Episode 5: How to Invest in Real Estate with a Self-Directed IRA or Solo 401
Tax attorneys and hosts Mat Sorensen and Mark Kohler explain how your self-directed IRA or solo 401(k) can invest in real estate. Mat and Mark explain the process, rules, steps, and common real estate deals and investments made by self-directed investors (rentals, fix and flip, partnerships, wholesale/options).
Mat Sorensen: Welcome, everyone, to the directed IRA podcast, excited to be with you today, talking about my favorite topic, Self-directed IRAs. And I am here with Mark Kohler, the man, the myth, the legend, the guy who taught me about Self-directed IRAs,
Mark Kohler: And I created a monster. I just turn them loose and, you know, it’s he’s a prodigy. And then he just passed me up it’s just the way it goes. So now we’re we’re glad many of you are finding this. It’s a relatively new podcast. And we have our Main Street business podcast on entrepreneurship and asset protection and taxes and all those goodies. Been doing it for over 10 years and we just get more and more self-directed followers and questions that we’re like, we’ve got to dedicate a show to this. So we’re here for you. Attorneys and CPAs, real legit law firm and accounting firm.
Mat Sorensen: We self-direct ourselves and got our company director, IRA. Of course, anybody that needs accounts and already done almost a billion dollars in transactions, isn’t that crazy? We’re almost to that already, which is pretty cool. So and I like your I like the like 65 in Arizona right now. This is kind of chilly for us. So I’ve got my sweater on today. Oh that sweater on the Mark is in flannel. He’s got a flannel shirt that’s very fashionable.
Mark Kohler: Well yeah I just came here from home at lunch. I pulled out the four wheeler with the blade on the front and push the snow around as there’s a blizzard outside for those that would like to see it. Yeah, yeah. There’s like four inches on that Kohler right there. I can see. Just pull up. Yeah, it’s sweet. It’s wintertime, dude. It’s November. I don’t know how you celebrate Christmas in Phoenix. It’s not real, but yeah, it’s different. It’s a tough it’s a tough time of year though because I have to go to more meetings, my ENA meetings, eggnog, anonymous. Oh, it’s my kryptonite. Some people go to AA. I have a sponsor. I can only have so much eggnog a week and it’s. Yeah, not going well. I’m off the wagon. You’re on the wagon or off. I’m whatever I am, I’m not doing well. So whatever. Yeah.
Mat Sorensen: I believe it’s off the wagon but what do I know. I always mix those up like the bull in a china shop. I mean I never that took me years to understand that one. I thought it was a bowl like you eat cereal out of the fine china they don’t have bowls the animal. All right. Well, we’re talking about something, guys, not just going to shoot the crap all day. We’re talking about Self-directed IRAs in real estate. We’re going to talk about owning real estate, the most common asset along with your self-directed IRA. Not the only. Of course, we got lots of other things the clients are doing, but this is a very common we’re going to go from out to buy it. Can I get a mortgage or loan? What if I want to partner with other people or other accounts on it? How can I manage the property? Or if I’m going to do a real estate development, what do I need to know there? So we’re just going to go over those commonly asked questions, things we should we want you to know as you go out and self-direct your IRA into real estate.
Mark Kohler: And there are so many questions. I am we started to prepare list for today’s show and we’re like. This is why we have a day and a half summit every year that’s recorded, because it just it evolves. But if you’re new to this, this is a great kind of 30,000 foot overview. But there’s always a golden nugget and a lot of little things we say, people that have been self-directing for years going, oh my gosh, I never knew that about UBIT, or you could do that with your Coverdale or you could twist and turn in a certain way. So we hope to while many of you there long time self-directed investors and Mat can give have one disclaimer on the real estate topic. Yeah, we talked about a little bit on the last podcast was. When you start talking about real estate in a retirement account, there’s a sliver, a segment, a cross-section, whatever you want to call it, of promoters out there that just encourage people not to put real estate in retirement accounts. And it continues to baffle me on why when you really just look at the rate of return, that’s that’s why we invest in our retirement account to get the best rate of return. Don’t worry about who gets depreciation. Yeah, IRA doesn’t get depreciation and also doesn’t pay tax. And so there’s yin and yang to the strategy. But just be careful if someone’s told you not to buy real estate or not to buy real estate in a retirement account, the most wealthy clients in America own real estate, and that self-direct that are most successful self-direct have part of the retirement account in real estate. Very, very common. It’s not crazy, not crazy talk. This isn’t high risk. So be careful. So here’s my little disclaimer for those that might be skeptical.
Mat Sorensen: I mean, the goal, I think, for everyone with their retirement account is to have the largest account possible when they hit retirement so they can live the lifestyle. They want to live and take care of the people they want to take care of, donate it to whatever charity they want to donate to when they pass on whatever we want, the biggest account possible. And so but we also think clients are most successful when they invest in what they know also. So if you know, real estate. Why are you buying a mutual fund, you don’t know mutual funds? You know, if you don’t get a real estate deal, why are you buying real estate with your retirement account? Buy it for the returns, the appreciation, the cash for all that stuff. So but we don’t care what you buy. I mean, between us, it doesn’t matter to us. Now we’re just saying just invest in what you’re good at and what you know and what you like. That’s real estate. This is for you then. So we’re going to take it down because there’s some things you want to know.
Mark Kohler: Yeah. And please go back to our other podcast recently on all the different things that you can buy with a retirement account. That’s a rabbit hole. We don’t want to go down. I just want to disclaim for those later on those other assets we’re talking about later. But for today, it’s how to do real estate today, not why you should not the naysayer conversation. So I guess Mat, I think if I were sitting in a classroom listening to the amazing Mat Sorensen, I’d ask you just in big picture view, what are the different ways I can own real estate with a retirement account and then we could maybe go down each one of those of how you would go through functionally to do it. Is that OK to ask you? What are the ways?
Mat Sorensen: Let me say the first thing is, remember, we’re talking about investment, real estate. We’re not talking about buying your home you’re going live it. All right. That prohibitive transactions that we talked about in our podcast. So we’re talking about maybe a rental. It could be an Airbnb, a property you’re going to flip, it could be raw land. It could be investing in an LLC with other people. That’s a bigger property or deal. There’s lots of different ways we’re talking real estate.
