 years. He kind of rode the bubble up and then rode it down and then ride it all the way back up now. So, he’s worn a lot of different hats as you’ll see and we kind of into this. He’s also been married for 22 years and 4 kids. And it’s hard to believe you’re a grandfather.
BR: I don’t like to talk about that too much. I tell my grandkids they can’t call me grandpa until I’ve at least surpassed 50. So that’s next year. Right now they call me “Rockstar”.
FB: Rockstar grandpa huh? That’s good. Well, what did I missed there? I know I kind of glazed it over. Tell our listener a little bit about of who Brandon Rooks is.
BR: You know I’m just a blue collar guy. I grew up pretty poor. Our family struggled quite often. And my mom and Dad divorced when I was 13. And then, they both remarried several times. I got moved around the country. I’ve lived coast to coast and Hawaii. I’m in Arkansas now which is my 15th state I’ve lived in. I finished my last year of highschool pretty much on my own. Got my own apartment and carried a couple of jobs. You know went the full 12 years of school and because of all the moves I ended up a half credit short in Fine Arts. Where I was already signed up to go into the navy. I’m a (not so clear word) entry program they told me go down take my GED. So, I’m one of those rare cases of kid that went all 12 years of school and ended up with the GED. Which is just part of my story. And then, took the test. 5 mysteries questions on the test. They’re like “why do you not have a diploma?”. And I’m like, “you tell me.” And took the ASVAB test, missed three questions on that test. And they’re like, what do you wanna be in? And I choose electronic warfare which I thought was the way to the future getting into electronics and you know- technology. Man I found that to just be boring and I just couldn’t stand it. So, when I got out I jumped right into sale and I sold cars during the day. I sold MCI long distance at night. I started a mobile disc jockey business with a navy buddy of mine. That we both got out about the same time. Just fell in love with you know delivering a great product to clients and making sure they got a great deal and you know I’ve never really considered myself a salesman as much as I considered myself more of a consultant that just helps people acquire something that they want, need, or desire. And I just make sure that it makes sense and it’s affordable. And that it will be a product I would stand behind. I was kind of the passion and the principles that I followed in sales throughout my sales career. I’ve always owned anything that I also sold. Just like in dealing with invest properties now around the country in all that I do and all the different investment aspects that there are. I invest right alongside with my clients and buy the same types of properties or investing in the same types of things that I recommend that they also do. So kind of tells you about me a little.
FB: Yeah, well that’s fantastic. Thanks for sharing that. Let’s go ahead and jump on in. We could go in a lot of different directions here. I know you have a background in almost everything real estate. And we could talk about single family homes, multi-family, large multi-family, raw land, commercial, funds. You know, you’ve got some experience in it all of these. Let’s kind of just start just maybe from an educational standpoint and let’s just from a high-level view and we’ll just talk a little it about like cash flow vs appreciation. You know, for newer investor what are those terms mean for you? And we’ll start there.
BR: Okay. You know, there’s 2 principles in investing that are kind of like key principles that most investors are looking for. Cash flow is-it’s king. A lot of people want to create a passive income or create an income that will allow them to quit working and just be a full-time investor. And cash flow is definitely a key component and one of the principles that you should always be shooting for first above and beyond appreciation. On the same token there are a lot of investors out there that solely go for the appreciation. They’re okay if the asset pays for itself, you know. Even if it doesn’t create a monthly or annual type of cash flow, they’re all about taking advantage of appreciation. The issue that I have with investing solely on appreciation is that you never know when the next bubble’s going to pop. And you never know if you going to get caught in it. So, the key really is being able to find the right type of investment properties that not only have cash flow but also have appreciation potential. And if you’re following that rule, you are more likely to be a little bit safer in your investment. To give you an example, a lot of people lost money you know in the collapse in 2008. And the reason was that they were out there buying up properties and places like Phoenix and Vegas and Florida and the coast of Carolina. And they were doing this 5% down or no money down loans. They didn’t have any business buying investment properties. They had low credits scores. They didn’t have assets. All they did was they pull equity out of their homes and you know went after getting a bunch of mortgages. And a lot of investors really got pulled in to places like Phoenix and Vegas and Florida and Carolina because there was such strong appreciation going on at that time. They were looking for those 15%, 20, 25% annual appreciation and it was there but the problem was when the market collapse shortly after that they’re all sitting on a negative cash flow or breakeven. Then when the influential market got tight, where everybody else is dropping their rents. So they can keep their properties rented. Those that were negative or break even seem found themselves drowning. And not being able to cover their nut. So that’s one of the key reasons that you never buy on just appreciation. You always make sure that the property can pay for itself that you can right out any level of you know ups and downs in real estate.
