Paying the financial adviser to lose less than 3%!

[Michael Wentzel]

I was chatting with a good friend and his wife the other day. They had just come out of meeting with their financial adviser who oversees their retirement funds. He had explained to them that due to the markets and what not, he was doing his best to lose them less than 3% of their portfolio. This couple is a smart couple, but they have no control over their investments. It is crazy!

They were discouraged. I told them that pay my private lenders 10% APR. They said they would move their money around if they could, but didn't know how. I think it is retirement account from a former employer, so I believe they could do a self-directed IRA. But I have never researched it or coached someone in how to do it.

Is there a great website or article out there about moving money into a self-directed IRA so you can lend it to real estate investors?

Has anyone had experience in this area that would be willing to give me a referral via PM?

Mike

[Brian Eastman]

@Michael Wentzel

A self directed IRA would give your associates the ability to control their own savings and invest in anything the IRS rules allow for - from real estate and private lending to conventional financial products. Simply put, it is still an IRA, just the institutional restriction on the type of investments sold goes away.

There are two business models:

An IRA held by a 3rd party trust company as custodian. Check out Kingdom Trust Co or IRA Services Trust Co. In this case, the institution holds the funds an processed all transactions. Processing can take a few days and there are per transaction and or per asset fees. This model works well for infrequent transactions that are not too time sensitive.

A Checkbook IRA LLC. In this case, an IRA like above is invested into a specially created LLC that the investor can manage directly. This allows the investor to control the IRA funds in a business checking account and administer investment transactions themselves without need for a 3rd party. This is a better tool for more frequent transactions.

There is a lot of good info here on BP on the topic.  I'd suggest you identify one or two firms of each type and then let your friends speak to that narrowed selection.