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Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Build Real Wealth Through Real Estate In Self-Directed IRA's and 401(k)'s

Do you INSTINCTIVELY KNOW that Wall Street doesn't have your best interests at heart, and that there's a better way to grow and protect your money to build wealth for generations? Then this is the alternative investments... More
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2019-12-6

The BEST Asset Class, Part #2

Ep. 322

If for every dollar you put into improving one of your real estate assets, you could get that dollar back within 12 months… and then enjoy decades of free and clear cash flow… wouldn’t you do that?  Right now, I’ll show you not 1, but 2 ways to do that in my current favorite asset class. I’m Bryan Ellis. This is episode #322 of Self-Directed Investor Talk.

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Hello, Self-Directed Investors, all across the fruited plane.  Welcome to Episode #322 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you.  Guess what’s going to happen today? Today, I’m going to help you find, understand and PROFIT from exceptional alternative investment opportunities!


In yesterday’s exciting episode, I introduced you to the asset class that I think is stealing the crown from multi-family housing as the GO-TO real estate asset class.  If you missed that episode… you missed a great one! Drop me a text message to 833-212-2112 and ask for the RV Parks episode I’ll send you a copy so you can get caught up…


...and you’ll certainly want to do that because today, I’m going to tell you two ways that, using that asset class - which is, of course, the high-cash-flowing world of RV parks - I’ll tell you not one but TWO ways that my partners and I - and maybe you, too, possibly - are planning to spend a bit of money on some of our RV park properties and generate a MASSIVE and rather immediate return of our capital… to be followed immediately by many years - possibly even DECADES - of free and clear cash flow.


But understand this:  I’m not just bragging on our deals - though I’ve got to admit, maybe there’s a LITTLE BIT of that hehehe - but more importantly, I’m trying to show you what’s POSSIBLE… because deals like this are in much greater supply than financially similar deals in other asset classes like self-storage facilities and mobile home parks.


And I’m also telling you because, who knows, maybe you can actually participate in these deals with us.  More on that in a bit.


So what are these two crazy-powerful value adds we’re going to perform?


So you may recall from yesterday, we’re acquiring 2 separate RV parks.  Specifically on the one in Wisconsin… we’re going to be able to add, at a cost of about $50,000 per cabin, about one dozen nice little cabins which will be available for rental in our parks.


Now here’s the really CRAZY thing… based on the rates our clients are ALREADY PAYING for space in that park, it’s actually quite plausible to think that we’ll collect more than $50,000 of income per unit after just two, or maybe 3, seasons.  RV parks, you see, are seasonal, generally with 2 4-month high seasons per year. And after only 2 or 3 of those season, those cabins will basically be totally free and clear cash flow, with only minimal incremental expense for maintenance!


That, my friends, is ASTOUNDINGLY WONDERFUL… super-high-ROI stuff.  I’m so excited about this deal!


And that’s not all


For the property in Michigan, we’re going to add a particular water feature there which is an absolute super-powered electromagnet for attracting families with children.  This is just an amenity we’re adding to the water amenities already onsite. It won’t be cheap to do this… with the cost coming in around $150,000 or so, but get this:


The evidence is absolutely overwhelming that this type of amenity brings more families with children to an RV park… and these are families who wouldn’t have otherwise come.  In other words… new customers!


And what’s astounding is that there’s data - anecdotal, admittedly, but still relevant - that suggests that the presence of this type of water feature can, all by itself, increase the net income of certain well-run parks by 20-30% after 3 years.  With rates like that, it takes no time at all to recoup the $150,000 and investment and then be SOLIDLY in the money.


And what’s EVEN BETTER is that I haven’t even begun to scratch the surface of what’s possible with RV parks.  If you find multi-family real estate attractive because of the potential to add value and create new income streams, then you’ll find RV parks to be like an absolute candyland of potential, much of which can be realized near term and at shockingly low costs.


I couldn’t possibly be more excited about the future with these assets.  We’ve already begun the hunt for even more of them.