Mark Kohler: And it could be foreign real estate held by an LLC here in the US. So if you not here. Yeah, a lot of people think, well, my IRA can’t buy something in another country. It can be difficult unless you self-direct and create an LLC and get on it so we can help with that too. This is not a property either that you’re going to have your kids rent from your mom or dad rent from. So again, we’ve got other podcasts in prohibited transactions. So those those disclaimers. But I think that if I had to throw it out there, I’d say you can buy it directly in the name of your retirement account. You can buy it with an LLC. And that’s it, I mean, they’re just going to go from there, it’s like that’s kind of the first fork in the road. Do I want an LLC or am I just going to do it in my name? I guess there’s this California subculture, black market idea of I can use a statutory trust or some sort of Delaware trust so I can get around an LLC, which I think we’ve talked about is chasing your tail. Not a good strategy.
Mat Sorensen: Don’t do that. We don’t allow it. I don’t know if there’s very few custodians who allow that. So don’t use the trust structure. So, yes, you have two options. You going have my IRA is going to own it directly. And if that’s Mark Kohler IRA, it’s going to be directed trust company Mark Kohler IRA. That’s the party on the contrast contract buying. So Mark’s not going to be on the purchase contracts. And Mark Kohler buyer. I just had a client the other day. A real estate investor owns a lot of properties buying his personal IRA, what’s the contract I see coome across my desk? John Smith. Personally, I’m like you got to start over, starting over. It’s got to be in the name of your IRA. OK, so that’s option one is to do it in the name of the IRA. You don’t sign for it. You’re going to prove it. But then we’re going to sign for as a custodian, we’re going to process the earnest money title is going to be vested in your IRA’s name. Rental income is going to come to your IRA. We’re going to pay expenses all that.
Mark Kohler: I want another little. Guidance here, for some, you might have just ISIL in an isolated manner, found this podcast. We have other podcasts, podcast on how you open the account. How do you get the money there? And then see what we’re talking about today. And I’m going to sit for the last time with no more disclaimers. We’re talking about day three or four. You’ve got your IRA, your self-directed IRA moved. You’ve got the account set up, you’ve done a little personal education. You’ve watched our summit or read some good books. You’ve got an advisor that knows what they’re doing now. You’re saying, OK, I’m not going to buy Facebook stock anymore. I’m not going to buy an ETF from a mutual fund. I’m not going to buy that Bitcoin, I’m going to buy real estate. How do I do it? And that option one that just to stay with that for a minute, there’s pros and cons with one or two is the one you call your custodian, whoever it is, your trust company, and say, I want to buy that property. Now, they might want to yell at you through the phone, because they’re going to say, we’ve explained all this on our website, go do it. And when you try to start doing this through your IRA by yourself with the custodian, it can seem a little overwhelming because the LLC provides a really nice platform for this, where if you’re just going to do it in the name of the IRA, I think it’s more cumbersome Mat is that fair to say?
Mat Sorensen: Yeah, I think the most common self-directed real estate investor is going to use the LLC, but not always, and we have plenty of clients who just buy real estate in their IRA directly. are there are pros and cons. This is episode five in the directed IRA podcat, go back to one. We’re doing this in sequence. If you’re brand new, you know, and some of these things, Marks hitting the caveats on your like go back to one. And if you watched one through four and all these caveats, Marks talking about aren’t hitting. Keep listening, read the Self-Directed IRA Handbook, or call and get a consultation. OK, let’s talk about the pros of just buying it in your IRA or your account directly. This could be your HSA. You’re Coverdell. Whatever you say, IRA. The pro is it’s cheaper. Ok, I just have my annual account fee for my IRA, maybe some processing and wire fees when I buy it, when I buy the property, but if I’m going to go that route.
Mark Kohler: Let me say it’s a little cheaper at the front. It could actually be more expensive down the road because whatever you need. Right, whatever you need to do something, you can’t do it maybe where an LLC gives you the ability. So but it’s cheaper up front. Is that OK?
Mat Sorensen: Very true. Now, let me say let me give a few examples of clients who buy this way. We have a lot of clients who buy just single family rentals, which right out of their IRA, they’ve got a property manager that helps them buy the property and then manages it for them that streamline, they know the process. They got it down. They help them buy it. They lease it. They manage the cash flow and pay the expenses. And they just then, you know, they accumulate in cash flow back to the IRA. And so that’s pretty streamlined. And the LLC could help for asset protection. We talk about the LLC. But and that was last week’s podcast, too, says you should know the IRA/LLC if they can go back to last week to get more detail on it. But that’s one example. Another one, clients just buying raw land. I’m going to buy raw land. I’m going to sit on it. Right. And there’s going to be a property tax bill once a year. Not a lot of money coming in and out that that’s gone to the LLC helps that much.
Mark Kohler: Yeah. And I’m going to just cut right to the chase. I’m going to just say it bluntly. This is my opinion. The client calls me up. I always want to do them right and give them what I think is the best ethical, honest, saving, efficient answer. And if I do that, they’re going to come back time and time again because they trust that I’m not going to take advantage of them. If they call up and say, Mark, I’m going to buy A or B property, should I use an LLC or put it in my name, I would say very clearly if it’s raw land or a property that’s not going to generate cash flow or have a lot of transactions like calling pest control or a property manager, decisions that have to be made, if it’s a very generally one or two transactions a year paying property tax like Mat said, I would I would probably say just do it in the name of your IRA. There’s no need for an LLC. You’re going to be able to call the custodian or trust company once or twice a year. There might be a transaction fee here and there, but it’s going to be simpler upfront to the minute you say, well, there’s going to be cash flow or there’s going to be a tenant or there’s going to be a development or there’s going to be a partner. Gameover, just do it with an LLC that it’s just you’re going to actually be grateful you chose the LLC. If it’s not that simple, don’t do it. That’s my take. Mat. Do you think that’s outrageous?
Mat Sorensen: Yeah. I mean, I use an LLC for my rental property that my retirement account owns. Like, I sit here in the office where I can push the buttons and send stuff around right for my own. I’m right here, but I use an LLC. It’s just easier and we understand it. The heck it is. I like just having a regular bank account with the LLC checking account. I even have a property manager. So the LLC is pretty cool. It just a lot of clients are so familiar with it. I love using IRAs. I think that’s the best advice for the typical running client.
Mark Kohler: Yep. I love it. Ok, now and I don’t know, I will say the practicalities. I’m just going to say it. I’m going to dumb this down. Mat I know you might want to add a couple other steps, but let’s say you’re going to go that route, you’re going to buy it in the name your IRA. I would also ask the custodian, what form do you want me to use? It’s usually going to be some sort of just transfer form or says the custodian, it means directed IRA.
