Wholesaling Real Estate Podcast | Are You Building Generational Wealth?

Wholesaling Real Estate Podcast | Are You Building Generational Wealth?

(upbeat lively music) – [Man] This is Wholesaling Houses Elite. The no fluff and BS podcast. With tips and tricks to help
you become an elite wholesaler. Our guest will spill the
beans on what it takes to be the best. – [Presenter] This
podcast is brought to you by Lead Gen Pros. Making it incredibly easy for the average real estate investor and business owner to get more leads. They work with a variety of companies who specialize in real estate investing and who are looking for a systematized way to increase their lead flow
and grow their business. If that sounds like you,
check out theleadgenpros.com. – Hey, what’s up guys? Welcome to another podcast. It’s Max Maxwell and
today I have a special guest with me today. It’s Sean McKay, right?
– Yup. – And Sean is from Charlotte. And this is the first
time I’m meeting Sean, so it’s important that, I like
to do my podcast unscripted, we don’t have any set questions, I’m literally interviewing
Sean for my own personal gain and you guys get to watch it. Because here’s the thing, a
lot of us are making money now and we need to do what to do with it. And, Sean, you are a, what is your title? First, tell us about yourself. Welcome to the podcast, how about that? – Thank you, it’s great to be here. So what we do is we’re in
self-directed retirement accounts, so IRAs and 401ks. And I’m sure we’ll kinda
unpack what that looks like, but it’s self-directed IRAs and 401ks. – [Max] Okay, and what company are you in? – American IRA. So as you said, I live, work, invest in Charlotte, North Carolina. The headquarters where I like
to say all the important, all the intelligent people are are in Asheville, North Carolina. So we are certainly very local to you, but we do have clients nationwide. – Asheville’s booming by the
way, but so is Charlotte, but Asheville’s still got opportunity. Charlotte’s like oh my God. – Yeah, yeah, as well,
trying to get a deal there. – So tell me a little bit
about your background. How do you decide you’re
gonna go into that? What, like college, did your
grow up in North Carolina? – Yeah, so I’m originally from Florida and grew up on the East Coast. And just growin’ up I
witnessed and I read about how real estate was a
way to create wealth. We’ve all seen the
statistics, the millionaires are largely created from real estate in some way, shape, or form. So I kinda always had that in my head. Early on I participated,
I put in down payments on some family rental properties, but I didn’t know what I was doing. I wasn’t exposed to mentors
and I wasn’t reading the books, we just kind of, hey, the
bank can give you some money; great, we’ll– – [Max] Leverage it. – We’ll do it, right?
– Yeah. – Went to college at
USF in Tampa, Florida. Good experience. Gettin’ out I thought that
I want to be transactional. Obviously, you’re the guy
when it comes to wholesaling and you’ve built a
massive brand from that. – Thank you.
– And I thought that I could be that guy. The problem is, first and foremost, I didn’t have the expertise. Like I said, I didn’t have the mentorship and it also happened
to be about 2007, 2008 which, in Florida, if you
don’t know what you’re doin’– – Especially the Tampa market. I remember all the time,
I remember going to Tampa, a friend of mine lived
in Tampa at The Pointe and I was just getting out
of real estate in 2008, ’cause everybody did, but I
didn’t know the effect of it. And driving through neighborhoods
unfinished was creepy. A lot of them. – Yeah, it was wild. So I realized pretty quickly
I wasn’t gonna be able to support myself. I like to say, I pretty much hit the lotto because I found a mentor
who’s actually our owner at American IRA.
– Perfect. – I knew him just as a
real estate investor. I said, I love to come
up, spend some time, learn how to actually do
a proper real estate deal. And he said, I have this
financial services company with self-directed retirement accounts. At this time I’m in my mid 20s, I’m like, meh, retirement accounts don’t seem really sexy, interesting (Max laughs). I really just wanna learn
how to make big paychecks. I wanna be, what is Max Maxwell, right?
– I want that money (laughs). – Yeah, I wanna get it. And he said, that’s
great, but you gotta learn how to support yourself. And frankly, you’re not very
good at this wholesalin’, flippin’ type of thing so
let’s get you a baseline. So it’s been incredible. To me, I always tell
people, at this point, I would do this job for
free at American IRA because you get exposure to
people that are just killing it, whether it’s big rental portfolios which is kind of where we’ve
transitioned my wife and I over the last 10 years.
– Smart. – Just building that slowly,
because we have this, the solid paychecks, so.