If you’d like to learn more about investing in RV parks… and maybe even participate in some of the deals that my partners and I are doing, drop a text to me at 833-212-2112 and let me know.  We haven’t yet decided if we’re going to take on outside investors, and if we do, we’ll open up an application process, the first step of which is to be on my investor alerts list… and the way you make that happen is to text me at 833-212-2112 and let me know you’d like to be included.


Oh… and  failed to mention… you can actually use your IRA or 401(k) to do this type of investing!  Want to know how? Well how about I give you those details in the very next episode of Self-Directed Investor Talk?!


My friends… invest wisely today and live well forever!


2019-12-6

The BEST Asset Class, Part #2

Ep. 322

If for every dollar you put into improving one of your real estate assets, you could get that dollar back within 12 months… and then enjoy decades of free and clear cash flow… wouldn’t you do that?  Right now, I’ll show you not 1, but 2 ways to do that in my current favorite asset class. I’m Bryan Ellis. This is episode #322 of Self-Directed Investor Talk.

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Hello, Self-Directed Investors, all across the fruited plane.  Welcome to Episode #322 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you.  Guess what’s going to happen today? Today, I’m going to help you find, understand and PROFIT from exceptional alternative investment opportunities!


In yesterday’s exciting episode, I introduced you to the asset class that I think is stealing the crown from multi-family housing as the GO-TO real estate asset class.  If you missed that episode… you missed a great one! Drop me a text message to 833-212-2112 and ask for the RV Parks episode I’ll send you a copy so you can get caught up…


...and you’ll certainly want to do that because today, I’m going to tell you two ways that, using that asset class - which is, of course, the high-cash-flowing world of RV parks - I’ll tell you not one but TWO ways that my partners and I - and maybe you, too, possibly - are planning to spend a bit of money on some of our RV park properties and generate a MASSIVE and rather immediate return of our capital… to be followed immediately by many years - possibly even DECADES - of free and clear cash flow.


But understand this:  I’m not just bragging on our deals - though I’ve got to admit, maybe there’s a LITTLE BIT of that hehehe - but more importantly, I’m trying to show you what’s POSSIBLE… because deals like this are in much greater supply than financially similar deals in other asset classes like self-storage facilities and mobile home parks.


And I’m also telling you because, who knows, maybe you can actually participate in these deals with us.  More on that in a bit.


So what are these two crazy-powerful value adds we’re going to perform?


So you may recall from yesterday, we’re acquiring 2 separate RV parks.  Specifically on the one in Wisconsin… we’re going to be able to add, at a cost of about $50,000 per cabin, about one dozen nice little cabins which will be available for rental in our parks.


Now here’s the really CRAZY thing… based on the rates our clients are ALREADY PAYING for space in that park, it’s actually quite plausible to think that we’ll collect more than $50,000 of income per unit after just two, or maybe 3, seasons.  RV parks, you see, are seasonal, generally with 2 4-month high seasons per year. And after only 2 or 3 of those season, those cabins will basically be totally free and clear cash flow, with only minimal incremental expense for maintenance!


That, my friends, is ASTOUNDINGLY WONDERFUL… super-high-ROI stuff.  I’m so excited about this deal!


And that’s not all


For the property in Michigan, we’re going to add a particular water feature there which is an absolute super-powered electromagnet for attracting families with children.  This is just an amenity we’re adding to the water amenities already onsite. It won’t be cheap to do this… with the cost coming in around $150,000 or so, but get this:


The evidence is absolutely overwhelming that this type of amenity brings more families with children to an RV park… and these are families who wouldn’t have otherwise come.  In other words… new customers!


And what’s astounding is that there’s data - anecdotal, admittedly, but still relevant - that suggests that the presence of this type of water feature can, all by itself, increase the net income of certain well-run parks by 20-30% after 3 years.  With rates like that, it takes no time at all to recoup the $150,000 and investment and then be SOLIDLY in the money.


And what’s EVEN BETTER is that I haven’t even begun to scratch the surface of what’s possible with RV parks.  If you find multi-family real estate attractive because of the potential to add value and create new income streams, then you’ll find RV parks to be like an absolute candyland of potential, much of which can be realized near term and at shockingly low costs.