Mat Sorensen: Because of that, you’re not going somewhere else.
Mark Kohler: That’s a yeah. I always feel like that. Should I really, you know, self edify. Herbert directed. I haven’t directed. IRA is so amazing. So the people, the men and women that are helping run that operation are so good. But anyway, so you call directory, find out what form on the website they’d prefer you to use. There’s a lot of self education on the directed IRA website, direct investment, real estate form.
Mark Kohler: You have direct investment, real estate, one up and you’re going to basically and here’s the crux of the whole situation. You’re going to make the offer to buy the property in the name of your IRA or 401k or HSA or Coverdale, and you’re going to make sure that the direction letter is going to help you use the right terminology to make sure that the offer is made in the name of the retirement account. Now, this is where you have to sometimes really whip your realtor around and go, whoa, whoa, whoa, don’t write up the reps here. The offer in my me, my retirement account is going to buy it. If their brain explodes and they’ve never heard about that before, you might need to change realtors. But if you’re OK with that realtor, you better say I’m going to take over on this point. Leave me alone. My retirement accounts buying it, here’s the name of the buyer or the offeror to buy this property and then it’s going to go from there. And so when it goes to closing, the money will come from the directed IRA to the escrow company for closing. And then title Mat title, remind me where are we going to, where does title go and all that. I know that you’ve really dealt with this a lot.
Mat Sorensen: Yeah, title is going to go on the name of the IRA directed trust company FBO Mark Kohler IRA, for example.
Mark Kohler: And the person has the title, do I send the title to Director Direc?
Mat Sorensen: Well, the closing is going to go through us like we’re doing the closing with your IRA. I mean, you’re always buying it, you’re not buying it. You’re going to approve us to buy it for your IRA. So everything we’re going to wire the money. We’re going to be involved with title and escrow every day. We’re doing one you know what I mean? So and the deed, I guess what we’re doing.
Mark Kohler: Yeah. Yeah. No, I’m just letting people know that Directed IRA is going to hold your hand through it. And I’m asking these questions. And just because again, I don’t want to go too deep, so I’m kind of just going broadly, then you dive deeper. But the deed, when it’s all done in that deed is sitting there. Who holds the deed?
Mat Sorensen: Technicality, but our Custard Custodial account agreement say we hold an electronic copy of your record, no one frickin title transfers property by an actual physical deed anymore, like any even notes and things like that. So you’re authorized to hold electronic copy of that four year account, which is what perfectly we’re not holding physical deed.
Mark Kohler: See, and I love saying that because we’ve got a podcast just on precious metals and things like that and all sorts of other assets. We’re going to have podcast on to explain. And some people go with my IRA buys it. Who’s got the deed? Who’s got the title? Where’s this all sit, it’s electronic, it’s digital. We’re in this beautiful age where you’re not going to be the owner. Your retirement account is going to own it. And the directed IRA, as the trust company is going to facilitate that and hold it on your behalf. So is that a fair way of saying, that’s OK, I’ll shut up now, but that I just wanted to kind of go through that. If you don’t use an LLC, you’re really going back and forth to the custodian or directed IRA to do it.
Mat Sorensen: And of course, if you use the LLC, what we hold is the IRA is we own the LLC. One hundred percent. Let’s say there’s other ways you could partner in the LLC to. That’s last week’s podcast. But with the LLC. Now the LLC is going to be on title. Right. And you’re the manager of the season. You’re signing the contract. You’re running the deal. We’re not involved with you purchasing anymore. You’re either with us. Just bought the LLC and we’re just on the LLC interest. And you can’t take money from the LLC because right around that. Right. You got to run it back through us. But now the Elsie’s off buying, owning the real estate, receiving the income, paying the bills. You’re keeping that all separate from your personal stuff. You got your own LLC bank account for it. So that little little different ways to do it. Now, if you’re like buying fix and flip property, the Airbnb, even with just the single family rentals we’ve talked about, the LLC is so much better, so much access to the money. You have a debit card to buy stuff and all that gives you much easier access to to pull off some of those deals. All right. Let’s talk about getting a loan, though. A mortgage.
Mark Kohler: If I want to say one thing at that big fork in the road where you say I’m going to buy real estate, I’ve done my research, I know what I’m going to do, I’m ready to go. I picked this little property or big property ready to go. And you say, I’m not going to have the trust company Directed IRA do it for a whole title. I’m going to set up an LLC. That next step is to set up that LLC. And that’s where that podcast where we just talked about the function of how that process works, getting with the law firm because trust companies or custodians should not be doing an LLC for you. That’s legal services. Let the legal community do that. Let your lawyer that knows what they’re doing do that. Set up the LLC and then the LLC makes the offer on the property. And you may say, well, how does the money get to the LLC? You know that that’s the that’s the podcast on LLC strategies, but that’s really the first fork in the road. I’m going to go with the custodian holding title or am I going to have the LLC hold title? And so you’ve got that little pit stop of setting up the LLC, making sure it’s funded. Then you’re going to make the offer in the name of the LLC. Then how am I going to pay for it? Do I have enough money? We’re going to partner with others back to the LLC podcast. Oh, I’m going to get a loan Mat. Can I get a loan?
Mat Sorensen: Yes, you can, but I have to get a special type of loan. All right. OK, it’s called a non-recourse loan. All right. So what there’s a rule on this that called the extension of credit prohibitive transaction rule that says the IRA owner cannot guarantee the debt for the IRA when the IRA makes investment, nor can your spouse or kids or parents or anyone that’s called disqualified under the rules. So when Myra goes to buy real estate, Maitreya’s can buy it and get a loan. But I can’t guarantee and sign for it. I can’t use my credit or my assets so the IRS get its own loan. Now, if you go to your regular bank or your typical mortgage lender that you may even use for your real estate investment, they’re going to be like, I don’t know what the hell you’re talking about, nonrecourse loan for your IRA, buying real estate where you come from. All right. Now, there are some banks that have specialized in this case. There’s really three banks out there and there’s actually probably five or six, but there’s three we’ve seen most common that do these. And we’ve got a referral list. You can hit us up for the referral list there on the Directed IRA website too under resource directory. But those banks will do an online course on what that means is. If the IRA doesn’t pay the loan, the bank can foreclose and basically take the property back, they can’t go for the IRA for any deficiency. They can’t repay the IRA owner personally. Their sole recourse is to foreclose and take the property back, that they loan the money on to pay themselves back. All right. That’s called a non-recourse loan.
