115. Secrets of Self-Directed IRAs with Zachary Wilson

Connect with the host:
LinkedIn: https://www.linkedin.com/in/brandon-e-jenkins/
Website: https://www.birchprosper.com/

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Connect with Zachary Wilson:
Email: zach.wilson@questtrust.com

Episode Highlights:
✔️ Understanding self-directed IRAs
✔️New IRA regulatory changes
✔️UDFI vs. UBIT
✔️Common IRA investor pitfalls
✔️Role of IRA custodians
✔️Syndication deals and IRAs
✔️Passive vs. Active Syndication Investments

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Transcript

SPEAKER_02 0:00

Uh, one thing when you're getting into the real estate space, right, regardless if it's in an IRA or outside of an IRA, you're dealing with alternative assets, which means these aren't securities that are regulated by, you know, for example, by the SEC. So, because of that, you want to be sure you understand the due diligence needed for the investment you're trying to make.

SPEAKER_00 0:20

How successful would you be if you had the blueprint for building wealth as a real estate investor or as someone who acquires small businesses? If you want to move the needle financially in your life, then you need to understand one thing the capital stack.

SPEAKER_01 0:33

I'm your host, Brandon Jenkins, and this is where your journey to financial freedom begins. Hello everyone, what's up, and welcome back to the Capital Stack. So I'm excited for today's show because we're going to talk about a topic that is absolutely vital to understand. If your goal is to take control of your financial future, which, you know, that's pretty much everyone who's listening to this podcast. So we're going to talk about the power of self-directed IRAs. And to do that, we're bringing out the big guns. So we brought out Zachary Wilson of Quest Trust Company today. Zachary, how are you doing today, sir?

SPEAKER_02 1:08

Doing good, doing good. Thank you so much for having me.

SPEAKER_01 1:10

I really appreciate it. Absolutely, man. Thanks for being here. So Zachary, uh, excuse me, Zachary is an IRA specialist at Quest Trust Company. Um, he's based out of their Houston office, not too far from the University of Houston, where Zachary pursued a degree in finance, great school, great city, good food. He started off, um he started off working on their internal auditing team, where he reviewed countless deals and investment structures on behalf of his clients. And so now as an IRA specialist, things have come full circle. So he now sees the impact that networking, business development skills, relationship building skills, all these things have on the ability to uh make these deal deals happen. So with that, Zachary, welcome to the show. Um again, pleasure to have you here. Why don't you kind of share a little bit about yourself, about your background, what got you into this space?

SPEAKER_02 1:58

Yeah, absolutely. So um, you know, like you said, I went to U of H. Originally I'm from New Orleans. So uh went from one city with good food to another.

SPEAKER_01 2:05

Yep, that's right.

SPEAKER_02 2:08

Uh so um when I when I first joined Quest, you know, it was something that I just wanted, I just wanted to get my toe into the, you know, into the industry. I just wanted a way to get in. Uh, I saw it as a stepping stone. And then once I got here, you know, I kind of it wasn't very, it didn't take very long for me to realize the power that came with learning the lessons that were to be learned if you just simply paid attention, right? Um, and so when I got on that backline auditing team, like you said, I got to see the structure of these investments. These investments were structured in ways that I had never seen before. When I thought of real estate investing, I thought of, okay, you know, fix and flips, rental properties. That's kind of the things that came to mind. I didn't know too much past that. And then I started seeing these investments. I start seeing private money lending, I see syndications, I see these debt funds, and it's just it, you know, it really opened my eyes to the different options you have. And that was just, you know, from what I was exposed to, not even mentioning that all this is being done in tax-advantaged accounts. All right. And so, with that knowledge, you know, now I came over to the IRA specialist team. And so I got to see the conversations that were being had that were leading to those investments. And so, you know, with that overall picture, it's really changed the way that I view my own investments and kind of how I plan for the future when it comes to my retirement savings.

SPEAKER_01 3:14

Yeah, absolutely. Thank thanks for sharing that. And you're right. Um, you know, it's one of those things that when you when you're introduced to this entire, it's a it's a different world entirely, but when you're introduced to it, you kind of see just how much goes on in the private, um, you know, uh private placement space, private entity space, and um and just this world of using, you know, self-directed accounts and different instruments in order to take control of your wealth. You know, it's something that for me was just completely eye-opening. Because I actually, you know, I lived in Houston for about for 10 years. I used to be in oil and gas. And that was kind of when I was first introduced to uh this business, and it it just blew my mind. Um, so but but let's let's kind of step back just uh for a moment and let's really talk about almost at a fundamental level. Like what is a self-directed IRA?