– Wealth building. – Yeah, so we all gotta
play the game, right? We all need that money to live off of and we’re all trying to build
that long-term wealth, so. – So that’s amazing. So you go from graduating,
finding a good mentor, he takes you under his wing and he says, listen, you need some
health (Sean laughs). So at that point you moved to Asheville? – I moved to Asheville. I was there for about a year and a half getting up to speed in
terms of all the mechanics and the technicals of how
to be a resource for clients with self-directed retirement accounts. And then I was lucky
enough to move to Charlotte so that we could kind of expand the brand and that’s been great. – Well, I would say you did pretty good because now you’re a VP over there. – [Sean] Yeah, well, maybe
that just means that– – Oh, you’re a quick learner. You’re a quick learner, right? – Well, definitely not a quick
learner, I’ll tell you that. It’s a lot of long weeks
and we put the time in. And I was very fortunate
because it was a young company so I was able to grow with the company. So we got a lot of people in the company that are a lot sharper than I am, but you put in your time,
some good things can happen. – [Max] It’s like being
number three or four in Facebook, right? – If we ever get to anything
remotely close to Facebook, hoo, that would be amazing. But, yeah, just three or
four in a great company that’s growing like crazy is
just, we’re really fortunate. – So you guys specialize in
retirement accounts, right? And a word that’s been bounced around in the wholesaling world
a lot in the top echelon of some of my masterminds I go
to is the self-directed IRA. Is that your most popular product or do you have something else? – Yeah, so if you don’t mind,
we can kinda deconstruct the retirement accounts. So I think there’s a lot
of confusion out there. People hear retirement accounts, usually they kinda shut off
some part of their brain and they think, it’s boring,
I can’t create real wealth, it’s gonna take 50 years. And retirement accounts
are just a vehicle. It’s just like a checking
account, a savings account; it’s just a vehicle to put your money. What we’re mostly used to is hearing about using that IRA or 401k to buy stocks, bonds and mutual funds. Nothin’ wrong with those vehicles. A lot of people have done
really well over the years. To me, though, our
mission is to just simply make people aware that
there’s a lot of other things that they can do with
their retirement accounts. So when we say self-directed, to me, there’s kinda two primary concept. So the first is, as the name
indicates, it’s self-directed meaning you as the account
holder are making decisions. So you’re not coming to us saying, hey, please find an
investment that makes sense. You are, as we say, kind
of the captain of the ship. You are identifying
investments, which is great, because you’re an expert in real estate and what you do, right, so
you don’t need us anyways to tell you how to invest. The second part is when
we’re talking about a truly self-directed account. Ultimately, these
accounts can still invest in stocks, bonds and mutual funds but the real benefit to our clients is they can invest in what are considered alternative assets. So that’s the direct
ownership of real estate, that’s a lending money,
sometimes secured by real estate, investing in privately held companies, so different than the stock market with the Exxons and the Apples. You might know someone in your community that’s starting a business or they need additional capital to grow further, you can invest in those
opportunities as well. Basically, the way the IRS code is written is it says we cannot
invest in collectibles or life insurance policies. So beyond that, pretty much everything– – So two things when you
have a self-directed IRAs that you cannot invest
in the way it’s written is collectibles and
life insurance policies? – Exactly.
– Okay, perfect. So now we’re at the point where we kinda understand what it is. Now can you have a job, a
W-2, and have a self-directed, or do you have to have
your employer run that? – Yeah, great question. So in the self-directed
world there’s a few ways you’re gonna fund that account. So as you said, sometimes people will have employer-responsive products, usually that needs to be with a job that they’re no longer at. So they have an old 401k,
an old savings plan, an old 403b, something that
your company set up for you you can move that to any provider you want and you can certainly choose to direct all or a portion of that
with a company like us. And then there’s some people
that are just gonna be initiating a new retirement account, just opening and making contributions. And certainly if you
have an IRA that you have or set up traditionals, Roths, SEPs, you can also self-direct those as well. – Okay, so that’s important. So you can either take
something from your employer that had set up and
contribute it yourself. Now how much does it take to get started or what’s the limits you can put in? – Yeah, great point. So different accounts
have different rules, difference contribution limits. So the most typical accounts
we see are the IRAs, like the traditionals and the Roths, and so in terms of money
you can put in each year. In 2019, you’re gonna be
limited to six or 7,000 depending upon whether you’re
under or over 50 years old. – Okay.
– There are accounts like SEPs and solo 401ks where you can put up to 56,000
or 62,000 for the Solo ks if you’re 50 years and over. So that’s just the money you can put in. But keep in mind if you
have a $400,000 old 401k or a $60,000 traditional
IRA, you can move over the entire balance, if that made sense. – Okay, so if I wanted to open up a self-directed IRA
account with American IRA, do we, did I say the name right? – [Sean] American IRA, yeah. – You only have a limit. So like if I wanted to start one today and I don’t have one rolling over, let’s just say I’ve been
wholesaling all year, I’ve made half a million dollars but I only live off of 50, 60 grand. Can I put 300,000 over there? – That would be great (Max laughs). That would be a win. So the ideal account for the entrepreneur is typically gonna be a solo 401k. – Okay.
– And so obviously being way under 50 years old you could put up to
$56,000 into that account from your earnings in your business. – [Max] Okay. – The challenge, and I
don’t wanna get off topic, but obviously you have a lot of businesses and you employ a lot of staff; if they’re essentially W-2 staff, they’re full-time to your business, then unfortunately that
disqualifies the Solo k, so kind of maybe that next best option is something like a SEP IRA that still has the massive $56,000 contribution limit. – So question, so if my, and this, we could go on a rabbit hole.
– Yeah (laughs). – Let me know if we’re going down there. If I’m the only one working for a certain company that I own, does that allow me to do that? So, for example, if I have two LLCs, all my employees work over here and I work for the management company– – [Sean] Right. – Will that qualify me to
put my 56,000 for the year in my solo 401k? – So you’ve done well because you like to be creative, right? You like to problem solve
and work through this. And the challenge is there’s essentially what’s called control groups, where basically we’re looking
at your entire business world, or the IRS would I should say. And they’re saying, it’s
great that you don’t have employees in Company A
that you’re looking to make that Solo k attached to,
but you have seven employees in Company B and 15 in
Company C, et cetera and so those other
companies do actually affect your Solo k.
– Got it. – But again there’s other
products like SEP IRAs and stuff that are largely almost as helpful. – Okay.
– Huge contributions. So when is a self-directed
IRA the best-case use? – So, to me, we talked
briefly before this show and we’re all kinda
playing two games, right? We all have to put food on the table, you mentioned 50, 60,000,
whatever our number is that we just need to survive
and pay all of our bills. And then beyond that, in my opinion, I think you’re trying to be
as tax efficient as possible. I listened to the podcast you
did with Mr. Tony Robinson Sr. and you guys got into a
great discussion about different strategies are beneficial for different tax situations. And you mentioned one of the
only things that keeps you up is just Uncle Sam comin’ for you, right? – That’s it.
– So you could look at that and you could say, you
have your businesses, you have to take care of your needs, but then at a certain
point you’re just gettin’ crushed with taxes.