Mark Kohler: Now, what I love about this loan conversation, briefly, is two things. One, a lot of people that have bad credit or challenged credit from doing just maybe you’ve got a business with a lot of lines of credit and it’s just hard to throw more credit on your FICO score. And so the beauty of the non-recourse loan is your IRA doesn’t need credit. We’re not going to look at your credit, in fact, is prohibited to look at your credit. So the beauty of these banks in this referral list that we give you is that these non-recourse lenders, they’re just looking at the property. And it’s almost a nice check and balance, too, because they’re going to look at it and go, hell no we’re not going to loan on this. And if you can’t get a nonrecourse Leonard alone on this, it may not be a good deal anyway, because they just want to make sure it’s going to cash. They want to see you succeed.
Mark Kohler: The second thing I like. Yeah, and the second thing I like about these loans is this is the door that opens for you to buy real estate if you don’t have enough money in your retirement account. So many people go, well, I’m not even going to listen to the podcast on how to buy real estate because I only have $50,000 in my IRA or $50,000 my 401k what you can do some good things with that. Most nonrecourse lenders are going to be probably a 50 to 60 percent loan to value. Meaning if you buy one hundred thousand dollar property, if you’ve got 40 or 50 grand, they’ll loan the other 50 or 60. Is that fair to say? Mat.
Mat Sorensen: Yeah, 30 to 40 percent down. They’ll fund the balance after that.
Mark Kohler: And one last example is I actually bought a rental property and still own it and I bought it for $4,000 down and got a seller carryback for $36,000. It was a $40,000 non-recourse, nonrecourse. They can just take the property back and many of your joke about it is true my little meth lab property owned by my HSA. It’s adorable. And so that property was bought with a non-recourse loan, with an HSA, with an LLC, with $4,000 down. And then my LLC collects rent or anything working with the property manager and I’m off to the races. So that allows you to use leverage. So when Mat brings up this non-recourse loan, think about I don’t need to worry about my credit and I can leverage my money. I think those are two major benefits.
Mat Sorensen: Now, keep in mind, we made a couple of points in our explanation that I remember you’re not putting 10% down, 20% down. You’re generally have to have 30 to 40 percent down to nonrecourse loan because the bank can’t come after you for the balance. If you default, they can just take the property, they can’t garnish your paycheck or collect your other assets. So they want to make sure there’s enough equity in the property.
Mark Kohler: I got lucky with that 10 percent down in. Sometimes sellers will carry back a majority of the note. But if you go with the bank, that’s the 30 or 40. I was just given an extreme example.
Mat Sorensen: And you can do the creative financing deals all day long. Just get them nonrecourse and you’re totally fine. And if it’s just an LLC, even you and your IRA/LLC, let your LLC, of course, be the borrower. And that’s how it would look on the docks anyways. And a regular seller finance deal just don’t personally guarantee it. So so yeah. So the nonrecourse loans popular think of it all client set me up and say, well Mat I can buy. You know, I can buy one property outright with cash or I can buy three with a nonrecourse loan. What should I do when I want to say buy three every time, if you’re going to these are good properties, increase the amount of assets you can do, you’re going to pay those loans down over time and you’re going to at the end of the day, again, we want the biggest retirement account possible. You’re going to do better off by using the debt and leveraging it, particularly at today’s incredibly low rates. And I will say this rates are going to be a one or two points higher than a regular mortgage. You’re not getting a three and a half percent rate on a nonrecourse loan, but you might get five and a half or five, maybe six. Still pretty good.
Mark Kohler: Now and yeah, it’s so funny, we’re in this day and age where five or six percent rate, we’re like, OK, like what they’ll get out of.
Mat Sorensen: My first mortgage is like eight percent on this podcast.
Mark Kohler: To put this into perspective, the big picture, if you’re driving down the road, take your breath. Real estate and my retirement account. I just want to bring us back full circle. Why are we doing this is because you know what? I might be able to get a cash on cash return or a return on investment. That’s 10, 15 or 20 percent or more. For example, most real estate investors are looking at a cash on cash or cap rate of eight to 10 percent. And then they’re still going to get cream on the top or gravy on the top or a cherry on the top or whatever with appreciation and mortgage reduction. So the rate of return can be significant. And so that’s why we’re even talking about this. We’re going to have shows on probably options. You know, I don’t even really take title to the property. I’m just going to option to buy the property and then assign that contractor option or sell that option off. That’s another variation of this real estate acquisition where you you kind of get to the finish line and go somewhere else. You give me money, you can you can go across the finish line for me. And that profit goes in your retirement account. Some of the biggest wins we’ve seen in retirement accounts with clients over the years have been through that option, real estate strategy. But this concept is you’re actually going to hold it. You’re going to hold the property, whether it’s a long term hold with raw land, you think they’re going to put in an overpass or they’re going to want to put a cell tower there or a freeway sign. And so you’re going to sit on it and hope it’s going to go up in value or it’s going to be income producing. And so that’s where you might use debt. You might use partners. And that way you can get into real estate and get a bigger ROI. Very, very doable. Very doable. Mat, I’ll ask you, can I partner in in the deal, too? Can I put my own money in the deal?
Mat Sorensen: Let me say on that last comment on the different types, the most common is just a single-family rental. I don’t people think like, oh, you got to buy some. It’s the single-family around be in the Midwest for under one hundred grand. It could be in the South for those price points. And others in California don’t believe that because a single-family rental in California goes for like a million right now. But, you know, as we’re talking about here, so and everything has a say on the option or wholesaling, that’s very common, too. I mean, we see that from a single-family rental contract getting wholesale or an option on it, and they maybe make five or ten grand. I’ve seen it with a client on a commercial property last month that was a one to two million dollar property. They wholesale the contract essentially for over one hundred grand. I’ve I mean, we’ve seen million dollar ones on real estate development deals, too. So those are all legit strategies you can do with the retirement account. So it’s it’s buying the rental. It’s doing a flip even. You know, we can what we need to talk about here at the moment, too. But all these different things that are real estate investment, not for personal use, are all real estate deals you can do with your IRA. I love it. When you asked about. Oh, you asked about partners.
Mark Kohler: I know I can use like we all know that you could partner with others or others retirement accounts. But if I want to throw my hat in the ring, can I be a partner on a real estate acquisition? Say I’m short. I need 80 grand to close. I’ve only got 50 grand. Can I personally put it in the other 30?