SPEAKER_02 4:00

Yeah, so that term self-directed, that's really just a marketing term to illustrate you're the one in control of the investments, right? So there's no legal distinction between a self-directed traditional IRA or a self-directed Roth IRA here at Quest versus the traditional or the Roth IRA you would have at Fidelity, Vanguard, Schwab, right? The only difference is the custodian themselves. So those custodians allow you to take your retirement funds and put them into the public market. We allow you to take those same retirement funds except put them into privately held assets, specifically real estate style investments is what we specialize in. Although we have we have investments ranging from, like you said, the oil and gas space to private money lending. We even have people, we have, you know, a client that trades, or I'm sorry, he leases medical equipment because that's that's what he knows. And it's kind of one of the advantages of that self-direction is that you're investing in what you know best. So that's really the major distinction. And I think you know, that's once once people realize that that you're dealing in the same realm, it kind of helps to demystify the you know the idea of self-directed IRAs.

SPEAKER_01 4:58

Yeah, that's a good point. I mean, you you're right. It um it kind of does help clarify um quite a bit. And and you know, one thing that's interesting to me is just the sheer number of things that people can invest in. You know, also I always think about the term alternative investments, when really some of the things that fall under the bucket of alternatives really kind of should be primary, in my opinion. Or, you know, think you think real estate, and someone says it's an alternative investment. To me, it's a little bit um unusual. But I think maybe it's the mechanism, I guess, when we're talking about syndications or talking about these things that are not widely used. Um and so one question from that I would have is uh who is uh an ideal candidate for a self-directed IRA? Or and what I mean by that is what introduced me to it was first obviously hearing more about syndication deals and things like that. But then I also had a few 401ks that were quote unquote abandoned. I don't I wasn't really actively figuring out what I could do with them, not that I had much to do with them in the first place, right? Because you're limited usually in those uh in those account types. Um, but so who is a self-directed IRA for? Who who should be who are the people that we should be talking directly to um right now?

SPEAKER_02 6:05

Honestly, just about anyone, right? There's not really any specific situation that says, okay, this person should be in the IRA, should be with a self-directed IRA, this person shouldn't, right? Um, there are people with different experience levels. I think that's one factor to consider. Um, if you're coming in and you're new to the space, well, you've you've got to be willing to learn, right? And that, but that goes whether that's in a self-directed IRA or outside of a self-directed IRA. You know, like you said, once you get into once you step into this world, it really is a it's a wide horizon. It's really open to the kind of thing, the kind of investments you can make. And you've got to be willing to get over that learning curve, right? You know, I always tell people when they're certain when they're getting introduced, the first thing you want to find is what's your niche, right? Well, are you someone who wants to go into lending because you want the consistent monthly payments? Are you someone who wants to get into syndications because you like the passive nature? Are you someone who wants to be a little bit more active, right? Um, all of that can be done in a self-directed IRA, but you've got to get over that learning curve. And then secondly, you know, I think is going to be how much you have saved up, right? That's the next factor. All right. We obviously have people in situations where, you know, like you said, you've got that old 401k, or you've got a couple of those old 401ks that they've built up, but they're not really doing anything right now, or maybe you're getting a super low return because you're not an active participant in that 401k, in which case you've got the funds to be able to move over and jump right into an investment. Right. Alternatively, you have people who are just starting off, right? They were a little bit younger. Now they're just starting to save for retirement, and they're making direct contributions to things like their Roth IRA or their traditional IRA. Well, that's perfectly fine. In fact, we host classes that specifically go over how to are strategies for investing with 10K or less. And a lot of it talks about partnering, right? Not many people realize that that's an option, but essentially what it does is it allows you to partner with either individuals who have more capital or larger IRAs that that way you can get into deals that you otherwise wouldn't have access to. So notice we can cover the full range of people in any given situation, but you just got to be willing to learn and you've got to know how you're entering in. You gotta you want to come with a deal ready. And rather than just opening up a self-directed IRA, flying blind, you know, and and trying to figure out figure it out as you go, you want to do that due diligence just like you would on any investment.

SPEAKER_01 8:17

Yeah, there's there's some things that you mentioned there that I think um are very interesting. And and um, and I'm gonna touch on the last point first, where you said coming with the deal ready. I think that uh and you've said it a few times, education is absolutely key, right? Because this it's it's what comes with sort of the self-direction piece where you're saying here's something I'm interested in um in investing in, as long as I understand the parameters and everything else. Well, what comes with that now is sort of this added burden of you have to understand what you're getting into. Okay. And so um, which is also again, it's something you mentioned that you all host classes, you do webinars, you I mean, you guys just have kind of this motherload of um education and information, which is is a must, right? Because you know, when you step into this world and then you haven't been uh exposed to it before, talking from the client side, um, it really helps to have someone that says, okay, well, hold on a second. You know, here are the things you need to be careful of so that you're structuring things properly. Um, but there's something else that you mentioned. Okay, you said that you are allowed to partner with individuals with more capital or even larger IRAs. Can you expound on that particular uh point a little bit?