I couldn’t possibly be more excited about the future with these assets.  We’ve already begun the hunt for even more of them.


If you’d like to learn more about investing in RV parks… and maybe even participate in some of the deals that my partners and I are doing, drop a text to me at 833-212-2112 and let me know.  We haven’t yet decided if we’re going to take on outside investors, and if we do, we’ll open up an application process, the first step of which is to be on my investor alerts list… and the way you make that happen is to text me at 833-212-2112 and let me know you’d like to be included.


Oh… and  failed to mention… you can actually use your IRA or 401(k) to do this type of investing!  Want to know how? Well how about I give you those details in the very next episode of Self-Directed Investor Talk?!


My friends… invest wisely today and live well forever!


2019-12-5

the New KING OF THE HILL Among Real Estate Asset Classes | SDITalk.com/321

Ep. 321

For the last few years, the asset class that’s been all the rage is multi-family housing.  But I’m here to tell you, my friends, there’s a new king of the hill. You’ll find out what it is RIGHT NOW in I’m Bryan Ellis.  This is Episode #321 of Self-Directed Investor Talk.


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Hello, Self-Directed Investors, all across the fruited plane.  Welcome to Episode #321 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you.  Guess what’s going to happen today? Well, I’m going to help you to find, understand and profit from exceptional alternative investing strategies and opportunities… so buckle up!


So, the telephone rings, and I recognize this guy’s name.  He’s a friend, a fellow investor, and someone whose judgment I trust quite strongly.  He’s the kind of guy that when he says “I’ve got a deal”, if you’re smart, what you say in response is “where do I send the money”.


So I picked up the phone, earnestly hoping that one of his life-changing opportunities awaited But that’s not what he said, this time.  Instead, what he says, is this: I’ve got TWO deals… and instantly, I know this is going to be my lucky day.


I’m going to tell you about those two deals and why you should keep your ears open for similar opportunities for yourself.  In fact, it may even sound to you, as I describe these deals to you, that I’m trying to sell YOU on investing in these deals with us.


Nope.  We’re closing on both of them with our own money, because both of these are just too sweet to turn down.  But I can tell you, with some confidence, that you’re going to wish you were in on this when you hear about it.  Who knows, we may raise capital for these deals so we can get some of our money back out to find even more of them… but we may just keep them… they’re that good.  If you’re already on my investor waiting list, I’ll let you know if we decide to make this available. And if you’re not already on my waiting list, and if you are liquid for atleast $100,000 - then you probably want to get on that list right away.  Just text me at 833-212-2112 and ask to get on the waiting list and I’ll take care of you.


So what is this spectacular asset class?


Oh now… surely you can venture a guess?  Think with me… the biggest demographic phenomemon of the last 60 years… the BABY BOOM generation… they’re retiring at the rate of about 10,000 people per day.  A whole lot of them have MONEY, and lots of it. And all of their kids and grandchildren have spread out all over the country. What are these people doing? They’re buying RV’s - in MASSIVE volumes - and taking their home with them all over the country.


So what opportunity does this create for me and you… and what is the ACTUAL opportunity that my friend reached out to me about?


RV parks, baby!  Imagine the benefits of owning a hotel… where you get a very, very high rental price for a very, very small portion of real estate… but you do NOT have to think about things like laundry or furniture or linens or any of the things that makes a hotel so very expensive to establish, operate and own.


Instead, what you’re renting out is, essentially, a piece of concrete.  A small piece of concrete, where your customers bring THEIR OWN bed and THEIR OWN furniture and THEIR OWN linens.  All you do is provide them with a hookup for electricity and water and, if you’re smart, some great amenities, and what do you have?  You have a situation where you’re collecting hotel-like nightly rental rates in exchange for a service that is FAR LESS EXPENSIVE and SO MUCH EASIER to provide than with a hotel.


But there’s another HUGE benefit to RV parks… lots of them, actually.  And this one explains why, we are expecting, conservatively, an internal rate of return of 15-20%+.  That benefit is REPEAT BUSINESS! You see, we know, as a sociological fact, that people who use RV parks are, by and large, very habitual in their behavior.  Once they find an RV park that they like, chances are they’ll come back every year or two over and over and over again…


...and that means not only are the profits in this business VERY HIGH, but they can also be incredibly CONSISTENT.


