In this video, I discuss the issues presented when trying to be an equity partner in a Joint Venture when a hard money lender is providing funding. Many investors are not aware of what can happen at the 11th hour when using an LLC or not with a HML.
Questions or requests for a video topic are always welcome!
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ABOUT CLINT COONS
Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice….(read more)
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Self Directed IRA/Solo 401k and a Hard Money Lender: The Perfect Combination for Investment Success
Investing in real estate has long been a popular choice for individuals looking to diversify their portfolios and secure their financial future. While there are various ways to invest in real estate, incorporating a Self Directed IRA/Solo 401k along with a hard money lender can provide an ideal combination for investment success.
A Self Directed IRA/Solo 401k is a retirement account that allows individuals to have more control over their investment choices. Unlike traditional IRAs or 401(k) plans, which typically limit investments to stocks, bonds, and mutual funds, a self-directed account grants you the freedom to invest in alternative assets such as real estate, private equity, tax liens, and more. This type of account empowers individuals to make investment decisions based on their own knowledge and expertise.
The key advantage of a self-directed retirement account is the tax benefits it offers. Contributions made to a traditional IRA/Solo 401k can be tax-deductible, and the income generated from investments within the account is tax-deferred. In the case of a Roth IRA/Solo 401k, contributions are made with after-tax dollars, but the income and gains are tax-free upon withdrawal. This tax advantage can significantly enhance the returns on your real estate investments, allowing your money to grow faster and more efficiently.
However, utilizing a self-directed retirement account for real estate investments often requires a substantial amount of capital. This is where a hard money lender can step in to bridge the financing gap. A hard money lender is a private individual or company that specializes in providing short-term, high-interest loans for real estate investments. Unlike traditional banks, hard money lenders focus more on the value of the property being purchased rather than the borrower’s creditworthiness.
Working with a hard money lender allows investors to secure the necessary funds quickly, enabling them to take advantage of time-sensitive opportunities in the real estate market. These loans are especially useful in situations where traditional financing is not readily available or when investors need to act fast to secure a property. By leveraging a hard money lender, investors can leverage their self-directed retirement account to access the funds needed for their real estate investments with speed and efficiency.
Additionally, when you combine a self-directed retirement account with a hard money lender, you can unlock even more investment opportunities. Whether it’s acquiring distressed properties, rehabbing and flipping houses, or investing in rental properties, the combination of a self-directed retirement account and hard money lending can give you the financial freedom and flexibility to pursue various real estate investment strategies.
Before jumping into the world of self-directed retirement accounts and hard money loans, it’s crucial to thoroughly research and understand the rules and regulations governing these types of investments. Consulting with financial advisors, tax professionals, and legal experts experienced in self-directed retirement accounts is highly recommended to ensure compliance with all IRS rules and regulations.
In conclusion, leveraging a Self Directed IRA/Solo 401k in conjunction with a hard money lender can provide the perfect combination for investment success in real estate. It allows investors to take control of their retirement funds and choose from a wider range of investment options. By partnering with a hard money lender, individuals can access the necessary funds quickly and efficiently, enabling them to seize lucrative real estate investment opportunities. However, it is crucial to thoroughly educate oneself and seek professional advice to navigate the complexities of self-directed retirement accounts and hard money lending successfully.
I thought that the 401k owner (and any company he has a controlling interest in) was a prohibited individual. Why is the loan in this example not a prohibited transaction?
Hi Clint, do this also apply to a Roll Over Business Startup entity which would be a C Corp? ROBS entities have acquired SBA loans and the participants have signed a personal guarantee to my understanding. In fact SBA requires that the individual sign a personal guarantee.