Mat Sorensen: Yes, be very careful, this is what I tell clients that want to start, especially if you’re new to Self-directing. I don’t love the concept because it’s clunky. It’s possible. I want everyone to know up front it’s clunky and they’re going to have a lot of questions. Where are you going to say, well, why can’t I? And I’m going to be telling you a lot of no’s. No, no, no, no, no, no. Here’s what’s possible. OK, now I got that out of the way. The easy answer, let me give you what I would say. Like, if you were buying eighty thousand property of 50 grand, I’d say go get a nonrecourse loan for the other three. Don’t put in your own personal money for 30. It’s actually more complicated. It’s easier to get a loan than to get 30 grand of personal money. Here’s why. The only way you’re going to be able to partner, there’s really there’s two ways that the general are going to say is using LLC, let your IRA put in 50 grand, you’re going to put in 30. Now, you got the 80 to buy. We’re going to break up the ownership of that LLC, based on the dollars that came in the most common way to partner in an LLC with your IRA. But here’s the downside. You have a partnership, LLC, it’s going to cost more. Our IRA/LLCs are 800 bucks. If your IRA owns a one hundred percent, if you do a partnership, it’s fifteen hundred more complicated. OK, the second thing is now you’ve got to do a partnership tax return. All right. The LLC is going to file a partial tax now on an eighty thousand dollar deal that, you know, that might cost you a thousand bucks a year to get that done, to have an accountant do it. Yeah. So I don’t love it as much there. Now, you could say Mat, this property is going to be amazing. I don’t want to bring in debt. I want to be in the personal money because I want to make some personal money on my IRA to make money. Then I get it. Then you bring in the money because it’s like I kind of like the concept and some clients do it like I got some personal money anyway, sitting here on the side doing nothing like I don’t mind making some money person and let my IRA build up to. So I just want to give the caveats there. Now, here’s the one thing that throws everyone. If you set that LLC up or you go into a deal with your IRA and your individual funds and you went in 50 thousand IRA, thirty thousand personal, let’s say that I don’t know what that is. Let’s say that two thirds IRA, one third personal funds. I don’t know the percentages there. You’re always going to be stuck at your IRA only to third to two thirds and you only one third. You can’t change the percentages if you need more money. You can’t just throw in the money personally to cover it. You can’t have your IRA throwing money to cover. You’ve got to throw in two thirds from your IRA, one third from you personally. Sometimes it gets a little clunky like that.
Yeah, no great points. And also I’d like to I think a great option is rather than using your own money, the loan and number three, find someone else to throw in some money. And once people know that what you’re doing money is easy to find because people see what you’re doing and they’re like, oh, my gosh, you’re buying real estate number one. You’re not even using your own credit. No, you’re not. And you’re using your retirement account. Oh, my gosh, where do I sign up? And so I think if you’re forced to use your own money, so be it. But you can and I like how Mat just brought up all of the disclaimers of, you know, what the good, the bad and the ugly is. And if you go in with your eyes wide open, you know, you’re off to the races. Don’t do eyes wide shut with Tom Cruise. Nicole Kidman just do eyes wide open is a lot safer. Yeah, that’s. We don’t want to go there.
Mat Sorensen: Yeah. A little more for all audiences type of way of doing things.
Mark Kohler: Yeah. Now I, I think another major point about this real estate stuff is what you’re allowed to do once you have the real estate. Now. Yes, we’ve done our prohibited transaction podcast. We always encourage you to stay up to date on those types of dos and don’ts and the no no’s. But while we’re on the real estate topic, Mat, I’ll just is OK. Just mentioned a couple of. Yeah, absolutely. Yeah. I got to give you something. I’ll just give two or three. You can do two or three. You can’t. And then in the Mat can I’m sure add to the list as well on both sides of the veil. So we’ve got.
Mark Kohler: Paycheck write checks, I can do the books and I have the yeah, yeah, I could write checks from the LLC checkbook, I could do the quickbook’s to make sure and analyze how the profit is going for the property. And number three, I could call my property manager once a week and dictate orders and just check on things and see how things are going. But what I can’t do is, oh, they’re working on the roof today. I’m going to go throw on a tool belt and go help out because it’ll save a few bucks and thereby save your IRA money. In effect, you’re contributing to your IRA when you do work to help your IRA, which is not allowed. So you can’t go in and throw in physical labor. You can’t go stay in it if it’s an Airbnb, you can’t use it personally and you can’t throw your kid in there that might want to go to college, go buy another rental property in the same town and for your grandma, your mom or in your kid going to college. But don’t let your IRA property participate in any family use. But what are some on the left side? Right side, you’d say yes. Those yeah.
Mat Sorensen: Things you can do. I mean, let’s say it’s it’s a fix and flip. You can go to the property, see what’s going on, or even just a property or having to hold. You can push tell people what to do, make sure they’re doing the work. But like Mark said, you can’t be putting on the tool that you can’t be performing the labor. Management and administrative tasks and oversight are OK. That’s a good way to think about it. Just think of it generically. I’m looking to make management decisions, oversee things, administer paperwork, make sure stuff’s happening. But I can’t provide physical services and labor. Once I do that, I’m crossing the line of where it can cause the prohibitive transaction.
Mark Kohler: And I don’t know. Let’s go. Go ahead.
Mat Sorensen: I say with the rental, same thing I can let’s say I could even show it, OK? I can write up the lease, I can collect the payments, I can pay the bills. I can call the tenant if they don’t pay. All right, that’s OK because it’s management and administrative tasks. I’m not putting in physical labor into the property.
Mark Kohler: Do you think and I was just going to ask that Mat to me if I and I Mat and I talked to IRS agents all the time. That’s what we do in our profession. And most of them are very reasonable and they just they’re just asking clear this up, you know. So if I had an IRS agent here and say, OK, did John Smith and Mary Smith violate or commit a prohibited transaction with this fix and flip? If I was an agent, I’d say, who is the general contractor? Just show who was it? How much did you pay him? If you did this fix and flip, who’s the general? Because you can’t be the general being the general, I think crosses that line. And so if you can you say, well, I don’t want to be I have a I have a general. I want to just hire a bunch of subs. Inevitably, I think we all practically know it’s almost impossible to not get dirty without having a general out on the site making it happen. And I was going to shoot them out on the property management. If it’s a rental, if I was an IRS agent, I’d say, OK, who’s your property manager you got. Well, I don’t have one. Well, there’s got to be a property manager because someone’s going to get dirty managing this thing and I just do it all. Well, I think that’s where you start to really explain yourself. You may have a handyman service that takes care of things, but. But Mat you’re saying you don’t have to have a property manager. You’re OK, but you better be able to show that you’re there’s a handy man on call. There’s a plumber on call, there’s an electrician on call, and you’re just delegating those services. Ok, that’s good.