SPEAKER_02 9:24

Yeah, exactly. Yeah, absolutely. So uh really what you're looking at is let's say you're part of a real estate group, right? Um, you're attending these groups and there's someone who is just simply they're a lender, right? They're a hard money lender, they lend out to people who are doing fix and flips, for example. Well, as you're networking with them, you could approach them and ask them, like, hey, you know, when's the next time you're thinking of lending out? And let's say, let's say they're okay, you know, and next month I'm planning on lending out on a hundred thousand dollar note. Well, if you've got 10, let's say 10,000 in your IRA, you can approach that person and say, Do you mind if my IRA participates in that note? Essentially, 90,000 will come from you as an individual and 10,000 will come from my IRA as its own unique entity. So when it's listening on the lenders of that note, it's going to show 90% interest coming from the individual and then 10% interest coming from the IRA. When that means 90% of the payments that are made come back to the individual, 10% of the payments that are made come back to the IRA. So notice you're able to get into that deal, a$100,000 note, albeit only 10% of it, but you're able to get into it when you otherwise wouldn't have access to it. Now, that's just for private money lending, right? You can do this with uh split investment on a piece of property as well. You split the title on the property, you pay for whatever portion of the expenses uh you know that reflects your ownership. You also receive the proceeds. So it just allows you, just like I said, to get into more deals that you just wouldn't have access to otherwise.

SPEAKER_01 10:50

Yeah, that's right. And I tell you what what kind of underpins that that um I think is is important is accessibility, right? This is some to me, that's something that that's important um for me and that everyone listening to this is you know, these are things that in the past, you know, if you're talking 20, you know, years and and before, these are these are vehicles that really people, the average person just had no way of really getting into it. The level of awareness wasn't there, you know, um the the mechanism kind of wasn't set up. And so it if it feels really good that we're stepping into the space now where the there's uh these things are much more accessible, you know, and it's it's now uh feasible for people to invest in these things. And um, I just think it's it's it's very powerful. There's something that you mentioned too that I wanted to pull out um when you when you touched on syndication deals and you said passive, right? And so this is an important um point to bring up, especially for investors here. So, and I'll I'll I'll go ahead and let you. I don't want to I don't want to leave with this one. I have a bad habit of leading questions. Okay, who who can invest in a syndication deal with their uh SDE RA?

SPEAKER_02 11:59

So, generally speaking, that's gonna depend on the syndication itself, right? A lot of times uh you'll see syndications raising capital and they're only gonna be open to things like accredited investors or maybe a sophisticated investor. Um, alternatively, you have things like crowdfunding syndications that are a little bit more open, but it's gonna be dependent upon your financial situation and your income as to how much you're able to invest into those funds. So, really, you know, anyone who has the capital, if you meet the qualifications of the syndication, then you can utilize your IRA to make that investment.

SPEAKER_01 12:30

Okay. And then and also, so from can a general um or uh partner uh or an active partner um also use their um IRA to invest in a deal, or is that passive only?

SPEAKER_02 12:40

So it's gonna be passive only. So if you're the if you're the general partner on a deal, then you wouldn't be able to utilize your IRA to invest into that deal. This is what the IRS is gonna conceal, uh consider self-dealing. And whatever we're talking about, that you know, we have to get into things like the disqualified parties to an IRA, essentially who can and can't invest with the IRA, and then the primitive transactions, what the IRA can and can't do with those people.

SPEAKER_01 13:02

Right, right, good, great point. And that's what I was kind of getting at, right? Because I wanted to make sure that people are paying close attention to that. Um, because you know, so I have a meetup here in the D, I'm in DC, so I have a meetup here in the DC area, and I've been asked that question before is is, you know, well, I have a self-directed IRA and you know, I'm looking forward for deals, and I have to slow them down and say, wait a minute, you can't do that as a um, you know, if you're talking about the active side. So very, very important to highlight that. And so so let's let's talk kind of a bit now about um something that I don't really hear about that often, and that is about potential pitfalls or traps or anything like that, potential problems um that that investors need to look out for when investing using an IRA. Is there anything that we need to highlight to say, hey, there's some traps here that you need to be careful about?

SPEAKER_02 13:47

Yeah, honestly, the the first one is is knowing who you can and can't deal with, right? And that's where a custodian like Quest is going to come into play. Um, obviously, it's not expected of the average investor to know the ins and outs of the rules surrounding IRAs. And so that's why we have our consultations, we have those discussions up front to understand what the goal is that you're trying to achieve, right? So uh, for example, you know, I it's not a common where I'll have I'll have someone come up and they'll give me a call and they'll say, I'm looking to lend towards, you know, let's say my son's business, right? I just want to give them a loan. They need a cup, they need some capital to keep going. Um, and then we have to stop and like look, you know, unfortunately it's gonna be considered a prohibited transaction. So you're not gonna be able to do that. So knowing the rules, having uh having someone that you can call, right? Like Quest, like a custodian uh that has that knowledge, to be able to bounce these ideas off of that maybe pump the brakes before you get into trouble is absolutely crucial, right? Um, on that note, you know, just kind of as a summary, who's who's disqualified, just think yourself, your spouse, up and down your family tree, their spouses, and any companies they're affiliated with. Right. That's the blanket answer. Obviously, you it gets a little bit more nuanced when we get into the details, but as long as you're staying away from that field, you're probably you're probably gonna be fine.