– Killin’ it. – You’re payin’ 40, maybe
as much as 50% in taxes. – You’re makin’ me cry right now. – Why not do some of that through the retirement accounts, right? That’s the obvious one. I think people like yourself,
those entrepreneurs, you have to do that. But then there’s also people
like me with a day job where we wanna be tax efficient as well. We have the IRAs, the 401ks, maybe we have some rental properties which are tax efficient,
but if we’re doing the flips or we wanna lend money to other investors those are usually not great situations to take a big tax hit. So if we can do those types of deals through our retirement accounts, wholesaling through retirement accounts, we’re seeing more and more of that. – So what does that look like? What is wholesaling through a
retirement account look like? ‘Cause obviously my challenge is a lot of people are
watching, our wholesalers. What does that look like? That you just saying that
interest the crap out of me. – Yeah, so that’s the cool thing. That’s why I love this
job, is I’ll see investors that are these prolific wholesalers and they have the ability
to turn, as you mentioned, a couple hundred bucks before the show into tens of thousands of dollars and sometimes even more on a big deal. And so you look at that and you say, it’s the identical process
that you’re going through, you’re finding the
deal, you’re vetting it, making sure it works,
you’re negotiating it out really the difference is as
you’re writing up that contract to control that property
there’s just gonna be specific verbiage stating that’s actually your retirement account
that’s binding the contract as opposed to one of your companies. So that when that contract is
then sold to another investor and it’s marked up $15,000, for example, that $15,000 of closing can
go to your retirement account and again it’s a much more
tax efficient way to do it. – So once I establish a
retirement account with you and the retirement account
has a name, I’m guessing, or is it just Max Maxwell
retirement account? – Yeah, we give you the verbiage but it’s basically our company name for the benefit of your retirement. – Got it. And let’s just say I take $300
out of my retirement account to put the earns money
down and due diligence from my retirement
account and then I decide I don’t wanna sell that
property, I just wholesale it. And I wholesale it to Tom
and Tom gives me 15 grand so I’ve essentially
turned $300 into 15 grand, that entire 15 grand will go back into my retirement account?
– Correct. – And how many taxes do I
pay on that for that year? – Yeah, so that’s a big question. – [Max] It’s a deep hole. – Well, so here’s where we can go with it. So these are tax
efficient vehicles, right, and so the IRS wants to see
that you’re making investments, that you’re largely being
as passive as possible with investments. So the trick is, and I wanna
give as much information and direct content as
possible, but ultimately self-directed companies
are the administrators, the custodians, you boil that
down with the record keepers for your retirement account. So as you’re kind of working
through these scenarios with CPAs and attorneys, if
we had 10 CPAs in the room, we get 10 different answers in terms of how many of these deals we can do before the IRS is gonna
say, you know what, your retirement account
is actually running a wholesaling business as well. Some CPAs will say, you’re
good doing five to 10, some are a little bit more
aggressive, higher number; others will say, I don’t want you doing more than just a couple of
year inside the account. So maybe you’re doing the juiciest deals, that 15, 25, $40,000 profit,
maybe a couple of those are going into your retirement account and being as tax efficient as possible. – Understood. So that’s interesting. So in my case scenario, I’m not sure if you know much about my
businesses and operations, it’s best for me to open up a solo 401k. – So– – [Max] On the 34,000, I know
you don’t know a lot, but– – Right.
– I have a wholesaling operation, I have a buy and hold operation, and I have a brand that
makes money as well too. – So (Max laughs) it would
definitely be a team discussion with your professionals as to
how it could be structured. The challenge with the
Solo k would be if you have W-2 employees in any of those companies. A lot of CPAs will say that a
Solo k is not the best vehicle or you’re not eligible for it essentially, so you might have to
go that SEP IRA route. So there are a lot of factors that, ’cause you do have kind of
a complicated situation. – So what’s a SEP?
– So a SEP is basically a pre-tax retirement account. It’s got the same general
features of the Solo k in terms of the same
contribution limit of the 56,000. So you’re getting huge benefits there. What the Solo k has that
makes it kinda optimal over any retirement account is you do have the ability to borrow from that account because it is a 401k product. You could borrow 50,000 or 50% of the balance of your
portfolio, whichever is less. So $40,000 account, you
could borrow up to 20,000. And then there’s also just some nuance to certain strategies are
gonna be easier in the Solo k. So, for example, with IRAs,
you wanna be really careful about using mortgages with
your IRA being the owner. So a lot of times clients
will either pay cash for rental properties or
they’ll use some interesting financing techniques, but
just getting a bank loan is gonna be, there’s that potential for a tax consequence basically.
– Got it. – With the Solo k, as long
as it’s for the acquisition you can actually use a mortgage and not have a tax consequence ’cause IRAs and 401ks
have different rules. – So if the SEP and the solo
are what most people have, is that right? – I would say most of
our clients have Roths and traditionals because a lot of times they’re moving over
existing IRAs or old 401ks. – So question, so why is
the term self-directed IRA coming up so much in the
investment community? And how does a person obtain one and how does a person use one? – Yeah, so if you look at yourself and you’re prolific wholesaler, you have many different businesses, if you go and place that
money with an advisor or you’re just picking your
own stocks and mutual funds, statistically you’re gonna get ideally the average return of the stock market. So historically, that’s
anywhere between eight and 10%. – [Max] Okay. – Versus if you take that same, let’s say, even a couple thousand dollars, you open a self-directed account and you’re moving through wholesale deals, you’re getting options on properties, you at some point may
be just lending money to other investors making 15 plus percent, I see clients like you all day long go from zero to literally
a million dollars in a handful of years
just from their capacity in the real estate arena. So this isn’t like a one
size fits all for everybody. There’s a lot of the general
public that’s probably better served with index
funds with Vanguard or working with their advisor. But if you especially have like
a really specific skill set where you can just create
massive wealth out of nothing. – I’m an expert in something, right? – This is a no brainer. – It could be flipping cattle,
it could be flipping houses. – Right. – So the contribution to create one is limited per year, right? – [Sean] Limited per year
depending on the account, yeah. – So that’s tricky then. So I, if I had 50 grand waiting, couldn’t just walk over to you and say, I want a solo, I want a self-directed. – Self-directed, so the
SEP, potentially the Solo k because you can get up to 56, you could actually plow
that pile of money in there assuming your income’s at a certain level which your income will be. So for those high net worth individuals, again those clients that
go from zero to a million in four or five years,
they’re making those 50,000 plus contributions
in the SEPs and the solos and they’re prolifically
growing the money. Do a couple of deals a year
and there and it’s game over. – It makes sense.