Both of the deals that we’re buying and closing on in the next two weeks are actually ALREADY very profitable… and the REALLY beautiful thing is this:  A little money spent wisely goes a REALLY LONG WAY with RV parks. There are two examples I want to share with you, both of which will ABSOLUTELY blow your mind… you’ll see why we are SO UTTERLY THRILLED with this asset class.


But before I share those two examples with you, think about this name:  Sam Zell. Sam Zell is a LEGENDARY real estate investor, Bloomberg pegs his net worth at $4.4 BILLION.  Zell started and currently owns a very large percentage of several publicly-traded REITs - kind of like a mutual fund for real estate investments - and each of those REITs are focused on different real estate segments like commercial real estate, multi-family and… surprise, surprise… RV parks and mobile home parks.  And guess which one is outperforming the others? According to a recent story in BisNow.com, the answer is no surprise at all:  Zell’s RV parks are CRUSHING the results from commercial real estate, multifamily and every other real estate sector.


As for those two examples of how an investor can easily spend a TINY amount of money in an RV park and get that money back entirely very, very, very quickly… you’re just going to be bowled over, my friends.


Unfortunately, we’re short of time today, so I’ll tell you those two things tomorrow, so be sure that you have SUBSCRIBED to Self-Directed Investor Talk in Apple Podcasts or whatever podcast system you use.


If you’d like for me to send you a notice when I release that episode so you are sure you don’t miss it, just drop a quick text to me at 833-212-2112 and let me know.


I’ll look forward to pulling back the curtain for you a little more tomorrow, my friends… and I’ll even give you my advice on how YOU can get involved in this incredibly, incredibly attractive asset class yourself… maybe even using the money in your IRA or 401(k), so don’t miss it!


My friends… invest wisely today and live well forever!

2019-8-1

A Great Idea For Real Estate Flippers... But It Doesn't Work | SDITalk.com/319

Ep. 319

Want to flip real estate in your IRA or 401(k)? Think you won’t owe taxes on your profits? You’ve made a very common error… but so did I in a solution I devised to that problem. Maybe my error will keep you from making any of your own, and I’ll tell you about it right now. I’m Bryan Ellis. This is Episode #319 of Self-Directed Investor Talk.


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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #319 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, where each day, I help you to find, understand and profit from exceptional alternative investing strategies and opportunities!


I have a great show headed your way right now. If you’d like to get the transcript or links to the resources I share with you today, just send text the word ep319 with no spaces to 833-212-2112. Again, to get a link to the transcript and resource links for this episode, #319, just text the word ep319 with no spaces to 833-212-2112 and we’ll get it right out to you.


Well, I’ll admit it, folks… the brilliant idea I had yesterday isn’t going to pan out. Still, there’s a very helpful lesson in it that you’ll want to know, particularly if you like the idea of flipping real estate in your IRA or 401(k), and I’ll tell you all about it right after this…


So here’s the idea: In the last couple of episodes I’ve shared with you 5 reasons that I’ve reconsidered my formerly 100% negative stance against oil and gas investing. It’s not that I never believed it could work, just that I had a misunderstanding of how risk can be mitigated, so the risk was all I saw. I’m definitely infinitely more open to that asset class now, and one of the big advantages created by many oil & gas investments – which is HUGE tax deductibility – sparked an idea in my mind:


The idea was this: There are a lot of people who like to flip real estate in their IRA or 401(k). Unfortunately, most of those people seem to not be aware of the fact that most such transactions are technically “earned” income rather than “unearned” income, and as such, the IRA or 401(k) will have to pay income taxes on any profits realized from flips.


So here was my thought: If a person does a flip deal that generates a lot of profit, why not just – assuming you have the available capital to do so – just mitigate those taxes by doing a separate oil & gas investment? That would generate a tax deduction which would otherwise be totally irrelevant for a retirement account since oil & gas probably IS unearned income, and therefore shielded from taxes by the IRA or 401(k), so you could take the tax deduction generated by the oil & gas deal and apply it to the income generated on your flip deal and VOILA, problem solved.