SPEAKER_01 15:01

Okay, good, good.

SPEAKER_02 15:02

Yeah, then the next thing is uh I think the next concerns are gonna be dependent upon the type of investment you're getting into. For example, uh, if you are looking to purchase a piece of property, right? You're looking to purchase a property within your IRA. Uh, one thing you want to be sure of is that you've got enough liquidity to cover expenses, right? If I've got 100,000 saved in my IRA, and that's every dollar I have for retirement, and I put it all in there, and then I purchase it, and then the next month the air condition breaks. Well, I can't just supplement those funds for myself personally, right? The IRA, while it's filled with your money, is an entirely separate entity than you. So it's got its own name, its own address, and even has uh, in some cases, its own social security number in the form of an EIN. So it has to be the one paying for these expenses. All right. Now, there are some solutions, like you want to, you know, you can make your annual contributions, the IRA can borrow funds, uh, but you just want to be sure you have you keep liquidity in mind to know that you can cover the expenses that maybe you know you didn't expect to have to cover. You just want to give yourself a little bit of a cushion. So that's one example. Um another one, I think the final one, it it, you know, I wouldn't say the least important, but I think I think it's actually one of the more important ones, is understanding the type of due diligence needed. Right. Uh, one thing when you're getting into the real estate space, right, regardless if it's in an IRA or outside of an IRA, you're dealing with alternative assets, which means these aren't securities that are regulated by, you know, for example, by the SEC. So, because of that, you want to be sure you understand the due diligence needed for the investment you're trying to make. You know, obviously, for things like real estate investments, if it's going to be a purchase of property, you understand, you want to know the value of the property, the surrounding area. Is it growing? Is it declining? What do the schools look like, depending upon if you want a rental property? Um and then alternatively, syndication investments, right? Syndication investments are an entirely different thing where you're looking at more of the syndicator themselves, right? You want to see their track record, you want to see a record, you know, of capital calls, you want to see their past deals, what experience do they have. You know, so understanding the due diligence into the investment you're getting into is absolutely a crucial thing to understand whenever getting into this realm, whether inside of an IRA or outside of an IRA.

SPEAKER_01 17:20

Absolutely. Great, great overview there, I think. And so it's knowing who you can and can't deal with, so it can't be anyone kind of in your family. And you you laid it out well, so I don't need to recount that one. Um, understanding uh um kind of the depending on the type of investment that you're in, making sure you have sufficient liquidity as an example, um, and then due diligence, making sure that because you you you made a great point there, these are not right, they're not regulated securities, so you really need to understand um the risk. And that's something that we've been, you know, uh talking about quite a bit here lately, is really quantifying, um, quantifying and qualifying the risk, right? Understanding, okay, what what's the key risk in the deal? Do I understand the merits of it from a financial perspective? And number one, without question, sponsor risk, okay. Very, very serious because you have, you know, we're in a situation right now where there are a lot of deals that are in a bind for various reasons. Some of those reasons include um having a sponsor on the deal that didn't know how to operate the deal properly. And so um, those are all things that you don't want to find out too late. So, so um, without question, having a good understanding of the full picture, you know, who's running the deal, where is the deal, how confident am I, you know, with with the market? You you really have to, as an investor, do your own due diligence almost as if you were on the active side to some extent. Um, it's understanding fully the market deal and the sponsor. And I also say, um, you know, look with the syndication deal, they're structured differently. So you can't you can't exactly stop at those. You have to also understand what's the what's my net, you know, kind of what I want, how does it trickle down to kind of what uh what my cut is and am I comfortable with those returns? So understanding the whole the whole picture there, very, very important.

SPEAKER_02 18:57

Uh yeah, absolutely. You know, you know, like you said, especially with interest rates climbing, right? A lot of these, a lot of these variable rate interest loans are kicking in, which is really causing a lot of trouble for these syndicators, especially if they've only been a syndicator in this low interest environment, right? Now that these things are kicking up if they didn't plan accordingly, it could get scary for them a little bit. You know, you're really finding out who properly planned, who did their due diligence as this as a sponsor, and then who's maybe caught a little bit off guard. You know, that's not to say that you know, uh that you know what capital call means that it is absolutely a bad decision, or vice versa. You know, sometimes it depends on the investment itself. Um, but you know, like you said, that that's really that illustrates perfectly the kind of due diligence that should go into an investment in case scenarios like this uh come up.