– Yeah. – So do you have a lot of W-2, I would say W-2 rich people
that come to you and say, I’m learning and I wanna
do something more creative than just letting it be over
here and earn six, seven, 10%? – [Sean] Yeah. – What does that look like? So if somebody’s watching right now and they’ve been with
a company for 13 years and let’s just say they got, I don’t know, $150,000 sitting in, what kind of account is it usually when you work for a company? – 401ks are pretty typically. – Yeah, so you got 150 grand in your 401k, you’ve been watching Max
Maxwell and you’re like, man, I wanna lend some money.
– Yeah. – Like this little small
that I’m getting every year it’s gonna be hard for me to
get to that million dollars. – [Sean] Yeah. – How do they transition
from they’ve been workin’ at AT&T for 15 years, 150 grand, 100 grand sittin’ in their 401k, how do they transition to
a company to like yours? – Yeah, great question. So the challenge is if
they’re currently employed by whomever that is, AT&T,
where they have that 401k, most of the time they’re not
gonna be able to move that until they’re no longer employed. Sometimes they’ll have old
401ks prior to that job or they have been contributing
to IRAs along the way. – Okay, let me give you a better example.
– Yeah. – I give you a user case of probably some of my audience members. A lot of people working six-figure jobs runs across my channel. They’re just tired that
even though they’re making great money working, $150,000, I got a guy that works at NASA right now that is just sick and tired,
he’s a rocket scientist and he like wants to, his name
is Eddie, he wants to quit. So let’s just say Eddie is making, he’s got 150 grand sittin’
in his IRA, and he’s like, you know what, I’m just
gonna go full-time, I quit. How does he transition his money? He’s starting a wholesale,
he’s making more money wholesaling than he did
in his W-2, but he’s like, I got this money sittin’ in my 401k, what do I do with this now? – Yeah, yeah. There’s a lot of ways that
he could go about that depending upon his skill set. You mentioned he’s wholesaling. So again kind of our
initial discussion about there’s those two games we’re playin’, there’s the putting food on the table and then there’s growing
that long-term wealth, he’s certainly gonna
be continuing to hustle with this wholesale deals
to cover his family overhead and his needs, but then at a certain point he’s gonna realize,
again you’re just gettin’ hammered on taxes– – He’s very frugal by the way. So let’s just say he
lives off of 50 grand. – Okay. So in that situation he’s
probably gonna continue with those entrepreneurial
efforts with the wholesaling. He’s gonna take that pile of money and, as you said, maybe he’s lending, maybe every once in a while he’s doing some of the juicier wholesale deals through his retirement
account to be tax efficient, maybe it’s joint venturing. A lot of our CPAs will bless clients using part of their personal money, using part of their
retirement account money joint venturing, putting
those two together to do a particular wholesale deal or flip or whatever it may be there. So you can get creative. – Yo, so that’s an interesting way. So you’re saying if my
wholesale deals cost $500 per contract to acquire, I can put 250 of my personal money in it
and 250 of my IRA money in it and the contribution will go
back evenly as it came in. – Exactly. As you said, because it’s 250-250. Now you could do 400-100 or
however you wanna split that. As long as it’s coming in and
out in the same proportion. You can get creative. – So the main thing not to get caught up is obviously learn from you
what you should and shouldn’t do in your company, right? And then obviously have good records and be a good custodian of what happens in case you get, I guess,
audited at this point. But there’s definitely creative ways to not have a high tax consequence. – Absolutely, yeah. – Okay, what are some of the
more creative ways you’ve seen? Or you just seen something,
and you don’t have to name names or time. You just say, man, you’re
great, that’s crazy. – So, yeah, I mean there’s a
lotta things that come to mind. What I love to see is
stuff that I certainly have no expertise in and,
frankly, I would’ve never even thought to mention
that as I’m trying to share this information with individuals. So we’ll have individuals that are just deep in the construction game. And so they’ll find opportunities to buy a construction equipment
and then lease that out to contracting companies and make a crazy return on that investment. I don’t know anything about
how much that equipment should cost and the lease rates
and all that kind of stuff but that’s still in their
circle of competency with real estate. Not all of our clients do real estate, we’ll see clients that
invest in a private company, they’ll see an opportunity
in a tech company, obviously we’re in North Carolina, there’s different tech hubs here. And so they feel like something’s a winner and they could put $10,000 and that 10,000 can become hundreds of
thousands of dollars because they had that knowledge base. So it’s cool gettin’ to see
people use their expertise to be able to do that. – So what I really see is that the tax law for a self-directed retirement account is basically so that an individual person is not bound to work with
a big financial institution in order to fund or add money
to the retirement account, it allows each person to
become their own expert and secure their future the way they see versus traditional stocks and
bonds and stuff like that. So that’s the basic reasoning of why they have these accounts. – I agree. I think when I look at our client base I see clients that are
diversification clients. Maybe they got that full-time
job, they like real estate, they don’t have a lot
of time to devote to it and so maybe they’re even
just putting a portion of that old 401k in a
self-directed account so that they’re kinda more diversified. ‘Cause we’re always
hearing diversification, diversification, but if all your money is in the stock market it
doesn’t matter what you own; if it pulls back 30%, you’re
probably gonna lose 30% of the value portfolio. But if you also have a rental
or you’re making a loan, making an easy 12, 15%,
that’s more diversified. And then that second ground is
the Max Maxwells of the world that are just out there crushing
it based on their expertise and they tend to be more
heavily concentrated with their self-directed. – So let’s take me, for
example, ’cause I’m sure maybe some of my audience
is in the same boat. I’ve never had a 401k at work. I went from working for
the federal government and in the military to
basically doin’ some small stuff in different companies to now where I make a decent amount of
money every single year. But I’ve never had a retirement, it’s never came across my plate. And honestly, in my culture,
in African American culture, a lot of us never get this talk. So it’s like what do we do, now that we have this opportunity, we’re making money, how,
not that you’re giving like financial advice,
but we’re making money, what is the best things you’ve seen? Right, you’ve been doin’ this for a while. What is it that you’ve seen
where people have came in with very minimal amount
of funds and have done well and you look at ’em and you’re like, man, you’ve done well, congratulations. – Yeah, yeah. – What scenarios have you seen like that and, for me, to my listeners will be like, well, it’s possible, and
this is what you should or the line that this person took. – Absolutely. Yeah, I mean that’s the
question of the day, right?