Mat Sorensen: I don’t think you need I don’t I would disagree on a couple of those points. I don’t think you need the property manager for a rental, even though I use one myself as a convenience. But I don’t have to. If I wanted to self manage it, I could. I guess you can show it. You can write up the lease, you can pay the bills and receive the income. I don’t see a problem with that. The IRS asks who your property manager is just say I don’t have one. I received the income. I pay the bills. You know, when there’s something that goes wrong, the LLC or IRA case, I’m going to go fix it because the client and a property manager.
Mark Kohler: Yeah, here’s the phone number. Here’s the handyman. There’s the plumbers. No, I don’t go get no.
I’ve had tenants to just and we’ve had this that like I’ve cut deals with a lot of tenants like it’s OK, you’re doing the landscaping, you know, something goes wrong on the property. You’re going to hire someone to fix it and send me the bill if it’s under a certain amount of credit off the rent. There’s a lot of things you can be doing to minimize your involvement, too. So I don’t think that property manager is required. Now, you’ve got to be more careful because you you do run into more situations where you might have to hustle out there to do something. But if you’re close to the property on the fix and flip too I don’t know that you’ve got to have a general contractor either. It depends on the fix and flip. Sometimes you’re not doing a lot of maybe it’s only a you know, some paint and some countertops and it’s a few things I don’t need a general for that. I just got this handyman type contractor. And I think what they’re going to look at is, did you provide the services or did you provide the physical work and services? And that’s where the issue now I’ll say this, there’s zero cases on it. The IRS does not police it. It’s hard to find in a prohibitive transaction case and there’s just not a lot on it. We’ve looked for him, but we know if you read the rules literally, that services can be a transaction. Now, it’s not going to be considered management, administrative oversight, stuff like that. That’s why I’m looking at the paperwork, making decisions, checking on things. I mean, the IRS wants you to manage your account and your investment. They want you to track the income and expense. They want you to make sure that the asset doesn’t go in the garbage can. But they don’t want you to abuse it by, like, the fix and flip it where it’s like, well, my IRA would have had to pay 50 grand to have to fix it up. And I just decided to throw on the two of them and put in that fifty thousand a value myself. That’s going to be a problem.
Mark Kohler: I like it. Can I bring up a real estate professional talking? If some of you feel like, well, Mark, why don’t you just come out of the gate and say what Mat saying and why are you posing some of these questions or hypotheticals? I’ll tell you, folks, and I’m not kidding, Mat Sorensen is truly the expert on this. And his therapist called me and said he needs a little shot in the arm. And so I thought maybe I’ll do it publicly. But no, Mat has been told that not to call you not to Hippocratic Oath, smoke or whatever, but Mat has spent hours and hours and hours studying this backwards and forwards and became the industry expert on it. And then when we opened our own directed IRA Trust company, a lot of the other industry companies were like very, very upset that they lost their little expert to a competitor being Mat himself. So you’ve got the best guy in the country on this. And so I do defer to Mat a lot of these questions that he’s just in the muck of it every day. And then, of course, you’ve heard it on our other show when we’re talking maybe a particular tax return strategy Mat’s going to defer to me. That’s what I’ve done my whole career as a CPA. So you really do get a one two punch with us. And so I’m just so impressed with Mat.
Mark Kohler: But from the tax side, I want to just bring up real estate professional. If I may a lot of people that are buying real estate, are in the retirement account, are doing it because they buy real estate. Personally, I like to invest in what you know. So if you’re out there buying real estate and Austin, you drive by and go, oh, my gosh, that’s a great deal. I’m strung out personally on three properties right now, but I got X, Y, Z sitting in my retirement account and my mom’s and my sisters and my wife’s and my kids and my husbands and whatever. Now you see an opportunity. You’re already in the real estate business. And so a lot of real estate professionals that are getting the tax deductions and strategies as a real estate professional start buying real estate in the retirement account because you’re investing in what you know. So the common question we get is, can the hours managing my retirement account, real estate count towards me as a real estate professional or my spouse in my real estate operation? Because many of our clients have both two buckets, real estate in their own name, real estate and the retirement account. The answer is no, hours managing. So you think about this. Are you managing real estate? No. You’re managing the investments of your IRA. And that’s a distinction in the IRS goes, no, no, no. If you really want to say you’re managing that real estate, then you can’t. If you’re going to be a real estate professional and count those hours, that’s pro, you just committed a prohibitive transaction. I don’t want to prohibitive transaction or whether you can’t count the hours, you can’t have your cake and eat it, too. So make sure you go in with that perspective that I’m keeping a distance. I’m being an administrator, not a real estate professional. So, yeah, very common question we get.
Mat Sorensen: Let me hit I want to hit two other kind of nasty topics they’re four letter words, OK, UBIT/UDFI. I thought it was the F word. I got the four letter F word. These are the other four letter words. That one has an F in it. But OK, let me hit these. Let’s talk about UDFI first, unrelated debt financing tax. And this is actually a variety of the tax called unit, which is unlike you DFI when we talked about buying real estate and using a loan to leverage it. So I use I use fifty grand from IRA, I get one hundred thousand from a nonrecourse loan, I buy property for one fifty. OK. Our change example. Let’s say I buy a property for one hundred, I’m going to have to do some math there and I’m not going to do the one third right that I’m going to buy a property for one hundred because I can do math on one hundred forty thousand came from my IRA. Sixty thousand. I got a nonrecourse loan. All right. Now the IRS looks at this and says, hey, forty thousand dollars, the IRA money, we’re going to get 40 percent of profits on this deal go back to the IRA because I was the IRA money and you don’t have to pay tax on that. But the other sixty thousand in this deal, that was not retirement money. That was debt. We’re going to assess a tax on profits you make in your IRA from debt. So here I am, 60 percent of this deal is debt. So six percent of the money I make on this now property is subject to this UDFI tax. Now it still goes back to my IRA. I just got to pay a toll to get it back in because it was a retirement plan, money to begin with.