SPEAKER_01 19:42

Yeah, that's right, that's right. And I would echo that point, right? Capital calls sometimes aren't aren't necessary, but but again, it's it's understanding kind of what the basis of the capital call was because sometimes it it's there because there wasn't uh adequate planning in place, you know, or experience. And um so I mean, so is the solution then what is the solution? Is it kind of just is it like you know, researching, kind of understanding? Oh what what's the solution to some of these problems, just at a high level?

SPEAKER_02 20:08

Uh honestly, it's it really it boils down to due diligence, you know. Like I said, it's just understanding that that this, you know, these scenarios were a risk, and you you know getting into it that this were the risk associated, right? But there are certain risks that come with simply the style of investment, and then there are certain risks that come with the sponsor as the individual, right? Um, if I'm getting into an investment that maybe the investment itself is a little riskier, but I'm seeing that it's with a sponsor that has been in the been in the game for the past, you know, 20, 25 years, has been through different market cycles. Well, I'm gonna put a little bit more trust into that. Whereas an investment that might be on the little bit of the safer side, but with a send with a sponsor that is, you know, maybe it's their first or second, you know, uh syndication, and maybe this time they're not being co-sponsored with someone who has a lot of experience. So it's their first one really going on the on their own. Um, well, maybe that's leaning on the riskier side. So it's just understanding what factors to consider, right? And honestly, what your risk tolerance is. You know, are you, as the investor, someone who can who can handle that type of risk? You know, for me, you know, I I know that right now I got into purchasing existing notes, right? I just like the interest rates going a little bit higher, give me a little bit of a higher return. And the purchase, the purchase or the uh lender that I was purchasing them from has a has a system set up to where if it defaults, they buy it back from me. So I know I'm covered, right? So I've done my own due diligence on that. That's my risk tolerance. There's some people who were looking for a little bit of a higher return and can handle the higher risk, you know. It just depends on each situation.

SPEAKER_01 21:41

Yeah, yeah, no, that's a good point. It's it it's it's knowing kind of what you are uh what you you are looking for, understanding you you mentioned it earlier, uh, your niche, and then being able to uh get really comfortable with okay, is this something that fits my risk tolerance? Um, and not stepping outside of that. You know, I think there are too many times where that fear of missing. Out really takes a grip, uh, takes a hold of people. And even though they kind of have established here's where I want to play, you know, that fear of missing out on the deal that is on the extreme end or outside of the bounds that I've set, and now I'm chasing a shiny object now and I get uh into a buying. Um, not a good place to be.

SPEAKER_02 22:16

So that's and that's something I've heard, you know, uh that I I heard I hear more and more the more I'm I'm involved uh in this industry is that obviously the goal is to you know to have returns and build your retirement, or even if you're investing personally, to build your own personal wealth. But I I can't hear, I've heard it echoed so many times that just simply don't just blindly chase returns, right? Don't blindly chase returns. Be strategic with the with the investments, right? Uh, for example, with the economic environment that we're heading into, you're seeing people that are saying, like, well, debt investments seem a little bit, you know, a little bit safer than maybe equity investments, whereas you know, equity investments could provide a higher return, but you know, with the economic environment coming up, they could be a little riskier. So it's just don't always, you know, don't just blindly chase returns, be strategic with your investments. Yeah, yeah. Great point. Great point.

SPEAKER_01 23:08

So we're going to get, you know, it's hard to talk real estate and investing without throwing out some acronyms, right? So we're going to get into a couple of questions here around taxes. Um, what are some of the tax concerns that uh that um your clients people people need to be aware of when they're investing through an SD IRA?