FB: Right. Okay
BR: So, there’s always opportunities to make, invest your money in real estate. You just have to smart about what you’re buying. Some of the things that I like, tend to be a little bit more boring markets, you know. Is not as sexy as on or property on Vegas but I like those midwest markets where the appreciation is minor. The rents are stable. And when the markets collapse they’re just not hurt as much. And you can ride out any storm with the right type of asset.
FB: Yeah, I totally agree with you there. And you know, as I’ve become a wiser investor when I first started investing a lot of the things I did were I was investing for appreciation or speculation and not for cashflow. And so, of course some of those work out and some of them don’t. But now, I’m a little bit wiser investor. I always look at cashflow first. And if we get some appreciation then that’s always a bonus.
BR: Right. You know there’s another aspect to the cash flow. A lot of people get sucked in by wanting a 10% or 12% cap rate. Well, most of the time right now, in the current that means you are probably buying a much lower priced property which comes with a different class of tenant. And you need a rental property for every type of tenant that’s out there. And it’s perfectly fine to grab up some of those 50-60 thousand dollar houses that you see in places like Birmingham, and Kansas City. in Cleveland and you know Indianapolis. But just remember the type of tenant that you have in that property you know, they hurt themselves of the job. And they don’t have work on it’s comp and they’re out for a week. All of a sudden they can’t pay the bills. And all of the sudden they become a little bit harder to stay on top of to get your rent. Or at the same time, you know you might have a little bit different respect level with your property in those types of homes. There’s nothing wrong with purchasing those smaller priced properties just don’t base your whole portfolio on those types of properties. And what I really like to see is people be really diversified in the types of assets that they’re buying. And of course, I believe it’s exactly how we started with you in one of the first meetings that we had. We picked up a couple lower priced properties, we picked a couple of higher priced properties and the average returns of all 4 of those properties made for a good solid investment. And you know , there’s ways to snowball paid down on your debt and build your asset faster. But you always want to look at the property that I’m buying. What if I need a next strategy? You know. Could I sell those property in 3-5 years for more than I paid for it? And will it cover all the commissions? And when I get out of it okay. And again, that’s speculation. But you can have some sense of understanding of the market if you do your research. And if you a look at what prices were in the past. You know, we can literally talk for days on that. But again, be diversified, be smart you know don’t go all in just because something looks like really high cash flow. Those are the types of properties that make you nervous, you know. It’s okay to have them just like I said, be well diversified on your portfolio.
FB: You bring up a good point there. Some of the cashflows that you look and some of them are too low and some of them are too high. You just kind of have to find that sweet spot right?
FB: So, you know a lot of our listeners are medical professionals and they’re real busy. And they’re of different ages, you know. We have some that are right out of school. And some are kind of mid-career, some of kind of pre-retirement and you know. Looking it heading it to retirement. In your opinion, how does that change focus on what types of properties they might need to be kind of focusing on? Whether, they’re just starting off as investor versus little later in their career?