Mark Kohler: And when you look at your overall ROI, who cares? You used leverage for crying out loud.
Mat Sorensen: You didn’t have the 60 grand to make money off until you got a loan to leverage. And you’re only being taxed when you make money after all the expenses because you’re an expense, everything, including depreciation off of this. So it’s not the end of the world, but it is something you should know going in.
Mark Kohler: And the get out of jail free card, no pun intended in this conversation is that you can do all the real estate you want with debt in a 401k and not have to pay UDFI. So clients, in anticipation of maybe selling a piece of real estate, will set up a sister company with a 401k and roll the IRA into the four one K and then sell the property. No UDFI,
Mat Sorensen: You’ve got to wait 12 months. You wait 12 months. I’ve done a lot of planning? There’s a lot of there’s a lot of strategies to get around that. Yeah.
Mark Kohler: Yeah. UDFI is probably the of the two you UBIT and UDFI, UDFI is probably the easier one to get around because there’s just more options. Is that fair to say. Yeah, yeah.
Mat Sorensen: There are some exceptions that not everyone works at the beginning, but sometimes you can work it in later in your deal.
Mark Kohler: Ok, I try to kind of give it a shot. Oh Captain. My captain. OK, yeah. I have to stand on my desk to do it or can I just do it. It wouldn’t hurt. That would make me do it right. You know, I’ve gotten a few calls and a little dead poets going, OK, here’s here’s restituted. You ask yourself this. This is the easiest way to understand these two taxes. Why is the IRS imposing UDFI? They’re saying we’re pissed that you’re making money on debt leveraged by your IRA, in a sense, not on the IRA itself. So we’re going to just tax that portion of profit you’re making on the debt. OK, fine. Well, what are they pissed about with UBIT, with UBIT they’re saying, you know what? If you want to go invest your IRA in passive types of projects, fine. What you go knock yourself out. But if you’re going to go compete against every other Joe blow American out there and start flipping property like other contractors or opening a restaurant or doing landscaping or doing any sort of service, business or product sales, you know what? It’s not fair. That’s not passive. So we’re going to tax your profit in a certain way to make the playing field level. So when you take your retirement account, IRA, or 401K less options to get around this, if you’re going to go out and compete with other, you know, vanilla, you know, middle of the road, taxpayers that own small businesses, we’re not going to let you get away tax-free. You’ve got to pay a little tax to level the playing field. That’s UBIT. What do you think she’s got big picture, OK?
Mat Sorensen: Yeah, that’s awesome. I always like to say retirement accounts are designed to receive investment income, rental income, capital gain, income and interest on dividend income. Right. That’s all investment income, what retirement accounts are designed to receive. And when you get that income and retirement account, you don’t pay tax. But if you get a business income, unrelated business income tax, like in the real estate world, you’re fixing and flipping more than a few properties a year where the IRS can say you’re in the business, your IRAs done so many. If you’re doing one or two, don’t stress, but you’re doing a bunch or you’re doing a real estate development or a lot of new construction. That’s the business of real estate, really. And so that’s unrelated business income tax applies. So you want to stay now? I mean, I’m in the investment side of real estate. I’m flipping one or two properties a year or wholesaler option deals. I got rentals all day long with many you want lending money. That’s all going to keep the investment side outside of this nasty UBIT tax, which is 37%. It’s no joke. It’s a it’s not like a five percent tax.
Mark Kohler: And yeah, it’s hefty and on our agenda in podcast to come, we’ll have an entire show on ordinary income real estate in a retirement account or active real estate investment and just ways to get around it. We want you to start reading on it now before the upcoming podcast? Look up, Blocker Corporation and Mats book. All of you should have the Self-directed IRA handbook. And we also use a regular basis just dividing and conquering. For example, don’t just have one entity and do 10 fix and flips. Maybe you have two or three entities to do each one does two or three. Now you’re flying under the radar. You may have different partners in each project. So that way you’re diversifying your risk, you’re diversifying the structures and not one entity or one retirement account is going to draw attention by being out there is the primary flipper. So there’s ways to get around it.
Mat Sorensen: But it’s yeah, we said when Mark talks about the flips to like in this kind of you know, this is a common question we get is, hey, I’m flipping properties with my IRA. Am I going to have to pay UBIT? That depends. How many do you do? I did one. Don’t worry about it. I did five. Worry about it. OK, but the strategy here in the middle, it depends, you know, one or two. Like I said, I’m usually not worried three or four or five or more worried about. But the strategy of like an LLC, like you can have an LLC. But like let’s say some clients say, well, I’ll set up ten LLCs own by the exact same IRA and I’ll just do two flips in each LLC. Now I can do twenty right? No. So what Marks talking about is, you can have separate accounts. Let’s say your Solok is doing a flip, your Roth IRA is doing a flip, your HSA is doing a flip, your spouse’s account does a flip. And I’ve got lots of clients that do that. And because those separate accounts are technically separate taxpayers when you do have UBIT. But so they get their own separate. And how many flips did you do, if it’s your one IRA or even your one Solok and it’s just you, not a spouse’s account that’s doing all these flips. How many LLCs you set up you’re doing one or two before you got to start thinking about it?
Mark Kohler: Well, so here’s kind of my wrap statement Mat if I may be so bold and then I’ll let you take us home with any other sage wisdom. Yeah. Here’s my take if you want to do real estate in your retirement account. It’s not a risky tax strategy, it’s not people have been doing it for years and years and years, but it can be a risky investment strategy and understand the difference. It is not a risky tax strategy. Then the IRS isn’t going to come after you. But it can be a risky investment strategy if you don’t know what you’re doing. So what I recommend that doesn’t mean just knowing how to fix up real estate. You may watch Chip and Joanna do it all day long, and that’s great. But are you also taking the time to read the Self-directed IRA Handbook? Are you going to the summit and watching last year’s summit? A couple hundred bucks you can buy it right now, the recording and start watching tonight. Watch it this weekend. So you’ve got to be the captain of your ship. It is not uncommon that many of our real estate investors that are self-directing they know far more than the professionals they used to work with because they don’t want to learn it. They don’t have enough clients to learn it. They don’t they don’t want to learn it because you’re the one client out of the thousand clients that’s doing it. And they’re like pay me to learn it. And you’re like, no. So you got to do it yourself and you’re going to probably upgrade. So this is a little self-serving statement here. Please schedule your first hour, schedule an hour with the tax lawyer here in that hour may be included in the set up of the entity anyway. Or you just get an hour of here’s my plan, here’s my life, here’s what I’m going to do. Use those resources to study the book, buy the summit, learn what you’re doing in real estate. It’s a yin and yang. You can’t just learn how to be a real estate investor and throw the tax rules out the window and vice versa. You may understand the tax rules and be a complete idiot when it comes to choosing how to remodel a kitchen. So, yeah, learn both and be patient.
