Show Summary

This is episode #326, and my guest today is Jim Ingersoll. Jim is an investor out of Richmond Virginia, a coach, and also has his own real estate investing podcast.

Today we discuss a very powerful topic….paying for your health care expenses. We’ve had other shows on using self-directed accounts to invest, but Jim is a practitioner, and her to share how you can use self-directed Health Savings Accounts to pay for your deductibles and other medical or health care expenses…with real estate, and generally, tax free. By the way – you can do very similar things to pay for your children’s education as well…given what’s happened with health care expenses in this country, and how it’s probably impacted you and your family…you want to listen closely to this show!

Please help me welcome Jim Ingersoll to the show.

Highlights of this show

  • Meet Jim Ingersoll, real estate investor, entrepreneur, author and coach.
  • Learn how to use self directed health savings accounts (HSA’s) to use real estate investments to fund your health and medical expenses!
  • Join the discussion on Jim’s biggest mistake as a real estate investor, and what he learned from it.
  • Learn how you can use Coverdell accounts to allow you to use real estate investments to help pay for your children’s education!

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: This is the Expert Real Estate Investing Show. The show for real estate investors whether you’re a veteran or brand new. I’m your host Mike Hambright and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 326 and my guest today is Jim Ingersoll. Jim is an investor at Richmond, Virginia, a coach and also has his own real estate investing podcast. Jim’s been around for a long time and involved in a lot of things. Today we discuss a very powerful topic, paying for your healthcare expenses through real estate investing. Now, we’ve had other shows that we talk about using self-directed accounts to invest, but usually those are with our friends at several self-directed custodians or companies. Jim is actually a practitioner. He does this as himself as a real estate investor. He’s here to share how you can use self-directed health savings account to pay for your deductibles and other medical or healthcare expenses with real estate at generally tax free.
By the way, you can do very similar things to pay for your children’s education as well. And given what’s happened with healthcare expenses and education expenses in this country and where it’s likely going, I’m sure it’s impacted you and your family in a negative way. So you definitely want to listen on today’s show. I’d even recommend getting a notebook because there’s going to be some great notes that come out of this and some great opportunities for you to pay for some of the biggest expenses you likely have in your life through real estate investing. So please help me welcome Jim Ingersoll to the show. Jim, welcome to the show.

Jim: Hey, it’s awesome to be here with you, Mike. Thanks for having me back. It’s nice to see you today.

Mike: Yeah, it’s good to see you again. A lot of people that listen to the show that we were having some repeat guests on now. But Jim it’s probably been literally like two years since you were on the show. I don’t have the number down in front of me but I know it’s been probably a couple of hundreds of shows ago. So good to see you.

Jim: Way back in the beginning.

Mike: Yeah, yeah. We’re actually coming up on three years actually.

Jim: Unbelievable.

Mike: Yeah, yeah. Awesome. Well, hey, I just told you kind of privately offline, you contribute to our other podcast, REI Classroom. So definitely appreciate that. And for folks, if you’re not listening into that, you should really check our REI Classroom wherever you listen to podcast at iTunes, Stitcher or anywhere because we have people like Jim that are really dropping some great knowledge in there and it’s like five minutes lessons. I mean, quick, short and sweet, and good stuff.

Jim: Isn’t that a great way to learn when you think about it?

Mike: Yeah.

Jim: Five minutes, you can cover a lot. You can change the world in five minutes with the right information really, with no BS, no fluff, no puff, you know what I mean? Five minutes of content can change your life. So it’s a great service you’re providing.

Mike: Yeah, thank you. Thanks for contributing. Well, Jim, hey, before we get started here, I’m excited to talk about it. We won’t try to get into too many political discussions here today, but everybody . . . I’ll be honest with you, this is actually, I didn’t even tell you this. This is real time. Like two days ago, my wife handed me an envelope, it was from our insurance company. She was like, “Hey you need to deal with this.” And our premiums went up 20%.
And it’s been happening in every year and truthfully, we have high deductibles like we never have any problems. We’re a family of three, never have any problems. I take my son has been to the doctor other than feel like a regular check-up for a few years. And so, we’ve never cost our insurance company a dime literally but our premiums just keep going up. So I’m excited to talk about this topic, how to invest in a way to where you can use those earnings tax free to pay for your medical expenses. But hey, before I still your thunder here, why don’t you tell us a little bit about you and your background.

Jim: Okay. I’m Jim Ingersoll. It’s good to see everybody today. And I’m located in beautiful Richmond, Virginia. I grew up in a small town in western New York probably hour, hour and a half, outside of a Buffalo. Up in the snowbell, we got 100 or 200 inches of snow a year. It was a lot. So I grew up building snowmen and snow forts.