BR: That actually completely changes on how I help an investor invests. You know, there’s a few things that I looked at right from the start. One I look at the amount of funds has to work with. We determine what age they would like to stop working. And how much income we’re going to replace in order to make that happen. And you know that change is lot for the doctor that’s just getting started. That hasn’t started with that earning power yet. And that change is a lot for like many of the doctors and dentists that you and I are familiar with and have worked with that are getting to that point where I want to sell my practice. I’ve amassed quite a bit of money and I’m ready to retire within the next couple of years. When I look at someone that’s really close to being done and wants to retire. I’m probably going to focus more on things like being able to jump into some hard money lending options put part of their portfolio. I’m going to look at brand new construction. Cash Flowing properties or even multi-family. One of the great things about multi-family projects is, you know, there’s a thing called mortgage position with any man. And when you’re going out to invest and utilize lending options and leverage your money so that you can get more bank for your buck with your investments. You’ve got to consider that you have 10 mortgage positions that you can utilize or you can get a standard 30-year fix you know lower interest rates. But if you use 10 mortgages on $50,000 houses, you quickly use up your mortgage positions and you still get all this money left to work with. So, towards end of career I’m probably going to help the client look more properties like multi-family where they can get a quadplex with 1 mortgage, 4 doors something in the brand new category or newer you know not that old in that way even if you have a vacancy in a unit. It’s really not going to hurt you. You’re still going have income coming in. You’re still going to cover your expenses. It also just make a lot easier managing of your portfolio when you work your way up to have multi-family properties. If you’re younger, and you want to get in into something to build your portfolio. You really want to look at those renovation properties that we have connections to all over the country. And you get an opportunity to get a property that’s well renovated, get’s tenanted they usually have great cash flow but they also have a lot of equity gained potential. And have fast equity gained potential because there was another performing asset that someone fixed up, made nice, you know. You’ve seen all tv shows on HGTV in color. You know they take it and buy it then make it work a hell a lot of more money. It’s kind of the same principle grab something that you can buy for less than it cost to develop or build that way as more new construction comes up and a lot of these renovation property opportunities go away which we’re seeing in the United States today. Then, you have a property that gets the right out the advantage of increased equity gains because of the cost- high cost of new construction. So that’s a great way to buy a property for a 100,000 within 3 to 5 years. Maybe it’s worth 130, 140 or more. Well, when the time comes that you have that type of equity gain. There’s 2 schools of thought a lot of people go I wanna buy the asset, take all the cash flow, pay it off so I own the asset free and clear. Which in my opinion is the absolute worst decision if you’re early on in your investing career. Because all you do is create dead equity. It doesn’t do you any good to hold a paid off asset and if you think about the investment equity that’s there. The money you paid down on it. Your return on investment shrinks to less than you get with any stock broker in the country or any bank. Leverage is the key to create an opportunity to utilize x amount of funds to increase your portfolio. So just like I said that property buy at 100k sold it at 140 take the commission out. Take all the profit, you ask to get your down payment back. You turn in you sell that house and you buy 2 houses or you buy a duplex. Now, you got 1 mortgage 2 doors. And done this principle with clients and I’m able to retire 3 to 5 years ahead of schedule because we did just recently have a really great time and you know. The market where a few years ago you can grab properties for ridiculously low prices in certain market. And they jumped right back up to right were they before they collapse. You know there’s another school of thought on that where some people say will it’s cash out refinance the property will but use some simple numbers real quick on that. Let’s say you bought a house for 70,000 it appraises now at a 100,000. Let’s pull some equity out of it to buy another house to keep the one I got. What happens is you can only cash out refinance to 75% of the value of the house. So really you bought it for 70, made some down payment. When you go to pull out equity really only grab another 5,000 more than what you put into it. And maybe have some equity principal reduction but if you sell it all of a sudden get all your down payment back. All your principal reduction that you had. And you get all the profit from your house. So, that’s how you turn 1 house into 2.
BR: Plus, let’s say someone goes out to a $160,000 and they cash out refinance because it doesn’t make sense enough money to buy another house. What happens is you waive the debt. You probably shrink, reduce or break even in your cashflow. Then all of a sudden you’re not any further ahead on that purchase then were when you first bought the property to begin with. You got another asset but you’ve got to buy another asset for your cashflow. And your other one went break even. Will now that property is at risk.
FB: I know somebody will ask this question. And I’m asking this rhetorically. But if you sell that house and you have all of that gain. Don’t you have to pay taxes on that?
BR: That’s great. You ever heard about 10-31?
FB: Ahh. Tell us about that.
BR: 10-31 exchange for now as long as nothing changes is an opportunity to when you get ready to sell your property. You get a 10-31 exchange administrator. And then, once you sell your property you have 45 days to identify new property. And then you have up to 180 days from the day your sold property closes to close on new property as is completely pushes off any of your capital gains. The great thing is that you could continue to do that for the rest of your life. And then you just basically make sure that all your properties are set up in a land or family trust before it’s time to pass. Then it will be up to your kids if they want to sell the property or they want to continue to earn income on that property and it becomes a legacy. But you can continually push off your capital gains by using what is a perfectly legal IRS tax code and doing a 10-31 exchange.
FB: That’s one of the nicest things our government can do for us, isn’t it? Pay no tax on sale of rental properties as long as put that money back into similar type of property in the U.S. no tax. Swap until you drop. Thank you to U.S. government.
BR: You can even do that one-time up to $500,000 on your own personal property. Should you buy a $500,000 property and sell it to $1.5M later. You can 10-31 up to 500k of it.