SPEAKER_02 23:24

Yeah, I'm I'm really glad you brought that up because it's something that I always like to make sure I'm I'm addressing on the very first consultation that I have with the client. Uh, the reason is because you know you hear about self-directed IRAs, you hear about investing into IRAs in general, and you hear that it's you know tax advantaged, right? These are tax-free accounts, means your returns are coming back tax-free. But there are certain scenarios in which a taxation can be triggered within the IRA itself, which seems counterintuitive, but really when you think about it, it's designed to be sure that these systems aren't being abused, right? So, for example, uh, there's really three things that can trigger a tax within the IRA. The first thing is going to be running a business in the IRA. So, for example, if I I could purchase a Starbucks using my IRA's funds, right? And if I didn't owe any taxes on the income, well, I could really undercut every shop in the area. Right. So to prevent that, I'm gonna it's gonna incur what's called a U-bit tax. Um, another thing is gonna be owning personal property. So if I own personal property in IRA, you know, one of the most common ones is gonna be owning a mobile home that's not attached to real estate, you know, that could trigger U-bit tax as well. Uh, by far the most common type of U-bit that's triggered is what's called UDFI. So this is unrelated debt financed income. And what this happens is this is what's occurred incurred when the IRA makes an investment into a debt-leveraged investment. So uh for the example, like a syndication, let's say syndication's raising 10 million and it's got uh it borrowed 7 million from an institution and the other 3 million, it came to personal capital, right? Well, that means that's a 70% debt leveraged investment. So when my IRA makes the investment, let's say you know it makes an investment and it's gonna receive a$50,000 profit at the end of it. So five-year deal, first three years, I get negative K1s, right? The negative uh the forced depreciation on that K1, which normally, if you were making the deal personally and you were a full-time real estate investor, you could have that uh depreciation go against your own personal income. Well, the IRA in the situation doesn't have any taxable income, nothing to apply it against. So we just hold on to it. First three years we hold on to it. Fourth year, let's say we break even, and the fifth year is when we get that fifty thousand dollars return. Well, normally, if this was not a debt leverage investment, that full 50,000 comes back to the IRA and you can redeploy it as you see fit, right? But because it's a debt leverage investment, 70% debt leveraged, that means 70% of that 50,000 is going to be considered taxable. So of the 50,000, 35,000 is sitting taxable. All right. Now, because we've opened up the IRA to taxation, we've also opened it up to deductions. So, for example, the neg the negative values, the forced depreciation on the K1s can now go against the taxable income that the IRA is experiencing. That's why this is still such a common investment, even though I'd say probably 90, 95% of syndications will trigger UDFI in an IRA. And one thing to keep in mind is that that isn't tax both by the IRA as the entity, not by you as the individual. So the IRA fills out a form 990T. You work with your CPA to get that form filled out, then you send that over to us, we make the payment to the IRS on behalf of your IRA.

SPEAKER_01 26:39

Wow, man. Look, I really appreciate you um uh clarifying laying that out. And for the listeners, you definitely want to kind of rewind that to get um some a deeper understanding there. Because one point that you mentioned there at the end that I actually don't hear uh stated enough is uh when you said now that you've opened it up to taxation, you've opened it up to some deduction. Um, because you usually, you know, that that uh UDFI kind of gets uh beat up um you know in conversations about the benefit of using an IRA, but they typically will end it there and not talk about, well, hold on, we still now have the um uh opportunity for deductions. Um so very powerful um point there. I mean, and and you know, I've even had conversations with people where I've tried to kind of explain some of that, and um, and I think it's just not as commonly understood, but that's something that, you know, for the listeners, again, you want to be clearly aware of that. So um, Zachary, let me ask you something. You know, what is so I'm if I'm a client, you know, I'm listening to this and I'm interested in kind of getting involved with um with you guys at Quest, what's kind of the process, you know, the onboarding process, and and where where do you guys take your clients?

SPEAKER_02 27:43

Yeah, so it's it's pretty straightforward. Essentially how it works is uh we always tell people you you want to have a conversation. So you want to have that consultation with an IRA specialist. By no means is it required, right? We don't charge anything for it at all. It's just so that we can lay out the rules, right? The rules surrounding these accounts, you can we can understand the type of investment you're looking to get into. And if we need to have a conversation like you know, the UDFI conversation, we can have that up front. That way you're not caught off guard five years down the line. All right. So after that consultation, the IRA specialist will send you over a link to the application. So you follow that link, you fill it out online, takes about 10, 15 minutes. From there, the link comes directly back to the IRA specialist. If there's anything that needs to be corrected on there, like there's information missing or something like that, they'll reach out to you, let you know. But if not, we send it to our onboarding team that has and they get that account established for you in 24 to 48 hours. All right. So after that account's established, you receive your account number. Now that you've you've got your account number and your account investing, which is essentially the name of the IRA, we can work on two things. One, we can work on the movement of funds. So what that looks like depends on where the funds are coming over from. For example, if you've got an IRA at Fidelity, it's as simple as uh liquidating the amount that you need and getting enough in a cash position to satisfy the transfer request, in which case, with us, you just fill out a transfer form, send it over to us, and we initiate that transfer on your behalf. That's straightforward. All right. Now, while we're waiting on the funds to arrive, we can actually start the investment process. So, what we'll do is we're gonna assign a specialist to you that's gonna focus on whatever type of investment you're looking to make. So if it's a real estate, let's say it's actually a syndication investment, right? So we're gonna get a private entity specialist that focuses on these types of syndication investments. That's gonna work with you as well as with the syndicator and their team to help gather up the documentation. We audit everything to be sure it's vested correctly in the name of the IRA. That way, down the line, when you get your return, there's no argument as to whether or not that investment was made by you and those returns go to you or they go to the IRA. We nip that in the bud up front. Second, we're gonna check for blatantly prohibited transactions, right? So we're gonna show, we're gonna say, okay, hey, it looks like you know your son is listed as the general partner on the syndication, or it looks like you as an individual are listed as a general partner on the syndication. Can you confirm that? And if you do, then we'll say, you know, unfortunately, it's a prohibited transaction and we we can't allow it to go through, right? That's our way of you know providing that service and protecting you from getting into an investment that would otherwise that could otherwise hurt your account. That full process, once we've got the document, with that full process takes 24 to 48 hours. If there's some mistakes on the document, like the vesting is wrong, for example, we'll let you know. Once you get it corrected with the syndicator and send it back to us, just give us another 24 to 48 hours to get the auditing. And then once that those are good to go, we fund as soon as the funds are available in the account. You know, we say prepare for two to three weeks because you want to factor in how quickly your other custodian can get the funds over here, especially if it's coming over from like a 401k. Um, and then also you want to you want to give some cushion for the syndicator. You know, some syndicators are very communicative and they'll send things to you immediately, get corrections immediately. Some take a little bit of time, right? So you just want to give that cushion two to three weeks to prepare for it. However, if it needs to happen quicker, we can have we can make it happen much quicker than that.

