MB 158: The Danger in Using Your IRA to Invest in Multifamily – With Damion Lupo

Are you using your IRA to invest in a multifamily syndication? Then brace yourself for an unexpected tax bill when the asset sells. If, on the other hand, you’d prefer not to owe the IRS for Unrelated Business Income Tax (or UBIT), it’s time to consider a Qualified Retirement Plan (or QRP) that gives you more control over your money and makes it much easier to invest in real estate! Damion Lupo is a real estate investor, serial entrepreneur, and high-profile financial consultant. He founded Total Control Financial in 2010 to help people achieve financial freedom. He is committed disrupting Wall Street and empowering Main Street with the tools and teachings of financial transformation. In the last 25 years, Damion has launched and owned 40-plus companies, including a venture capital firm, an insurance agency, and more than a dozen real estate investment and development operations. He is also the author of QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now. Today, Damion joins me to explain why the current retirement system is broken and discuss the problem with using your IRA to invest in multifamily real estate. He walks us through the fundamentals of UBIT, describing how you can be blindsided by a BIG tax bill when an asset sells.  Damion also offers insight around the alternative to the IRA that is exempt from UBIT, the QRP. Listen in to understand the multiple benefits of the QRP as a retirement vehicle—and learn how to regain control of your retirement savings AND maximize your profits as a multifamily investor. Key Takeaways Why the retirement system is broken Hand $ to someone else + hope for best Better to create own wealth The shortcomings of the 401(k) No control over money, high fees Limits around what invest in The problems with the IRA Hit with taxes if invest in syndications Pay unlimited fees to custodians The fundamentals of UBIT 35% tax on profit from debt Hit with UBIT when asset sells How to avoid UBIT Move asset into QRP (in-kind rollover) The benefits of the QRP Ability to control own money Higher contribution limits (up to $50K) Borrow up to $50K to invest in self No custodian = much lower fees No third party for paperwork Short- vs. long-term real estate investments Short-term investments need tax shelter like QRP Don’t put long-term investments in retirement account When it’s worth it to get a QRP Cost between $1500—$6K (depends on # of employees, companies) Makes sense even for $50K investment Connect with Damion Damion’s Website QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now by Damion S. Lupo Text ‘doors’ to 72000 Visit http://www.themichaelblank.com/qrp Resources The Real Estate Guys Deal Maker Live Hal Elrod Damion Lupo on ABI EP079 Tom Wheelwright