FB: Sounds good. That’s beautiful. We’re hitting on a lot of things right there. What if somebody’s new to real estate , what are some like really simple ways that they can get started? What are some very simple things to kind of easy get into some things to figure out how it works?
BR: You know, I’m always going to prefer owning investment properties for cash flow. And appreciation over just about every other asset other just because of the tax deduction, depreciation, growth potential. You know, and somebody’s always going to need a place to live. So as long as you buy right. I think it’s a great place to start. And it depends on your funds. So you know we have a really good network and connection of suppliers around the country. I have builders that I worked with. I have renovation teams that I worked with. I have inside bank contacts where often I can find you know bank assets that they need to get out from under they got a client that needs to get out from under it. So ,those can we just send me the best deal is a great place to start. Just pick a property that based on the funds you can make sense to purchase. You’re going to be putting a 20% down on a single-family home, you know. I personally like homes that are in the rent range of about $1000 or more per month. It’s just a little bit different classic tenant. That we tend the have less issues they can see. Or you know they are not quite as hard on wear and tear on your property. And I stay out of the inner city or the hood. That has that in those areas. I tend to stay away from section A property. It looks really attractive to have a guaranteed government check every month and not all section A is an issue but more often than not. They keep it every year with an annual inspection and they make it explains that you, you know. That they didn’t make the fix at the first thing. And you have a tenant that when they don’t have to pay anything towards their rent. You just, you tend to have less respect of a property. That’s what I’ve seen quite a bit. So you’ve got to be careful and there’s still ways to screen that. Make sure you’re good. But you know start with the smaller property. Start with something in the 80, 90, 100 thousand dollar range depending on different markets that could be a great property. You know you might also look at what you do with your IRA. Your IRA will make sense to maybe acquire a cash flowing asset. But also acquire, if the opportunity is there which we do have. Getting into some hard money lending where you can earn 10, 12, 13, 15% annualized interest returns by just investing in you know a lending position. If you have the qualifications as a credit investor which would mean $200,000 a year annual income. And that’s it or 300,000 as a filing couple or if you have $1 million in assets not including your own property. You can purchase shares in funds or syndications. And a lot of time this is pretty easy. You can get into a fund or a share or excuse me a syndication with a $25,000 commitment and buy a share. Those are great. That’s where somebody else’s has put together a multi-family project or a big project. They manage it, they handle it. You know, they raise capital, they sell shares and you just receive and annualized return. And if it’s a great syndication or fund which of course I know you’ve seen somebody alongside put together. You have opportunities for cash kickers. Over and above the preferred returns that are offered. So, that’s a couple different ways to get started. There’s fix and flips you have opportunities for clients where they can just be the capital contribution and a small renovation property. That could be anywhere from 15 to 20 to $25,000 and then I’ve got the team that go out to acquire the property. Do the renovations, get in marketed, get it rented. And turn around and get it sold to an investor and they split the profits with my investors. You know, once that sale actually happens. And the great thing about that the choice a percentage profit split. So, it be who’s my groups that I work with to get the best amount of profit I can out of it. Because it directly guide how much the investors going to receive on profit. That could be a pretty low cost you know entry. The lowest price opportunities that I usually have and it’s just a matter if I can find enough for that inventory. I did go back on the hunt or something recently. You can pick up what’s not developed, it’s kind of improved lots in certain communities around the country. Recently, which of course I’d you know send some information over to you on this as well. There’s a place right here in my own backyard is called Bellavista. It’s a city with 2 zip codes it started out as a retirement village. It literally sits on top of Bentonville, Arkansas which a lot of people have heard of Walmart. Which is where Walmart is headquartered but we also have Tyson Foods, JB Hunt Trucking and we have whole host of other fortune 500 companies that operate here. All because they work hand in hand with these companies. And what’s really great about our Northwest Arkansas market just a couple of quick stats for you is right now we’re adding 30 new residents a day. Our unemployment rate hovers at 2%. Our vacancy rate is under 2%. They’re adding 3 new jobs a day. Our median income just surpassed that of Houston, Texas. The average median income in Northwest, Arkansas is $98,000 a year. So, we were one of the lowest cost of living in the country. Some of the lowest crime rates in the country in this Northwest, Arkansas. Yet, we have some of the highest incomes. And Bellavista is a beautiful place at 7 golf courses, 8 lakes at full way 2 way community, you know. And right now, I can help find it’s pick up lots for around $7,000. And they’re ready to build lots. The streets are in, pavements in. Water or sewer or utilities are at the street. And I’m getting ready to start building in that market. So, there’s an opportunity for investors to grab a piece of ground for around $7,000. Sit on it or probably fix to 24 months at this point in time. We’re just waiting for the highly bypass to be completed around Bellavista. Which most everybody knows as soon as you put in a bypass around anything. It just starts attracting business along and buy best.