– Yeah. – We’re all trying to
get to that next level. And I apologize if I sound
like a broken record, but to me the huge benefit
with these retirement accounts and even just investing as a whole is that you’re able to control
your own destiny to say, I’m just gonna focus on being
a great wholesaler, right? And so you’re listening to these podcasts, you’re getting the
information, you’re hopefully even finding mentors and you
become competent at that. And again to me I think what’s really cool about the evolution of the
11 years I’ve been doing this is it used to just be the old execs that had huge pensions and old 401ks. They knew it, they got it,
signed around the paperwork and– – And that’s what I’m sayin’. It’s like this new information era where my parents have no idea about this stuff you’re talking about. And now we’re in this information era and maybe even the guys
making $50,000 a year but only lives off of 25, what does he, like what does he do? – That is what I want more of, and year over year that
is what our client base has turned into. Our account balance has
actually gone down substantially and I think that’s great
because people feel like they can be involved in
this without the 100, $400,000 account or whatever it may be. – So you’re saying like
your average account has maybe went down but you’re
getting more younger people that see the actual, like they’re like, okay, wait, maybe I should be retiring. – [Sean] Right. – ‘Cause, frankly, the old way is dead. – [Sean] Yeah. – You can’t get 20, 30 years at a company, retire with a pension and, that’s dead. So we have to change
the narrative and say, all right, you gotta
take control of your own financial future here and
it’s actually pretty easy. – Yeah, yeah. And again it comes back
to, so you’re gonna be that great wholesaler
and maybe you’re gonna do just one or two deals in that first year, you still have to work your day job, you got family, everything else goin’ on. So what I love is when I see
that first wholesale deal that’s making life easier
and maybe you’re payin’ off your credits cards and
maybe you’re getting like more just comfortable
and solid financially, but then that other 10 or
$15,000 wholesale check you’re doing through
that retirement account so your account balance
goes from 2,000 to $18,000. If you put that in the stock market, unless you get lucky on a penny stock, you’re not going from 2,000 to $18,000, right?
– It ain’t happenin’, right? – So if you just do
that, think about that, once a year for 10 years you’re gonna have a large six-figure balance
in your retirement account just based upon hustling,
puttin’ that work in and just really have
them focus on a strategy. – I think this is amazing. I just think that the conversations, I mean, just for me in
the last three years, to go from broke at home to
having sitting in front of you and having these conversations and really debating where money goes and how to keep the most of it. I think the regime change
starts with our generation, and you’re the same age as I. And I think it’s just like
it’s important for us, since we have this information
to pass it on to people because it’s important. – Yeah. – I mean, who doesn’t wanna retire? Here’s another question. Retiring in the next 30 years, right, what do you see the money
that is gonna be needed to live a decent lifestyle? Just guess it. Well, what is it now, what is it now? – Well, so– – [Max] I guess it depends
on the lifestyle, right? – Right, but even going
back to your podcast with Mr. Robinson Sr., he spoke about, what was it, 5% or–
– Only. – Or not in need of any sort of assistance or any sort of social
security and things like that to pay their bills, right? – [Max] The other 95% need
help or dead or broke. – So whatever we’re doing
(Max laughs) it’s not enough. And as you said, it’s just gonna get worse as pensions have been phased out, social security maybe that’s around, maybe that’s not.
– Inflation. – Inflation. So what I love is there’s just
so many ways to go about it. So king of wholesaling, you could build up a $5 million portfolio and you could just, you could almost put that
in like savings accounts and you’re gonna be fine
living off the interest. – Yeah. – There’s also clients that
are gonna build that portfolio of rental properties and
maybe it’s five, 10 properties but just the cash flow
alone will keep them so that they can always pay their bills and then they’re not having to
worry about sell-off assets. So there’s just so many
ways to go about it. – I’m glad you brought
up rental properties ’cause I’m acquiring more,
and I know my audience is acquiring more, and
some people probably have been acquiring for a while. When you do it in a retirement account does the retirement account
pretty much own the asset? – [Sean] It does. – So each rental check goes back to the retirement
account, correct? – Correct.
– Minus expenses and all the stuff like that?
– Mm-hmm. – So you’re just literally every month just stacking it up every single month? – Yeah.