Right?


Well… Yes… until recently, that is. During the end of yesterday’s show when I described this idea, I kept hearing a voice in my mind saying… check it out, check it out! It was as if this idea absolutely SHOULD work, but for some reason, it won’t… I just couldn’t remember why.


Well, I did what I always do when I have a question of this nature… I reached out to the Great One, attorney Tim Berry, for clarification. And he filled in the blanks for me. Apparently, before the recent Trump tax cut, it WAS possible for deductions generated by one investment to offset the profits generated by another investment in an IRA or 401(k). But apparently, that went away with the new tax law. That’s unfortunate. That tax bill has been so very good on such a broad basis and so clearly very good for our economy… but the fact is that there are still some somewhat crappy parts to it, and this is one of them.


So… this idea won’t pan out. Not all of them do. That’s ok. Let’s keep thinking creatively together, shall we?


My friends, invest wisely today and live well forever.

2019-7-30

I WAS WRONG About Oil & Gas (Part 1) | SDITalk.com/317

Ep. 317

News flash: I was wrong. There’s one asset class that I’ve never embraced and certainly never invested in because it is, I convinced myself, incredibly risky. Well, I was wrong. I’ll tell you HOW I was wrong… and the upside potential of this asset class RIGHT NOW in Episode #317 of Self-Directed Investor Talk.


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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #317 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you.


Our telephone number here for you folks that have questions is easy to remember: 833-212-2112. And that’s also our TEXT number, too… because if you’d like a link to the recording of this show or to the transcript – maybe to review for yourself or forward to a friend of yours, it’s very easy to get that and costs nothing other than normal message and data rates. Just text today’s episode number – 317 – to 833-212-2112 and we’ll send those links out to you right away.


The asset class we consider today isn’t a new one, but it’s still a sexy one. Two of the most famous TV shows of the 1980’s – Dallas and Dynasty – were based on the immense wealth created by this asset class, and the frankly, the money involved in this arena has done nothing but get bigger and bigger and bigger.


That asset class is, of course, the oil & gas industry.


Now look… I’ve never invested a single penny in this asset class. I have no experience with it. None. My interest in it is solely because a friend of mine for whom I have great respect, and whose acumen as an investor is absolutely first-rate, and has been so consistently for many years now… well, he reached out to me as he does from time to time for help with raising some capital for a project of his. Given his success, I always take such calls quite seriously, but this time, his latest project stopped me cold: He wants to do a big oil & gas investment, and he wants me to help him raise money for that investment.


Normally, I’d turn down the request just because I think oil & gas is so risky. But I had to give him a fair hearing because of his track record. And I’ve got to say… I think I may have been operating under some faulty assumptions for a long time.


I’m still doing my research, but here’s what I’ve found out so far:


First, risk doesn’t exist in a vacuum in the oil business. I mean that, by and large, it’s relatively simple to know in advance, through the use of modern science, whether a particular high-risk, high-reward new oil well might be a total dud. In other words, if you’re careful, it’s not extremely likely you’ll ever be taken by surprise if you invest in a new well that ends up being unproductive. You’ll know going in about your odds of success, and you can likely mitigate that risk in several different ways, which leads to


The Second point, which is this: Risk mitigation is the key in oil & gas. It appears that the “smart money” in that business mitigates their up-front risk by a combination of careful and aggressive investment in the geological research necessary to make well-informed predictions, and by always spreading risk around by way of investing in not just one and only one oil well, but in MANY oil wells, so that the failure of any one can be overtaken, probably in substantial volume, by the other more successful wells.


Now those first two bits of learning are helpful and useful but not overwhelmingly surprising. But these last two points, I never would have guessed. And I’ll tell you what they are in about 45 seconds from now, when we return from this quick word from our sponsor.


