Many people are intrigued by and interested in the business of flipping houses, which is the buying of a property at a low cost, renovating and fixing them up, and then reselling them at a profit. However, most people don't realize the unique set of skills and knowledge required to successfully manage a flip project.
This week I had the opportunity to speak with a brilliant and powerful woman with whom I was very taken. As a female in real estate, Caeli's integrity, authenticity, directness, and her knowledge and expertise are why I invited her to speak at my upcoming FIBI Pasadena meeting.
Kathy Fettke's real estate story started when her dad invested in an apartment with a friend and found out via postal mail that the apartment had been sold and that he had 3 weeks to do a 1031 exchange. Kathy helped him find a replacement property, a 6-bedroom home she and her husband rented from him, and they rented out a few of the rooms, and turned it into a triplex of sorts with tenants she found on craigslist.
Douglas G. Duncan is the Senior Vice President of the Federal National Mortgage Association, known as Fannie Mae, and he is a Chief Economist. Doug is responsible for providing all forecasts and analyses on the economy, housing, and mortgage markets for Fannie Mae. Duncan also oversees corporate strategy and is responsible for strategic research regarding external factors and their potential impact on the company and the housing industry. He serves as the Chair of the Fannie Mae Corporate House Price Forecast Committee.
This month, the speaker for my FIBI Pasadena meeting is Kaaren Hall of uDirect IRA. I had the pleasure of interviewing Kaaren for my radio show, and I wanted to share some of her wisdom here with my blog readers.
Kaaren is the founder of OCREIA (Orange County Real Estate Investors Association) and despite being in the midst of a recession and mortgage market collapse, Kaaren founded and made a resounding success of uDirect IRA Services. The single mom discovered a strategic way to put her 20+ years in mortgage banking, real estate and property management to use. The solution was an untapped market for both her skills and for investors – self-directed IRAs. Because self-directed IRAs can have a dramatic impact on retirees’ quality of life, Hall brings her full passion to educating Americans about the little-known investment vehicle. She has educated tens-of-thousands of investors and professionals on how to build wealth by taking control of self-directed IRAs.
Kaaren was a radio announcer for 17 years and transitioned into real estate by managing buildings in Seattle and learned a lot about property management. She was a realtor for a year and transitioned into mortgage loan servicing and then she got into mortgage loan origination. In 2007 she transitioned into self-directed IRAs and two years later she opened uDirect IRA Services.
At my meeting, Kaaren will be speaking about how your real estate retirement comes together. She says for 40+ years the best-kept secret has been
In 1975 President Ford's ERISA laws went into affect. ERISA creates the IRA and a self-directed IRA and a typical IRA are the same creature, but the assets you put in are different. Self-directed IRAs contain alternative assets like real estate, notes, precious metals, and private stock, things that are non-correlated with the stock market, whereas a typical IRA contains stocks, bonds, and mutual funds. The power comes from the fact that in America we have 27 trillion dollars in retirement and if you have an IRA or 401k from a previous employer then they can invest.
The stock market and real estate are cyclical investments, and if you're stuck with only being able to use stocks with that money, then you're literally stuck with a cash on cash return and when the returns go down, you're stuck in a particular channel and you're stuck with that risk. When you go to an alternative platform like Kaaren's talking about, your returns go up to 9%-20% even when real estate is countercyclical.
Kaaren says the kind of returns you're going to get in a self-directed IRA are all about your research and your knowledge and it's about the power to invest in asset classes you understand. She says if you have the stock and it goes down to zero you have nothing, although real estate never goes to zero.
Kaaren says the three-step process is:
1. Open an account- A form, a $50 fee, a copy of your driver's license, and some other things
2. Fund it- get money into the account by contributing to your IRA depending on your age and income. You can do an IRA to IRA transfer or a rollover.
3. Invest- What is your asset? What are you going to invest in?
At uDirect Kaaren and her team help you play the game of keep-away and steer you from prohibited transactions because then your money becomes taxable. Providing you with the distinct list of prohibited transactions is what uDirect is there for. Kaaren is not a lawyer but she will help you identify red flags and suggest you speak with someone regarding the transaction.
Some of the prohibited transactions are:
1. Disallowed people- lineal ascendants and descendants, which include your parents and grandparents and their spouses, you and your spouse, and your children and grandchildren and their spouses.
2. You don't get personal benefit from your IRA today, it's about investing for later, for retirement. You don't buy, sell, or exchange assets between your IRA and those people.
3. Offering services to the plan- If I, Christina, wants to buy a house and make it beautiful, I cannot do any of the work, it's called an overcontribution. I'd have to keep things at arm's length and hire third-party vendors to do the work.
IRC 4975 is where you can read about the rules. The cool thing about self-directed IRAs is you get to invest tax-free in a RothIRA or tax-deferred in a different kind of account. The tax-protected status remains as long as you follow the rules. uDirect is available to help you and keep you abreast of legal and prohibited transactions. Kaaren has a free report on asset classes on udirectira.com you can download and read. The ERISA code says you can invest in anything except life insurance, contracts, and collectibles.
Kaaren says as far as asset classes you can hold, your IRA can invest in performing and not-performing debt, your IRA can be the bank and make loans, equity, and private stock. On udirectira.com you can click on the 'get started' tab to begin your process. You can call 1.866.538.3539 or 1.866.447.6598 and have your IRA questions answered by someone on the uDirect team. For any of you looking to invest in the state of Florida, you can email Kaaren at [email protected] and she'll inform you of the new law that says in Florida if your IRA buys a house, the IRA doesn't own the house, the custodian owns the house.
Iris Veneracion is the founder of Invest Club, a dynamic real estate community in Southern California and she's a full-time investor who specializes fix and flips as well as buy and holds. Lately, she's used the short-term rental platform, Airbnb to double and sometimes triple her market risk. She believes in the power of partnership and she is the creator of the 60-day challenge, a butt-kicking real estate extreme experience available to local California investors.
This week I had the privilege of interviewing a fellow investor and friend, Paige Panzarello. Paige and I met over two years ago and bonded instantly when we shared our real estate stories as well as what it takes to keep going and to be brave when your backside has just been handed to you. Paige has been involved in real estate investing for over 25 years and is an expert in her field and is currently focusing on non-performing notes.
This week on my Ask Christina First Radio Show, we aired an Interview I did with Sensei Sean Gilliland. Sean earned the nickname "Little Sensai" as a child who was involved in martial arts and who followed his instructor everywhere, wanting to be like him. Today, Sean is a real estate investor who began investing in 1995 and is the founder of Black Belt Investors. He has been a speaker at my FIBI Pasadena meetings and he uses the discipline and knowledge he obtained as one of the top 3 martial artists in the US to run his business.
I recently had the pleasure of interviewing Deborah Razo. Deborah is going to be the guest at my FIBI Pasadena meeting in January. Deborah started her first business in 1990 and after owning and partnering in several successful small businesses, she realized that her path to financial freedom was through real estate investing. Deborah has a flair for fixing and flipping properties, from purchase, rehabbing, marketing and sale processes to tools and techniques for locating properties and analyzing market values to capitalize on opportunities for profit. Deborah is also a Sr. Leader for the Tony Robbins organization.
Ellis San Jose is the co-founder of For Investor By Investor (FIBI) network. I speak of FIBI often because I head the Pasadena chapter of that organization, so Ellis is a boss of mine in a way. Ellis is the leader of Real Estate Group 360, a company of experts for buyers, sellers & investors of real estate. Ellis has years of experience in the acquisition of non-performing and performing properties and loans.