BR: But we’ll turn around and sell those lots to builders for between 15-20,000 over the next several months. I’m already working on bringing in a production builder into the area. There’s a production builder here already that I’m working with. And then I also have a local builder that I’m probably going to came up with. I’m already, I have a you know capital commitment from one of my lending institutions that I worked with that fund all the construction and we’re going to start building in that market. So, great thing about Northwest Arkansas is the growth and you know the land is just not as plenty as you think. And a lot of people are pushing up in the Bellavista and as soon as that bypass are done it creates you know decreases a lot of congestion on the main road, opens it up. And that’s a great opportunity to grab a $7,000 asset, sit on it for 6 months, 12 months, 18 months, 24 months well everything happens. And then, we turn around and start moving those to individual buyers that want to buy and build in Bellavista. Here’s another thing I should probably talk about. And everybody’s like, wow $7,000 a lot it must be a piece of crap. You know, I get it, I mean. I’m excited about it but when I go to look at lots they’d become available. A lot of times when I first started buying them. And I was buying those with the last company I was with. We’d research every lot that became available. Sometimes they were lots that went back to the bank because the developer/builder lost right after the collapse you know. Sometimes it was another big asset that bottom up and they couldn’t hold them through the collapse. And when the collapse happened it really, it hurt. And a lot of times it’s the POA. Somebody may passed away and they never get the chance to retire just like they wanted to and their kids don’t want the lot. And they don’t want to pay the monthly $16 HOA dues. $16 a month HOA dues, you know. So, they don’t want to do it. So, when I go look at the lots that come back available to any of those sources. I may research a 100, 200, 300 lots and only choose 10, 15, 20 lots because I’m looking for the highly desirable factors. Called the sack lots, corner lots, biggest lot on the street, new homes build on that street you know since 2000. The location, you know Bellavista is 10 miles wide, 5 miles deep. And there’s plenty of lots that become available that they’re on the street where every house on the street was built in the 70’s. You don’t want to build a brand new house on a street while house that’s built on the 70’s right? So, that’s the part what I look at. I mean, I have literally driven down the streets researched thousands of lots in Bella Vista over the past several years. That’s why they’re getting so hard to find because I’ve grabbed most of the great one’s already. But every now and then I get a pocket that I can go out and research and I’ll picked those up. And that’s a great opportunity I think I may have 15, 20, 30 those lots available on the next few weeks and maybe a few months but you know it’s just an opportunity to grab for a low cost with the chance to double your money in a very short time. And that’s a good way to get some people started.
FB: Absolutely. That’s fantastic. And I think our listeners can see your knowledge of the subject and we’re only hitting on such a few little things. We could actually do this all day. But I wanna ask 2 quick questions and before we kind of wrap it up here. Is it possible Brandon to still get double digit returns in today’s real estate market?