Mat Sorensen: Everybody comes from a different angle, you can be like, Mark, I’m crushing in real estate, I know what I’m doing. That’s why I want to use my IRA already know what I’m doing. I already know I can kill the market, that I’m I’m more strategic. I got a competitive advantage. I’m whatever it is, whatever your reason is. And so it’s like you just got to learn the IRA stuff. Right. And that’s I mean, we got you all day long. On the other hand, if you’re like, I don’t even know real estate, I on the other use an IRA before, like you’re starting from scratch. And just like Mark said, take the time, get the right professionals, get educated, there’s going to be a learning curve and know that and don’t go all in. Maybe just buy one property. You know, if you’ve got a five hundred thousand dollar retirement account and it’s been my mutual fund, you just buy your first rental or do your first deal, you know, get it under your belt first and just take a more measured approach for it. But self directing I like to tell clients is not complicated. It’s just a new thing. He’s got to learn it. I will use my board game examples like playing a board game for the first time. He’s going to learn it, then get the process down. And it’s the same thing over and over again.
Mark Kohler: Know. And one last piece of wisdom, one last piece of wisdom board game example after Thanksgiving dinner. Do not play risk. Do not play monopoly. Tears will be shed. Family will not come later to Christmas. Just stay away from the board game. Do something where no one gets their country taken over by another or they get they lose because they landed on someone’s hotel. It’s just it’s just not fun. I tried this three months ago, Mat. I said, one of my kids for their class had to play Monopoly. They’re in a financial class. I was like, that’s great. Let’s play Monopoly. I’m a little competitive. I couldn’t let my kids win, I just couldn’t. And so I’m like, you know, like an hour and a half in and I’ve got houses and hotels and my teenage daughters and this sucks and throws, you know, throws crap and leaves the room. They are like, Dad why do you always have to win. I’m like. That didn’t go well, I’m just I try to let them win Mat, you know, I set it up for what it was trading properties I like. I’ll give you St. James place for like Baltic Avenue worth nothing. I’ll give you St. James and I don’t know. But just be careful these holiday seasons.
Mat Sorensen: These do I know you probably like owned Ocean Avenue and put hotels up over there. I know what you were doing.
Mark Kohler: So, you know, sometimes it’s good for them to learn the hard way.
Mat Sorensen: But yeah, I’ll say this. I want to get a last couple resources and this is maybe play some monopoly or I love risk I do love risk.
Mark Kohler: Oh, that’s even worse. Yeah.
Mat Sorensen: The problem with Risk is that takes three hours you have to be dedicated. Here’s a few other resources you go to DirectedIRA.com to our real estate page we have a real estate guide. It’s our QuickStart Guide on real estate. It’s like six or seven pages. Some diagrams and summaries of the most important things know at least start there. Also use that with other people or even professionals. If you run into someone that’s helping us. I don’t know this, but this may be your accountant involved in use for years or your attorney like get them some of these resources. You want to do the deep dive. Get my book. Frankly, if you’re it’s been over one hundred grand on your retirement account, Self-directing it. You should write a $20 book about how to do it from my site. And it’s a good book. I promise you, it’s not crap, OK?
Mark Kohler: It’s it’s amazing to me that people will spend hours and hours watching fixer upper shows or or spend money at a workshop on for thousands of dollars, or they’ll be on Ameritrade for hours to study a stock they’re going to buy. But heaven forbid, they just go to a workshop online that you can watch at your convenience recorded on how to tap into the the biggest pot of gold. The biggest bank of money in America is in retirement accounts. Figure it out, what’s the number now, Mat, how much money in retirement accounts?
Mat Sorensen: $30 trillion. That’s a T there folks. Ok, well, I think that was just my last tip, which is there’s good resources out there, but we have them. One thing about Self-directed IRAs is when you Google around on there, you got to be careful what you’re reading and relying on. Make sure the professionals know what they’re talking about, not just some guru that’s pay for clicks on Google. And then we’re going to do we’re going to have some other assets coming up. We’re going to be doing some note investing, investing in private companies. We’ll be talking about crypto and all these other assets as we go through the podcast to some of the tax traps that we talked about will go in more depth than some of the planning strategies that Mark and I both mentioned.
Mark Kohler: Cows. Oh, yeah, you could buy cows. What is it? A what of cows? I’m going to buy a pair, a pair, a pair. That’s a mom and a heifer. I’ve already talked to my rancher and he almost does look like Kevin Costner from Yellowstone. And so I even yeah, I bought a cowboy hat just for this purpose. So I brought my Roth IRA is going to buy.
Mat Sorensen: You don’t want to get taken advantage of. Like you don’t want to look like some city slicker up there. So you’ve got a cowboy out there and negotiate that kind of look the part, you know.
Mark Kohler: Yeah. I got to look the part for my ear. I’m going to get schooled. Yeah. So I, I got I have my Roth IRA is going to go buy three pair and they’re going to go to pasture this next year and we’re going to sell off those little heifers and mom’s going to get pregnant. So I have a pregnant mom in the fall or sometime. I don’t know. But here’s the point. We are going to keep you posted on the profit of my three pair this year. And I am trying to get into country last night out about lost it. You know, we were in the garage. We had the vehicle up on blocks. I mean, this is all new for me. This kid over like I was like, get my hands greasy was so exciting. And we were working in the garage and we were playing country music. And a song came on and I said, I’ve got to draw the line. It was song as I’m living in Mexico, living on Refried Dreams right now. And I got all the did I just hear that right on the radio. I’m living in Mexico, living on Refried Dreams, you know, whatever. And I’m like, oh my gosh, that was the worst lyrics ever. But oh I don’t know, you got to do what you got to do. It just it’s relaxing. It dumbs me down. Yeah. I just say that was my that was that my inside voice, OK, well that can be another great episode thanks to Mat Sorensen leader of directed IRA. People move your accounts, get your crap together self-direct on by something you know, it doesn’t have to be Cowes.
Mat Sorensen: Whatever you want. Yeah. Yeah. Take control of your retirement, baby. Thanks, everybody.