Hey folks, Bryan Ellis here.  An industry that’s really caught my attention lately is oil & gas.  It’s not for everybody… but if you’re looking for the ability to take an income tax deduction for practically EVERY PENNY you invest into your deals…PLUS a method of investing so reliable that banks lend against this kind of income, you should reach out to my friend Aldo over at FlowTex Energy.  I don’t know if they’re funding any investments right now or not… but what I do know is Aldo can help you see whether oil and gas is a good fit for you… and why it’s probably a much better fit than you think.  Learn more now.  Just text the word ALDO – that’s ALDO – to 833-212-2112 right now.  Again, text the world ALDO to 833-212-2112 right now.


So, continuing on with the 5 things I’ve learned about investing in oil & gas that may be changing my mind about that asset class…


The Third thing I’ve learned is this: There’s more than one way to play the oil & gas game. You see, the thing we probably all think of – acquiring land, drilling for oil, hoping for big gushers and selling oil by the thousands of barrels each day – well, that’s certainly one way to play it and it’s a very HIGH DOLLAR kind of way. But it’s not the only way. For example: It’s actually quite common for niche-type companies to do very, very well in the oil and gas business simply by buying wells that are ALREADY PRODUCING and simply to monetize those wells. It turns out that the state of the art in science where oil and gas detection are concerned is sufficiently advanced that many banks will actually lend against the production capabilities of oil wells, so predictable and reliable is the ability of scientists to forecast the productivity level of any particular oil well.


But why would an oil company sell an oil well that they already own, that is producing reliably, and that has a predictable value in the future? Well, it has to do with the fourth issue I learned about, and that one – along with issue #5, which is the most important one of them all, the one that actually makes it HARD TO LOSE as an oil & gas investor, we’ll have to reserve for tomorrow, since we’re out of time for today.


I really hope this has gotten you thinking about the potential of oil & gas investing. I’ll be straight with you: I’m not yet 100% sold. But every day, the pendulum swing is getting closer and closer to a big, fat YES.


So join me tomorrow to hear about the final two HUGE things I’ve learned… more substantial even than the first 3. If you’d like to hear this episode again or read the transcript – or even forward it to a friend of yours you know is interested in oil & gas investing – then just text today’s episode # - which is 317, 317 – to me at 833-212-2112 and we’ll get those links to you right away.


In the mean time, my friends: Invest wisely today and live well forever!

2019-7-29

3 Disturbing Signs For AirBnb Investor "Hosts"

Ep. 316

Is the big-time AirBnb boom opportunity winding to a close? There are three totally anecdotal, but eerily accurate, indicators I’m seeing, each of which gives an unambiguous answer to that question. I’m Bryan Ellis. I’ll tell you what those 3 indicators are RIGHT NOW in Episode #316 of Self-Directed Investor Talk.


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Hello, Self-Directed Investors, all across the fruited plane. Welcome to Episode #316 of Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you.


To ask question, just call 833-212-2112. Or if you’d like to receive a link to this show you can listen again at your leisure or possibly share it with a friend, just text today’s episode number – 316 – to 833-212-2112 and I’ll get that link to you right away. Again, that’s text today’s episode number – 316 – to 833-212-2112 right now.


Today we jump into a topic that I bring up with some concern. I want the answer to this question to be different than I fear it might be. The question we’re considering is this: Is the big-time boom opportunity in AirBnb drawing to a close? 


I’ll give you my answer, along with the 3 pieces of evidence I’ll cite to support that opinion. But first, a quick word from a sponsor I know you’ll enjoy hearing from:


Hey folks, Bryan Ellis here.  An industry that’s really caught my attention lately is oil & gas.  It’s not for everybody… but if you’re looking for the ability to take an income tax deduction for practically EVERY PENNY you invest into your deals…PLUS a method of investing so reliable that banks lend against this kind of income, you should reach out to my friend Aldo over at FlowTex Energy.  I don’t know if they’re funding any investments right now or not… but what I do know is Aldo can help you see whether oil and gas is a good fit for you… and why it’s probably a much better fit than you think.  Learn more now.  Just text the word ALDO – that’s ALDO – to 833-212-2112 right now.  Again, text the world ALDO to 833-212-2112 right now.