BR: It is. You’ve got to have the connections and you know I’ve watched the returns shrink because the prices of the properties are rising rapidly and rents are levelling off or like in hard money lending the cost of money is more but it is possible. You know that’s one of the great things about having the right connection which to all the listeners out there, what you know is Forrest Bryant is tied in. He’s found the right group. So, you know there’s opportunity. Right now my new construction properties like you could access too are still an average annual 12% returns on your money that’s cashflow. The properties like these little lots I mean if you double your money what’s that? A thousand dollars a thousand percent return? You know, but it’s small. The hard money lending options that I have are and I’m a consultant to the company that does that is a 15% annualized return on investment. They’re typically looking for about a $50,000 investment minimum but it’s going into somebody’s land grabs and new construction projects and they’re grabbing up everything that they can. These legacy lots. The lots where the infrastructures are already in place that way they’re setting the tone for being able to build for the next 2-3 years. And there’s an opportunity for 15% annualized interest right there. The renovation/rehab projects typically are a 40% cash on cash return for my investors and clients. And then these fund the projects or syndications you know I’ve hit some good one’s to last year and we were able to offer 12% annual preferred returns with additional bonuses based on their performances. Now, I do see that shrinking a little bit because the cost is rising so fast but I know that I’ll comfortably be able to put 1 or 2 of those projects this year and it will be a 10% preferred return with opportunity for cashflow. See there’s definitely opportunity for double digit returns in real estate right now. You know one of the things that I lead right into is that a lot of people are contemplating. You know when you get down to just hovering above double digit returns you question do I stay in the stock market? Or do I invest in the stock market? Because every stock broker in the world will tell you you’ll get 8-12% return on your money, right? Wow, how often does that really happen? You know, and is investing in stocks safer than real estate? Well, I like hard assets I have no idea what company is just all of a sudden going to go belly up or get in trouble. I can name a few from the past and I think everybody listening can probably remember a few of them that all of a sudden went under. You know but I don’t like a stockbroker or world markets or the next 9-11 or if Trump’s pisses somebody off it causes a collapse. You know I don’t like somebody else can throw on my money so I love to invest in real estate which is a tangible hard asset that I can touch, you know. To me there’s risk in everything you do. But if you do your homework, if you’re tied into the right network, if you’re buying a property and following some of the golden rules of that acquisition then you’ll find that’s how most millionaires grow. And are able to keep their wealth overtime. Most of the millionaires that I know all have a very large real estate portfolio. And you know time and time again since the dawn of time since we’ve been investing in stocks and investing in real estate. Real estate has always outperformed the stock market. Plain and simple. Google it.
FB: Excellent answer. I wanna dive in the one thing. You mentioned it a few times. I wanna just make sure our listeners called on to that. Are you saying that you can do real estate investments on you IRA? Is that what you were saying?
BR: Oh, you cannot do it inside like fidelity or swab. You have to convert your IRA to a self-directed IRA. There are 2 types of self-directed IRAs, there’s 3rd party custodian and there’s self-directed LLC. Where you established IRA LLC you have control of the check book. I highly highly highly recommend you don’t go that direction because if you make one little error slip up and paying for a property covering a cost, calling in a home warranty and you pay for it on your credit card not out your self-directed IRA LLC. The government will come in, liquidate all things, catch it till no tomorrow. And that could be one of the biggest mistake of your life. Get third party self-directed IRA custodian and for the listeners out there if you’re curious about that Forrest can connect you with who he used you know in our circle. But basically all you do is to transfer or rollover. It is not a taxable event. You simply open up the self-directed IRA. You transfer or rollover your fund from your existing roth IRA, traditional IRA, SEP IRA you know, any of those types of IRAS you have out there. Your HSAs or your kid’s college fund. You can roll them over to self-directed IRA and then you can instruct your 3rd party custodian to purchase real estate asset on your behalf. So by all means, yes you can buy investment real estate inside your IRA. That could be hard money lending, buy land, buy turn key rentals, buy shares in a syndication or fund and your promissory notes on renovation flip properties. It’s one of the fastest ways I can grow somebody’s IRA is by grabbing something like a land or a flip opportunity and turn it really fast and you know quite often doubling your money in short amount of time
FB: That’s fantastic. So, if you do that. Then money, the income that comes in to that IRA depending on how it’s set up is either tax deferred or tax free?
BR: If it’s a roth IRA. Let’s say you made an acquisition of a piece of land in your roth IRA for 7,000. Turned around and sold it for 14,000 that is $7,000 tax free gain. The cool thing about IRAs is that typically a traditional or roth you can only put x amount of dollars per year. But let’s say you have $50,000 on your IRA and you bought a turn key investment property on your IRA. That property might bring in a $1,000 a month but there’s no cap on how much your IRA can grow from the investments that are in it. There’s only a CAP on how much you can contribute to the IRA. Now, there’s solo 401K’s you can invest on a little bit more. You know, that’s definitely something you talk with your self-directed IRA custodian and will answer all those question. But yes, you can purchase an asset. It could grow 5 fold, 10 fold in a year and if it’s a roth IRA all gains are completely tax free. If it’s a traditional IRA it will come in tax deferred. And you don’t start paying taxes on your IRA until you start to draw out your distributions at 59 and a half. And then you just pay tax on how much your drawing out at that time.
FB: So Brandon, I know you’re a big fan of networking and I know you understand the importance of that. If somebody is new to real estate investing you know. How do they meet people that they trust and that are not going to take advantage of them. Let’s face it there’s a lot of horror stories about real estate deals gone bad. People are just taking advantage of them. How does somebody’s new to real estate investing, how do they meet trustworthy people?