– Wow. – Yeah. – So you can buy, so it’s not wise to maybe
put all of your properties in there ’cause you
need cash flow to live, but you need to start putting
some of them in your account that you just say, okay, well,
that $700 profit from that, with have $500 profit,
you’re just gonna stack? And I think what’s hard to visualize and I think maybe I’m gonna
have my team create a graphic that shows that interest or
that compound over 20 years with just a small two to 3% rent increase what it can look like in 20 years and I think that’s hard
for people to vision, it’s only $500 a month. But when you actually visualize
it, you’re like, oh, wow. Okay, that made me a millionaire. – Absolutely. Yeah. It’s so crazy. And I’m sure you’ve had
these conversations too, but every individual
that I’ve had the chance to sit down with and learn from that’s been the game for 20, 30, 40 years, on the rental property end, every single one of them says, the only mistakes I ever
made was selling anything. Because like you said,
that compounding effect, you can’t see it until years down the road
you’re going, net worth, wow. Cash flow, wow. The whole thing you just,
there’s just a lot of ways that it becomes a much bigger benefit. And who knows you buy
and sell one neighborhood where you’re in a great general location, but that one neighborhood
just went completely nuts. The rents used to be
500 and now it’s 1,000 or 1,500 or whatever it is. There’s just so many
unforeseen positive elements to the momentum. It’s just unbelievable. – So, this is now the question. How late, is it never
too late to start, is it? – No, and you mentioned
certainly the younger generation, it’s great for them to get this and to, in their way, implement
it when it makes sense, but I also love even
just seeing individuals that aren’t making the
six-figure paychecks that are in their 50s,
60s, 70s and they say, oh. Well, yeah, I actually
do know how to wholesale or I’m gonna learn how to wholesale. I’m gonna flip a house a year. – I get a lot of net worth retired. A lot of people that watch
this, I’ve met them personally that have retired or stopped
working, couldn’t get a job. 55, 58 years old learned how to wholesale and that they’re like, this is easy. – [Sean] Yeah. – And they can easily just contribute. Here’s another question. If I had kids, and for the people out
there that have kids, I’m asking this question for them, can you create a retirement
account for your kid? – So there are a few
accounts you could use. So there’s a retirement account, so we’ll see clients normally,
again, talk to your CPA, but normally, they’re
gonna favor the Roth IRAs because that’s a post-tax
account, so it grows tax free. So you end up putting a couple
thousand over the years. You do some great wholesale deals that might grow to be hundreds
of thousands of dollars. When that money is pulled out, you don’t pay any taxes on the way out. So Roth vehicles are great, the thing is you have
to have earned income. So some children work in
their parents’ business whether that’s helping with marketing or some people get a little cute, a little creative with
working in the business, that’s between you and your CPA. But if they’re getting
some sort of a paycheck, then they can have that Roth. – So essentially, I’ve seen ways, and this is just kinda
going, I’ve seen people have investment websites and take pictures of their
kids in front of their houses and pay them a modeling fee. Kids are models, right? I don’t know if your kids
are model, but (both laughs) there are model kids out there. So that’s a way I’ve seen
people create an income for a child, and children do have incomes and you can pay them and feature
them in your YouTube video even if seven people watch
it, it doesn’t matter, it’s a fee. I’ve never did it. I don’t have kids, but I’ve
seen people successfully, that’s how they get their kid’s income. – Yeah. – So that’s important. So you can’t, there is ways, there is accounts that you
can set up for your kids. Because I think even at this
age, throwing $5,000 a year, $2,000 a year into a seven-year-old’s
account down the road is probably something you should just do. I wish I can do it for kids I don’t even have yet, but (laughs). – Well, then there’s also
the concept of Coverdale. So retirement accounts like the Roth, that’s where you need the earned income but Coverdale is basically
an educational account where you’re putting money
in there for a child. And it could be an infant, it could be up to essentially 17 years old and you can make these same investments, wholesaling options, rehab, whatever it is.
– Could your employer make those same contributions for you or? – You would want, with the
Coverdale’s, basically, typically, that’s gonna be from
a family member or a friend and they have to have a certain, they have to be within a income threshold, but that’s a very easy work around. So long story short, everyone
can get that contributed to for their children or friends, family members, stuff like that. It doesn’t have to be your kids. You might have a nephew or something that you wanna put that
$2,000 into the Coverdale, start cranking out a
wholesale deal or two a year. And then by the time they’re our age I’m probably gonna be
working for ’em, right? I mean, that’s, it’s
amazing how that works. – So we talk about maximizing, not having a high tax consequence where everybody wants to do that, right? Play within the laws, right? There’s rules for us and
we need to follow them. What is the current retirement age that you could start
pulling out this money so that you can use it to live? – Yeah, so 59 and a half is when you can start
to take the money out without penalty, but there
are some workarounds. So we do see you’re certainly involved with the movements of
financial retirement early, Financial Independent, Retirement early. The FIRE movement, right? And so, there are individuals
in their 20s and 30s that are retiring and they
probably are all set up with different structures,
but we also see clients that need to get to
money for whatever reason before 59 and a half. And so with accounts like a Roth IRA, you can actually, at any
point in time, pull out money that you’ve actually
contributed to that Roth. So over the last 10 years, you might have put just easy numbers, 50 grand into that account. The 50 has turned into 400,000, but you can always pull that 50,000 out if you ever get a pension
or something happens. – So you can pull your base out and that you’re taxed for that just–
– Yeah. – Okay, that makes sense. Could I lend money to a friend? – You can. – Another wealthy friend?
– Yeah, yeah. – Okay. – Basically, you can’t lend
money to yourself, your spouse, your lineal line up or down. So parents, grandparents,
children, grandchildren. – [Max] Got it. – The down line is also their spouses. – Got it. So no up or down, lineal line, but another friend, high
net worth individual, if he needs access to money, I can loan it to him at a reasonable rate? – [Sean] Yeah. – That reasonable rate is determined by? – By you guys, yeah. – Got it, ’cause they’re doing
car loans at one, 2%, right? – Uh, yeah. – I’ve seen it. I’ve seen billboards
for car loans at 1.2%. – Yeah, there’s definitely, so the crazy thing is there is
no challenge with the upside. So we see 30, 40 plus percent
interest rates all day and that’s just situations
where it makes sense for everybody. On the end where it’s the 1% or sometimes clients try to 0% loans, the concern is you’re probably
at a higher risk for an audit because it doesn’t look like a– – Arm’s interest.
– Arm’s length reasonable transaction that a lot of people wanna do especially ’cause a lot of times they
wanna do it unsecured. – Yeah. – Which unsecured at 0% doesn’t seem like a lot of upside, right?
– Nobody does that. Nobody does that.