SPEAKER_01 30:59

Yeah, I appreciate that. And I can I can tell you that um I can certainly attest um you know, that you guys have a really good and seamless kind of process. I've um, because your your your client portal is also really, really clean too, right? You kind of allow your clients to kind of upload information and put information in and uh communicate directly with uh with the specialists that they've been assigned to. So it's really um uh really, really good kind of setup and platform and system you guys have. Um and so so can you share a little bit about I know you guys have an expo coming up. Can you kind of share some details on um on the expo? What are some of the things that you offer why someone would want to uh to attend?

SPEAKER_02 31:35

Yeah, absolutely. So uh the Quest Expo is the biggest event that we're gonna launch this year. Uh we used to do it on the annual basis, but the last time we did it was in 2002. We gave ourselves a year because we wanted to be sure we were bringing the enough value to the table, right? What we found was that on a yearly basis, as soon as we ended one, we had to immediately start working on the next. And it eventually just started to pile up where we didn't feel that we were giving as much as we could, right? And so our our entire, our entire belief is that providing customer service, right? That world famous customer service is what we're known for. And we wanted to be sure we're providing that at the expo. So we took that year off. It's gonna be in Irving, Texas this year. It's gonna be June, I want to say 23rd to the 26th. Um, I'm sorry, to the 25th. Uh, and how it's gonna be, it's it's not an IRA expo. This is an alternative asset expo. So we're gonna have speakers from across the industry. So we're gonna look at mineral rights packages, right? Oil and gas investments. We're gonna look at private money lending, we're gonna look at real estate investments, syndication investments, we're gonna have panels that will be looking at the economic forecast, right? We'll take both a look back to see what we've learned and a look forward to see how we feel uh going forward and some of the things to keep in mind when doing when going over your investment strategy, right? So notice we're covering the entire realm of alternative asset investing. And it's the largest event that we host. You know, we've got uh we've got tons of speakers coming out, tons of vendors. You know, it's really an opportunity both to learn and to network. A lot of can't tell you how many times we have people that will come there, you know, they'll make some deals happen, and that's when they're walking away happy. Um, so really excited about it. It's gonna be our biggest one. We're hoping it's gonna be the biggest one uh that we've ever hosted. We're expecting over a thousand people to attend. Uh, we're really excited about it.

SPEAKER_01 33:15

Man, that that sounds incredible. I I love that you guys are positioning yourselves. I mean, you've already been there, but kind of further uh maybe further or deepening, I guess, the position of kind of being the um a leader in the alternative space. Um, and and like I mentioned earlier, you guys have some great education as well that will help clients and prospective clients to kind of understand more about this space, more about the service that you guys offer. So that is going to be an incredible, an incredible event. A thousand people, that's incredible. I think it's just amazing. Man, you guys, you guys have a great YouTube channel, uh, by the way, as well for anyone who's kind of looking for additional um content and information.

SPEAKER_02 33:50

Oh, yeah, absolutely. And you know, because we're in the alternative asset space, right? You know, if if you were to go to Fidelity, you could set up an IRA and you could have that account be managed actively, right? With alternative asset space, it's not the same, right? The self-direction is really where it has to, that's where that self-direction really comes in. The fact that we can't actively manage these for you because they're not securities. You know, like I said earlier, there's a little bit higher risk of due diligence is a key. So the fact that we can't manage the account for you, we're gonna do the next best thing. We're gonna be sure that we give you as much information as possible. All of it is accessible completely free at our education center and our YouTube channel. We have hundreds of videos going over just about every aspect of alternative asset investing, both inside and outside of an IRA. Uh, we host Tuesday and Saturday classes at noon every single week, a different speaker, every class, all of which recorded and uploaded to our YouTube channel again, completely free and accessible to the public. And that's because we want to be sure we are providing as much as we can. We can't make the investment for you. So we want to be sure you have all the tools necessary to be able to spot the investments that you're looking for and know what to look for with those investments.