Ok, AirBnb… Very cool concept, I’ve really respected the creative thinking of this company since the beginning. The idea is simple: You have a property. You let AirBnb list your property for short-term – as little as a single night – rentals, and the two of you share revenue from that rental. And it turns out that that concept has been so popular that many people who otherwise would have tried to monetize their real estate by doing conventional year-long or month-to-month rentals have instead been making money, and frequently MUCH more money, by doing short-term rentals through AirBnb than by using the more conventional approach to generating rental income.


But all gravy trains slow down, and this one will too at some point.


Are we there yet?


I don’t think so. But I think we’re getting pretty close… close enough that making money on AirBnb is no longer easy as “shooting fish in a barrel”, so to speak. I’ll share 3 pieces of evidence that leads me to this thinking, but I’ll go ahead and readily admit:


Each of these 3 reasons are anecdotal, not statistical. You probably know that my formal education is in engineering and computer science, so I don’t typically have a lot of use for anecdote. But I have noticed that anecdotal evidence is frequently a leading indicator for the more empirical form of evidence I prefer, so I can’t ignore it and neither should you.


So without further adieu, here are my 3 anecdotal indicators that suggest the AirBnb gravy train is slowing down:


Reason #1: Anytime there’s a cable TV show about an investing strategy, you’ve got to wonder if that strategy might be spent… or at least that there’s more competition than makes sense. And guess what? There’s now a TV show on the cable TV station CNBC called CashPad… and that show is about NOTHING BUT people turning their houses into AirBnb properties for profit.


Does this mean disaster is imminent? No, but it does mean it’s becoming so well know that it’s looking like a “good idea” to John Q. Public… and that’s historically not a good sign for anything.


Reason #2 the AirBnb gravy train might be slowing: The government. Look, the government is really only good at a few things, and the thing they do best is to destroy great business opportunities. That’s what is happening now in a number of jurisdictions where local governments are trying to flex their muscles and put rather onerous restrictions on AirBnb property owners. Some of these restrictions are reasonable, because AirBnb hosts and their guests aren’t always particularly respectful of the neighborhoods where they stay. But it’s bigger than that. Local governments see an opportunity here to generate more revenue, and frankly, I suspect this will, in many places, increase the effective cost of renting AirBnb properties enough to make serious, frequent travelers – the backbone of the hospitality industry – return exclusively to the big hotel chains.


And finally, reason #3: This is most anecdotal of all and I’ll admit it’s a little condescending, though I don’t mean that to be the case. Here’s the deal: Have you noticed that some of the people doing well with AirBnb’s don’t seem to be the sharpest knives in the drawer, if you know what I mean? Don’t get me wrong: I know that there’s not an actual connection between high intelligence and the ability to be successful as an investor. But it appears to me that the money has been so easy in that game that up until now, it’s been pretty easy for everybody – whether they’re more of the “wheat” or the “chaff” variety – to make a lot of money from it. And when something is too good to be true, there’s inevitably a market adjustment.


Now as I said, all of these reasons are “soft” reasons without data to back any of them up. They’re all observations, and they’re such soft observations that I’m certainly not suggesting anyone change their plans on the basis of what I’ve shared with you. But maybe, just maybe, it might be a good idea for you to keep an eye on this stuff.


After all, job #1 of the self-directed investor is to RESPECT YOUR OWN CAPITAL.


My friends, invest wisely today and live well forever!

2019-6-27

Can RENTAL PROPERTY OWNERS Use A Self-Directed 401(k)? | SDITalk.com/315

Ep. 315

Have rental properties and want to set up a company and an associated self-directed 401(k)? Good idea… but the IRS might stand in your way. I’m Bryan Ellis. I’ll tell you all about it RIGHT NOW in Episode #315 of Self-Directed Investor Talk


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Hello, Self-Directed Investors, all across the fruited plane. Welcome to another action-packed, edge-of-your-seat thrill ride into the fantastic world of tax-free alternative asset investing. This is Self-Directed Investor Talk, the SHOW OF RECORD for savvy self-directed investors like you, and today we have an excellent show for you


This is Episode #315, so to get the transcript and other resources for today’s show, visit SDITalk.com/315, that’s SDITalk.com/315 for all of those resources, provided to you with our compliments.