– So you wanna be a little careful on that aspect, but as you said, just typical rates and up are something we see every day. – I think this has been
a good conversation. I think I understand it more. Obviously, it’s per every individual once you look at what they have. Do clients come to you
and get recommendations or should they get
recommendations from their CPA then come to you? – In terms of the types of account? – Types of accounts. – Yeah, so most of the time, clients are just simply gonna open the type of account they currently have. Traditional to traditional,
Roth to Roth, things like that. – [Max] I don’t have any. – Old 401Ks. So you’re gonna be someone who’s gonna wanna do
a lot of tax planning. You’re definitely gonna
wanna have your CPA involved because you have all these
moving parts to your businesses and high net worth and you
have a lot to consider. And frankly, we don’t
have access to your return so we couldn’t even give
you a reasonable solution to what you need. So for people like you, CPA analysis and then we’re happy
to have conversations. – I think there’s a lot of
people out there like me that this is the first time
they were financially fit and they’re now like,
okay, I’m hearing this. You’re starting to hang around a little bit more higher
net worth individuals and you start hearing
these words pass around, most of them don’t actually
know what they’re doing. They just know it works. So that’s when they come to experts and just get that information. And you’ve seen people, well, have you seen people
with these retirement accounts lend money to individuals
to do real estate deals? – Yeah, I would say
probably 60 plus percent of our clients are either, they’re doing some sort
of real estate deal whether it’s the ownership
of rental properties, whether it’s lending money
secured by wholesale deals, flipping spec houses inside
the accounts, options. All the things you’re familiar with, all the things you do, they
can be done in these accounts. – So there’s different types
of I guess self-directed. There’s ones where you have to, well, first of all, how
fast is it to get money? Say for example, I have
50,000 in my account and I want to fund a wholesale deal, how fast, traditionally fast is that? – So there’s kinda two lanes to go. So if the retirement account is gonna directly make that offer, assuming your account is
already set up and funded with whomever your provider is, for us it’s gonna be about
a 24-hour turn around for us to be signing
documents, sending on us money, consideration, whatever
you want to call that, but the typical flow is, as
you said, you’re gonna be, you know the game better than I do. You’re working an off market deal, you’re dealing directly with the seller. And so, I find with those clients, it’s typically just kind
of setting the expectation with that seller. Like, listen, we’re signing
around this contract. You’re using the forms
you would always use, but I’m doing this from a unique account and so, it’s just gonna
take basically an extra day to get to your money and to go through that process.
– Yeah, we do three days anyways.
– Three days, perfect. – It just has to be
postmarked by three days. – Perfect, so that’s kinda lane number one is we are as the administrator, the custodian directly involved in that. – Mm-hmm. – The other lane is you
may have heard the term checkbook control or having
an IRA or 401K owned LLC. – [Max] Mm-hmm. – And so with that structure,
clients have the capacity to just as you do in
your other businesses, if you needed to write a check on the spot because many times they’re
managers of that LLC and they are signing
around all the documents, they are sending the funds, and we are removed from that process. – [Max] How much do you hate
that as a custodian (laughs)? – So it’s interesting because, here’s the way I’ll say this. It’s more profitable for companies like us if all the clients do that because we don’t need as much staff. You guys aren’t needing us for all this back and
forth transactional work. – But they also need to be educated. – That’s the thing is you don’t
hear me proactively saying, hey, we all need checkbook control because there are really savvy investors and then there’re investors at the beginning of their journey and they’re gonna make a mess of it and we don’t even know
because we’re not involved in those transactions. So it’s kind of a if you’re
the right person for it, it can be a great tool, but
it’s definitely not something that most people at
least should start with. – Yeah. So, just to kinda wrap this
up and ask this question, what is the minimum
amount of money, right? People are listening to
this podcast right now. They’re fired up, right? They’re like, you know what? He’s right, I need to go save some money. They’re gonna give you a
call over an American IRA. What is the minimum amount
of money they should have to open up? And I know there are several
different types of accounts, but what if they came to
the table with two grand, could that get them started
just to get the count open and then learn more about it? – Yeah, absolutely. So as you said, there’s
really kinda two components. The great thing is, and
again, we appreciate you helping us to spread
the word and to educate. So typically, there’s a $50
setup fee to open the account and we’ll waive that for
anyone who just says, I heard about this on the Max Maxwell–
– That’s awesome. Go use it now.
– Yes, that’s right. So it’s a free account because most firms actually
start charging that annual fee once you open the account.
– Okay. – We don’t charge that
annual fee on the IRAs until you actually make your
first investment with us. – [Max] Yeah, so that starts
the annual process then. – Exactly. So the set-up fee is waived and sometimes clients just
need to get the account open. So I’m taking action, I’m doing that. And then as maybe they’re
getting a little look closer to the wholesale deal or at
least wrapping their head around how they’re gonna use the account, then as you said, even
with a couple $1,000, you can get that account funded so that you can put a couple $100 into the wholesale deal
to buying that contract to make 15 grand. – Listen, I challenge everybody
listening to this right now and I am making zero dollars from this. This is, I am not making
a dollars on this. I just want people to really understand how to secure their financial future. I’m gonna make some of my
employees do it, right? And it’s free to open the account. Open the account, get everything going and then make a small contribution to it. And the moment you have
that brilliant idea or the wholesale deal comes out
on the pipeline and you say, you know what, I got three
deals closin’ this month. I don’t need but one of them or I don’t need but two of them. I’m gonna close the last deal
through my retirement account and just put the 10 grand over there. And then you’re gonna see
how quickly it compounds. But open an account is the first thing. I think taking the first
step, getting the account and understanding that
you can invest in it. And then I think once
you have the account, once you have a few 100
bucks in there, 1,000 bucks, then you’re gonna deep dive
into the education side of how to best use it. We talked before the show that
there’s people that go around and you spend thousands
of dollars to learn how to move your money from one the other, and we’re having this free conversation people get to listen. So I think it’s important to open up. I’m gonna open up a new
account Monday with you guys and we’re gonna get this rolling. I’m gonna show you guys proof that I’m gonna do exactly what I’m saying. So I’m gonna do it. I don’t know how much amount of money I’m gonna put in that account yet, but I’m gonna ask some advice and see how much I can put in there and then I’m gonna rock and roll. And as I do deals with you, with the IRA, I’m gonna talk about it. – That would be amazing. And that would be cool as great case study because we have these
clients that do well, but for a variety of reasons, they wanna be so under the radar. You’re not under the radar, right?