BR: You know, it is all about networking and inside track. These days 100% of the people that I worked with are referred to me through a past client, supplier or builder that I’ve already worked with. And much likely, with your network the High Speed Alliance. Excellent network you know someone that is dedicated to helping people to break through that barrier and get on the inside track of where to find some of the more reliable people to work with in the industry. Kudos to you for starting up the High Speed Alliance group as well. And I know from many other people that you’re connected with that this are some of the best in the industry. What’s great is that people want to get into that circle. And sometimes never do. So, network is really key. Someone has a track record the minute you jump in you going to know from just talking to them. They’re there to help, they’re there to coach, explain, mentor, advise. Without ever really looking at what’s in it for them. There’s just always there to help the person that needs help. One of the things I love about the network you and I are involve in and your group. You definitely have the heart in the right place. While we have the opportunity we want to help as many people succeed in this industry as much as possible. Kudos to you, much appreciated for what you do.
FB: Wow. That’s amazing. Thanks for sharing that there. So, I think we’re coming up on the end here. I’ve got a couple of your favorite quotes here and you’re quoted as saying. “Success comes to those who strive to ensure the success of others.” And “either you run the day or the day runs you.” What are those quotes mean to you Brandon?
BR: Well you know there’s a lot of gurus out there and speakers that probably lead to the success comes to those who strive to ensure the success of others. You know there’s people that take advantage of other people. And then there’s people that lifts people up and help other people. And the way I’ve always looked at what I’ve done is it and by helping enough of my clients achieve success, I never have to worry about my own. And that’s one of the key things on that first quote. And the second one, we all know it man. That they can get away from you, you know. It just can flat out get away from you. And kind of how I managed my days is this is where I like to be a little different from everyone else. I’d make a personal commitment to answer every single call, email and text that comes in, in the same day. I don’t care what time day it is. I don’t care what time night it is. If I’m awake they’re going to get some sort of response. I may not able to address the concern right at that time but I’ll be like “Hey received a message, I’ll reach out first thing tomorrow.” And I think you can attest to that, you’ve seen it. And as many of the doctors that we all know have seen the same thing. So, you know that they can get away from you and people can just. What happens is you’re like do you see the email pop up you like just too busy, I’ll get to this next you know it just close right down the chain and it’s 3 or 4 days later. And you forgot to talk to that person or schedule an appointment or get back with them or fill that paperwork that they were needing. You know, that’s what I mean by the day runs you or you run the day. Part of my very first and formal thing that I do is that I make sure I answer everybody in the same day, if they reached out to me, and I had to create a task list and it’s funny that I’m still a pad of paper. I know we have all these apps, we have all these folders and all these electronic technology and google these and counter that. Some stuff I use and you probably seen me on some of the events we’ve been at. I keep a pad of paper it’s about 25 lines on there so I have 25 tasks every single day. And my goal is to knock as many as those off because as I can because at the end of the day I’ve got to add several to it. And it works for me you know. Some people will laugh at that but it works for me it keeps me organize and make sure that I always tackle every tasks that I get hit with.
FB: You’re definitely are a high achiever and you get a lot done. So your systems working. So, that’s good. So if our listeners wanna get in touch with you how do they do that?
BR: Feel free to reach out to me at my phone 913-827-3517. Call me anytime. And where you can also reach me at my email address it’s ipcrockstar@gmail and I would say I’d like to personal touch call me first to discuss you know anything you guys wanna discuss. Answer any questions you may have. And once we have that discussion and we know kind of what you’re looking for and how we can help you get in right direction.
FB: Perfect. Thanks for being on. Don’t go anywhere because we going to do our special members only session right here on the back and we’re going to a little bit deeper into some things and some of our high level investors wanna hear some of the members of High Speed Alliance. If you’re listening, if you want to mark your calendar. If you wanna come learn more about working with High Speed Alliance and working with Brandon another real estate professional around the nation. Were trying to help our members achieve freedom and legacy and so if that’s interesting to you then come visit with us and see if it’s the right place for you. You can check out our website HighSpeedPodcast.com or HighSpeedAlliance.com. So, thank you for listening and we’ll see you next time. Thanks, Brandon.
BR: You bet. Thank you Forrest.
You’ve been listening to the High Speed podcast. To read our our blog and to learn more visit our website at www.highspeedpodcast.com
Brandon W. Rooks
C.E.O. at Rockstar Investments, LLC
Consultant at Norada Real Estate Investments
Office (949) 218-6668 x6