Mike: We get one or two inches in Dallas, maybe.

Jim: Yeah, well I don’t miss it that’s for sure. But for all the investors up there, I know they’re crushing it up there this year too. So it’s great. So we moved here in 1998 to Virginia and that’s back when I had a job. Growing up, my dad was an architect and a part-time landlord. He made it look so easy. I saw him do some really amazing things financially. He made it look so easily. We ended up jumping in after watching him.
But before real estate I was an engineer, electrical engineer, got a masters in engineering management, just kept on climbing that corporate ladder because that’s another thing I learn from my dad. Mike, he taught me to work hard, get a good job, and keep taking all the promotions you can get. But you know what, after a while, that made me sick. I jumped off that ladder and went full bore right into real estate.

Mike: Yeah, the truth is I think when your parents were growing up, or my parents were growing up, it was a different world. There was loyalty on both sides and that doesn’t exist anymore. People are transient. And I had a woman that worked for me for a couple of years, quit over a text message. Just said, “Hey, I quit.” I don’t think this says anything about me. I was just shocked by it. I was like, who does that? Who does that?

Jim: Millennials. Millennials do that.

Mike: Yeah, but anyway, I think it’s just a different world now than it was in the past and I don’t think there’s not even such thing as a blue chip company to invest in anymore, let alone work for, right?

Jim: Right. No, I totally agree.

Mike: Yeah. I know we agree on being self-sufficient. And it’s actually interesting that we’re talking about how to, another way to pay for your health insurance today because this never was really the way that I was when I was in corporate America because I didn’t have a family yet. But a lot of people stay in their job because of health insurance, right?

Jim: Right.

Mike: Because they’re afraid of like leaving or . . .

Jim: I left my job maybe 10 or 12 years ago. It was a long time ago, and I went into real estate fulltime wholesaling to start like a lot of people. But one of the fears I had was, “What am I going to do with my medical?” even back then, and it wasn’t a crisis like it is today with premiums jacking up and all that but it was still a concern even back then.
The other concern was like, “How am I going to get my kids through college?” Both of my kids were young. They were like 8th and 9th grade when I left my job. And so I had a lot of fear to overcome to pull it up and those are two areas that we can talk about both of them today. Because you don’t want anything to hold you back. You got to jump over that, I call it the four letter dirty F word, fear, F-E-A-R. It’s horrible man. It will cause millions of dollars if you let it creep into your life. So you got to ditch it.

Mike: Absolutely. Yeah, I know that we both . . . I’ll say there’s a couple of hurdles as a real estate investor that we have to get over. The first one is health insurance and how am I going to pay for things. How am I going to offset my income is the next one. I mean, I can talk much about that today but a lot of people are like, “Hey, I’m making $80,000 or $100,000 a year,” whatever the number is for you and they’re fearful of, “If I just leave my job cold turkey, then I’m making zero. How do I get up over that hump?”
And I can tell you, I know you know this too, once you get to a point where your business is doing well, and you’ve overcome, well overcome the amount you need to live on, then the rest, then it starts to get a little more fun. You don’t have that fear anymore because you’re like, “Hey, I’m kind of playing with the house’s money,” if I will. Right?

Jim: No, you’re right. When I left my job, I was nervous. I had a really good job. I was running multiple factories in multiple states. And I had a really good executive type job. And I jumped off that ladder because I got sick of it. It was fun opening up things and hiring people but then they started asking me to lay people off and close stuff down. It sucks. So we started doing that and I said, “Good bye. That’s it.” But I had to replace my income really quick. So I did that with wholesaling and I just got this thing producing. So I just went right into high volume wholesaling and like the next year I did 120 deals just like that.

Mike: Wow, that’s awesome.

Jim: That’s sort of my story on how I escaped. But that insurance, paying for kids college education, make sure your family is safe and secure is really important.

Mike: Yeah, absolutely. Well, so let’s talk about health savings account. And for folks that are listening, you’ve probably heard us talk about self-directed IRAs and other things before. And usually those have always been from our guest that’s on the show that’s a custodian or works for self-directed IRA company. So Jim is a practitioner. He’s a real estate investor like most of you listening and so we’re going to get his perspective today on how you can invest inside of your health savings account with real estate and essentially end up earning pretax revenue that you can pay for your medical expenses with, right Jim?

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Inside of your health savings account with real estate and essentially end up earning pretax revenue that you can pay for your medical expense with, right Jim?