SPEAKER_01 34:59

Awesome, awesome, awesome. Let me let me ask you a question too. And this is a bit of a not not a challenge, but just out of curiosity, right? Because for someone who's who's kind of considering what what what's what's the distinction? Like what if someone says why Quest versus another uh custodian, another firm, you know, what are some of the things that you guys are doing to kind of help stand out in addition? I mean, you've listed a lot of them, but is it what else are you guys doing to kind of help stand out and say, okay, this is why you need to we need to have this conversation with with with you?

SPEAKER_02 35:25

Yeah, so I think whenever you're considering you know your different custodians, um, first thing I can I can kind of illustrate is the value that we bring is just give us a call. Give us a call, and you're not gonna get an answering machine. You're gonna get someone who answers the phone and can answer just about most of the questions that you have. And if you want to take a deeper dive, we've got 34 certified IRA service professionals on staff to take that dive with you. So that level of customer service that we can bring because you're connecting directly to another person is unmatched in the industry. On top of that, because we know we're in the alternative asset space, right? In that real estate space, we realize that sometimes the window for funding, the window of opportunity, is very slim. And what we're gonna be sure of is that it is not the custodian that prevents you from getting the investment, right? Because that's that's one way to deter someone from investing in these with these accounts at all. If the custodian is the holdup, they're not gonna want to do it. That's why all of our processes are 24 to 48 hours, every single one across the board. You know, we say prepare for a little bit longer, but it's not because of the quest process, it's to be sure you're factoring in other custodians or you're factoring in the syndicators or you know, the borrower on a note. So all of our processes are very, very quick. Love like I've touched on before. Yeah, yeah, the topic like I touched on before, just the education, right? We we like to we we try to position ourselves as the industry leader when it comes to education and resources. So we host networking events and our Houston, Austin, and Dallas offices. We host webinars uh that are completely free. We host a virtual uh networking happy hour every month that has people from across the country joining. And then we host things like our um uh like the like the uh expo, right? These massive events where we're gonna kind of combine everything we've got or put it in one space for one weekend and give it to you. So uh that's real, that's really what I think separates us from the rest of the industry.

SPEAKER_01 37:12

Yeah, absolutely. That's right, service, education, uh, accessibility, I mean, you know, ease of access, kind of speed, right? All the things that you want could because you mentioned you mentioned a point there that's very important. You're right. Um that you know, as a syndicator, I've been on the active side, been on the passive side quite a bit myself. And that speed of being able to get funds, um, get get things processed and and funded is a huge factor. So the fact that you guys have that down to a science is is uh is critical. So we're getting kind of close to uh to wrapping. Um and I wanted to ask a question here of you, uh Zachary. So if someone's listening to this, they're ready to start um, you know, and they want to take action now. Like, how can they do that if they want to take action and kind of get on board with you guys?

SPEAKER_02 37:56

Yeah, there's a couple different ways. Uh, one, you can just go to the website right when you get on, it's gonna ask you if you want to set up a consultation with an IRA specialist, check out that Calendly. That's gonna show you what's the uh what availability all the IRA specialists have. You pick a time and day that works best for you, and one of us is gonna give you a call, right? That way we can start the ball rolling right then and there. Otherwise, if you don't want to go through the website, you can give us a call, right? You can either give us a call at 855-Fund IRAs, or you can call us at 281-492-3434. If you have an extension for a specific IRA specialist, go ahead and let the front desk who whoever answers knows, and they'll send you on over to them. All right. So, really, we're accessible. We're here for you, whether it be setting up consultation, reaching out via email at IRA Specialists with an S at the N at questtrust.com, or going to the website, giving a call. Really, any way you want to reach out to us, we're available here to get the ball rolling for you.

SPEAKER_01 38:48

All right, there it is. You guys, you heard it. So reach out if you um are interested in kind of getting your stuff set up, reach out to hear more about um some of the education. Um, so Zachary, once again, man, just thank you so much for uh coming on and adding some value, giving us some details about some things that you guys have coming up, and um, and also pointing us to the uh repository kind of of information that you guys have available. So thanks so much for adding value to myself, to the listeners. Appreciate it.

SPEAKER_02 39:14

Absolutely. Yeah, thank you, thank you for having us. Thank you so much for having us out. Um, you know, this is this is a space that, like you said earlier, not many people know about. The more exposure we can get, the more people can take control of their retirement and really have that freedom to invest in what they know best.

SPEAKER_01 39:28

Absolutely. As always, thank you so much for tuning in to the show today, brought to you by Bridge Prosper. If you enjoyed today's episode and you'd like to learn more about commercial real estate investing, please like, subscribe, and share. And we'll see you again next week. I'm Brandon Jenkins, and this is the Capital Stack, where we help you learn, apply, and prosper.