So…


I regularly hear from rental property investors who want to use a self-directed 401(k). The idea is that they want to form a company connected to their rental properties since one must have a business in order to establish a self-directed 401(k). On the face of it, this isn’t a bad idea.


My regular listeners will, of course, know that I am a huge proponent of self-directed 401(k)’s as being the absolute crème-de-la-crème of self-directed retirement accounts versus any type of IRA in Every Single Way…


…Except one.


“Well Bryan, what is that one exception?” I can practically hear you asking right now? It is this:


Far fewer people actually QUALIFY to set up a self-directed 401(k) in the first place. The qualifications aren’t complicated – really, all you have to have is a business that you own which has no full time employees other than you and maybe also your spouse, and your business has to have earned income. That’s really about the size of it.


But therein, there’s a pretty big GOTCHYA for rental property owners who want a self-directed 401(k). What is it? Well, it’s that caveat of having EARNED INCOME.


Earned income, as you may know, is the type of income that results whenever an employer gives you a paycheck or, if we’re talking about a business rather than a person, it’s the type of income that results whenever a business is paid for the purchase of a product or a service. It’s income that’s earned on the basis of active effort.


You’ll note that that definition doesn’t directly apply to rental income. Rental income is, under the tax code, what’s known as UNEARNED income. Not unearned in the sense that you’re unworthy of receiving the income, but unearned in the sense that rent is payment for the use of an asset rather than for the purchase of a product or service. From a tax perspective, there’s no active effort involved in receiving rental income.


So that’s a problem. If the only income you are receiving comes from rental income, then all you’re receiving is UNEARNED income rather than EARNED income. And it really doesn’t matter whether those rents are being paid to you personally or to a company you form to own the properties. Either way, the nature of the income itself is still UNEARNED.


And if that’s the only kind of income you’re receiving, that’s not sufficient basis to establish a self-directed 401(k), I am sorry to say.


But NEVER FEAR, my friends. As always, I have a solution, which Self-Directed Investor Society clients have been using quite productively for years now, and it is this:


While RENTAL INCOME won’t qualify you to set up a self-directed 401(k), what COULD qualify you to do so is to establish a PROPERTY MANAGEMENT company which serves your rental properties. In other words, let’s imagine you have one or ten or a thousand rental properties… you could very realistically and legitimately establish a company that provides property management services to your rental properties, for which it receives payment, usually in the form of a percentage of rents collected.


And in your quest to set up a self-directed 401(k), that will go along way. Because while RENTAL income is UNEARNED and doesn’t qualify you to establish a self-directed 401(k), PROPERTY MANAGEMENT income is distinctly of the EARNED variety… and thus is a legitimate qualifier for the “earned income” requirement to set up a self-directed 401(k).


Capiche? The idea is simply to segment a small portion of your income and do something to convert it, in a legal and legitimate sense, to the form of income that will allow you to qualify to establish a self-directed 401(k).


But even this solution has a rather serious drawback. Two of them, actually. Did your investing guru – who isn’t an expert in self-directed retirement accounts – mention these drawbacks to you? I didn’t think so. But I, your exceptionally well-informed, highly opinionated, always lovable and deadly accurate host won’t hold back the goods from you.


But you’re going to have to listen in tomorrow to get THE GOODS because I’m out of time for today.


And that reminds me… if you haven’t SUBSCRIBED to Self-Directed Investor Talk, please do that now so you get a notice when we publish new episodes! As I suspect you can tell, this isn’t information you can afford to miss, and it’s not information you’ll get anywhere else.


And second… if you like this show… and hey… YOU KNOW YOU DO! Hehehehe. Seriously, if you like this show, please consider giving us a nice 5-star rating and review in Apple Podcasts… that really, really helps to get the word out and brings in more listeners, which motivates me to make this show better and better with each passing day.


That’s all I’ve got for you today my friends, except for this one parting thought:


Invest wisely today, and live well forever!