Jim: Yeah, absolutely. It’s a phenomenal tool. It’s one of the best gifts our government ever gave us. And it helps you feel warm and secure and take care of your family while you’re transitioning to full time. Because like you said, those premiums are going up. Mine went up. We’re just renewing right now. And it went up significantly. But even worse than that is the high deductibles. I mean, if you’re lucky, you might have like a $4200 deductible but many of the plans available are $6000 plus per year.

Mike: Yeah, I think ours is $6000. Yeah.

Jim: Yeah and then the total for your whole family out of pocket could be 10 or 12 grand. That rightfully scares a lot of people.

Mike: Yeah. Well, maybe we can kind of break this down. But first let’s talk about what a health savings account is and then we can kind of dive into how you use it and other ways you could use it, what expenses you could pay for.

Jim: Well, all of your medical expenses can be paid for but a health savings account, I like to do them self-directed. So if you go to a self-directed IRA custodian, equity trust, I really like the folks over to Quest IRA, IRA Services, whichever one you’ve got that you enjoy is great. But open up an HSA is called health savings account. It’s very similar to an IRA. And then from there you can begin to contribute and your max contribution over year, I don’t have the number in front of me, but that doesn’t really matter. Just start to make some contribution to it. And then once you’ve got a little bit of money in there, you can invest into real estate and that’s where I really want to focus.
Because the myth is, if you’ve only got a little bit of money in an HSA, it’s just going to sit there and you can’t really invest it. But the truth is if you’re a little bit creative and you know how to get around some of this stuff, you can invest it and you can use it as leverage similar to buying a rental property at a bank. Because you come in and you may have 10% or 20% down and you’ve got control of a $100,000 or $200,000 asset. You can do the exact the same exact thing in your IRA if you’re a little bit creative.

Mike: Yeah. You can obviously do a fix and flip, right?

Jim: Yeah.

Mike: So where it starts to get a little more challenging probably, correct me if I’m wrong, is in assignments or a wholesale deal, which I know there’s probably a way to run them through there, right?

Jim: Sure. You can do an assignment.

Mike: And then you could even buy and hold long-term properties. You can have a rental property in there where the rent checks every month are going to pay for your health, for your medical bills.

Jim: That’s how I do it. So you can do all that. There are some prohibited transaction rules you need to be aware of. There is also unrelated business income tax. So if you borrow debt finance, if your HSA account borrows from somebody on debt financing, you may need to look into what’s called UBIT which is Unrelated Business Income Tax. You also want to avoid doing the same type in transaction over and over in your account because you don’t want to be perceived as a business. You want it to be perceived as an investment. And that’s why it works really good for investing in notes, it works really well for buying rental property. You can do a subject-to deal in different things.
Now, your HSA can still borrow money but if you do it on debt financing, you’re going to have to pay tax. If you borrow it on equity financing, you may be able to avoid that tax. So that’s how I like to do it.

Mike: Okay. And so without getting into a tremendous amount of detail here on borrowing money, I think, I don’t want to gloss over the significance of the fact that instead of doing what I did many years back of saying, this is in my . . . I actually don’t have this health savings account which I know is one of those things that I need to do, but we have IRA accounts. So historically, I would put whatever the limits were when I was younger, $3,000 a year, put it in there, invest it in S&P 500 Index Fund or something silly, and there’s no way to lever that. That’s just what I put in there is what I put in there and what it returns is what it returns. Those accounts can actually borrow money and use leverage to buy more real estates than you can afford essentially, right?

Jim: Yeah, let me give you an example in my HSA then we can talk about what you can do with the money after because that’s important also because it can come out tax free and pay for your medical. But I’ll give you an example. I’ll give you like a basic case study. There was a five bedroom house over near a hospital outside of Richmond that my HSA account bought about two years ago, say. And it was, say, a $70,000 house and it needed $20,000 worth of work. So it’s like a 90 grand investment.
Now that all sounds good but my HSA doesn’t have $90,000 sitting. So what I did, is my HSA borrowed that money from somebody else’s equity trust account, another self-directed IRA. And they joint ventured together on that basically using equity financing. So anything above that $90,000, some day when it gets sold, we’re going to split and all the rental income coming in every month also gets split.
So my HSA, HSA number one borrows all of the money, 90 grand, from equity trust account number two. So that money comes in and then we buy the house, we do the rehab and we’ve rented it. It’s been rented for a couple of years. I think at $1250 a month. Okay, now the $1250 a month is good rent for a four and five bedroom house but the nice thing is there’s no mortgage due every month. So what we do is my HSA will split that net rental income and so half of it goes back to equity trust, half of it remains in my HSA. You kind of follow the math?

Mike: Yeah, unlike debt equity, you could lose money. In this instances, I guess unless you have really bad repairs or a bad make ready or something that you shouldn’t, kind of a month a month, lose any money. But yeah.