– Yeah. I’m just too late for that, right?
– So it would be great for you to be able to share– – Mr. Robbins says, the bird
with the brightest feathers get shot first, so I’m
just waiting to get shot. (both laugh) Well, I can’t go back down at this point. I can’t change my feathers. So, I’m gonna do it because
I think it’s important to share the education. So I will take the risk of
being out there and expose, but I wanna show people how easy it is to build generational wealth and I say how to change
your family tree, right? So now it’s time, we’ve got the education,
we know how to do it, we’ve got the resources,
we’re making money, now it’s time to stop buying that new car, that new shoes, that new this, let’s put those few $100, right? I just bought a Gucci belt the other day not for myself, but as a gift. It was 450 bucks, right? So, to do that, that literally, I could, today, I have a deal
closing that I got $200 in that the assignment fee is 14,000. So just doing that, I could’ve
turned that $400 Gucci belt into a $14,000 assignment, and that’s the way I want
people to start thinking is, okay, I can spend this on
that or I can put it in my IRA and do this with it. So I think this has been cool and I gotta have you back
’cause I think we’re gonna, I feel like there’s a
responsibility that we have as young people to go out
and spread what’s going on because this applies to
people doing wholesale deal, this applies to your Uber drivers that are out there
making money in Charlotte and knocking down 50 grand
a year driving around. And let’s lower our tax consequences. Let’s be smart about this. Let’s build generational wealth. Let’s get off of the
system if that makes sense. Let’s not be dependent. Let’s be in the 5% that
Mr. Robinson talked about. We don’t wanna be dead
broke or need assistance. And it’s true statistic ’cause it came from the
Department of Labor. So, Sean, I thank you. – Thank you so much.
– I appreciate it. – Appreciate this, thank you. – And before we go, where
can people reach to you? What steps? ‘Cause you gotta get a bunch of calls and I want those calls to come in and I want those e-mails to come in. What’s the best way you want them to go? – Yeah, absolutely. So I appreciate that. So certainly our website
is Americanira.com. – [Max] Okay. – You can pull forms from there. Certainly our contact
information is up there. As I mentioned, our
headquarters is in Asheville. I do have a sales team over there and they can certainly work with you– – You gotta get the calls. I’m telling you now, you gotta prep them
because this is important. I want people to open up these accounts and I want them to show proof. Open the account and send me a picture that your account has been opened because I think it’s just
important that we’re taking a step to financial freedom. So keep going. Go to the website Americanira.com. You got forms on their, educational stuff and then they can also just
call and reach out to your team. – They can call, they can log in to set up a consultation so that we can contact them. And then certainly, we do have
specific office information. I know you have a huge audience, so I will say that you can
also contact me directly in our Charlotte office, and the information is on the website. I will say if the Maxwell experience is just like off the charts,
then maybe we’re gonna have to bring sales team members
in to assist with the volume. But as much as I can participate directly, I’d love to help out. – And I think this is important. We talked about buying back the block, we talked about changing our family tree. I think this is a step
in the right direction is creating that retirement account, reducing your tax consequence and just building generational wealth. Sean, I thank you again. – [Sean] Thank you so
much for the opportunity. – I’ll see you guys next time. And if you like this, give it a thumbs up. Give it a like. Give us a five-star review on iTunes and I’ll see you guys next time, peace. – [Presenter] Thank you for listening to the Wholesaling Houses
Elite Podcast with Max Maxwell. Make sure to tune in next week to see what elite wholesaler
we’ll have in the hot seat. (upbeat techno music)

30 thoughts on “Wholesaling Real Estate Podcast | Are You Building Generational Wealth?

  1. Another awesome content-filled video/podcast!!! Definitely will be reaching out to him. Thanks Max for sharing and giving the full picture!

  2. Its 4AM in California 🥴 I havent been to bed yet…sorry…notification carry on🤷🏿‍♀️🚶🏿‍♀️

  3. Can you do a podcast about getting a job? I mean let’s say you’re a wholesaler or aiming to be but you don’t have any health insurance you’re barely making your own mortgage you’re behind on your taxes you’re behind on your car note your credit score is low and you need money immediately, I know what you’re going to say go drive four dollars but is that the only way? What job should a expiring whole saler get

  4. Literally got a speeding ticket today driving for dollars trying to get from Fort Worth to Arlington before making my way to Dallas then Waco. Im 23 haven't made a deal yet but I want this so bad. I spend every moment listening reading and hustling real estate. I try to cover every area within 50 mile radius. I saw this opportunity 5 years ago but I didn't want to pay Ron Legrand to learn this skill.

  5. Max, thanks again for the opportunity to be on your podcast, amazing experience! You are an inspiration to anyone out there that has big dreams. Keep killing it!

  6. Great video Max!!! I would love to see you, Mr. Robinson and Robert Kyosaki together talking shop… Thanks for the inspiration!

  7. Hi you guys! I need a little guidance. Are you allowed to show the house to cash buyers that you have under contract?

  8. Thanks Max. This is the education that’s not taught in the average household and schools. ⭐️🔥💎💎
    -Duke 🇺🇸🇿🇦

  9. Max. do you ever discuss how to access the list of vacant properties that the mail carriers have reported?

  10. What if I start a solo IRA and later on down the line gain employees? Am I still eligible for the solo IRA? Do I have to switch to another option?

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