Jim: Yeah, because there’s no mortgage payment due. So we just take the $1245, we hold out the taxes. We hold out the insurance. I pay the property manager his 8% fee and the net, whatever that is, say it’s $900, whatever it is. $450 goes into my HSA every month, $450 goes back to the equity trust account every month. And it’s actually closer to $500 in real life on this case study. So I’ve got $500 a month stacking up in my HSA. And so that’s $6,000 a year. And see, I kind of designed it that because my deductible is $6,200 a year. You see how one rental property . . .

Mike: Yeah, just one.

Jim: 100% leverage. Didn’t need any of my own money for that deal is creating enough money to cover my deductible.

Mike: Yeah, and as a rental, as a buy and hold, it will presumably continue to do that every year, every year. Whenever you’re doing fix and flips, you’d have to do one of those every year I guess.

Jim: Yeah, no I could come back and buy a subject-to deal or I could . . . Once you create some cash, you can do a lot of different things. You can lend it out to somebody else from your HSA, you could invest in a note, you could do a subject-to deal, a fix and flip, a wholesale assignment, whatever you want. But that’s one example of a real life case study of how I’m paying for my deductible.

Mike: Yeah, and then let’s talk about what else, you could pay for your deductible, or you could just pay for your premiums, right?

Jim: I’m not certain on the premiums but you should talk to your CPA because you might be able to run those through LLC anyways and get them deducted.

Mike: Yeah, sure. I guess I’ll put an asterisk on this entire show that Jim has a lot of experience with this but don’t trust anything we say here today to be like the legal definition of anything.

Jim: Yeah, consult your tax CPA and tax attorney and lawyers, of course.

Mike: But I think, and I could be wrong, I think you could start to pay for things like long-term care insurance, like other things I think. I mean do you know other things you can pay for?

Jim: For me, I’m only using it to pay my deductible. Now if you don’t have any medical expenses for the year, that’s great. So it’ll continue to compound. Compound interest is one of this greatest wonders of the world, right? Using the rule of 72 if you’re making 12% interest, you double every 6 years is a great thing. So you can do a lot of different things once you start to accumulate cash or you can pay for your medical expenses. That’s a big fear for like families. And I’ve been coaching some guys, up in your area, Mike, in Dallas that he just left his job as a math teacher a few months ago at the end of last year.

Mike: Yeah, I thought you weren’t going to put any competition in Dallas in for me. Didn’t we have that agreement?

Jim: Oh, this guy is freaking crushing it too. His name is Max. He has five girls, imagine that, five girls. So he’s got some concern there on how he’s going to pay for his medical. And this is one way that he can do it if he chose to. Open up an HSA with the self-directed IRA account, find somebody who’s got an IRA willing to lend your HSA some money and buy a rental and just hopefully you don’t need the money but every once in a while, life happens and you have a medical expense.

Mike: Yeah, absolutely. And you know, knock on wood, like I said, we have very few expenses, medical expenses. We just fortunate, I’m going to keep on knocking on the wood for that but last year I actually got a group of guys together. We played paintball and I twisted my knee. And it was just like killing me forever. I’ve never actually even broken a bone so I was like a weenie about it. But anyway, eventually I was like, “Something’s wrong.” So I went to get an MRI and it turns out, I didn’t have to have surgery or anything but an MRI was like 3500 bucks or something when you’re paying out of pocket, literally. I remember they’re like, it was like I was at the store. I mean, when I worked for corporate America, it just kind of gets taken care of and I never even got a bill. But when you’re self-employed like this, it’s like, well, which credit card are you going to pay this on today?

Jim: Yes, it gets real. All of a sudden it gets real so you don’t have medical expenses. You’re still a young man. But that can change as you start to age a little too. I mean, I didn’t use to have any and then at the end of last year, I found I’m going to have a hip replacement which is a terrible thing to go through by the way, a replacement. And the rehab and everything is horrible. But a fear people have is, that’s like a $100,000 procedure, a hundred grand. My deductible was $6,200. And my rental property paid for my entire hip replacement from my perspective, totally tax free and all that profit. And your contributions are tax deductible and your distribution to an expense is not taxable either. So it’s a nice tax savings.
And all of these real estate investors need to take advantage of taxes because if you’re creating great active income flipping houses and you’re paying self-employment tax and we’re all paying property tax and we’re taxed to death in this country. So anytime you have the opportunity to take advantage of it you need to.

Mike: Yeah, absolutely. And hopefully with folks that are listening to this, what we are trying to teach here is that you can use this as a tool but most importantly if you use this as a tool and that alleviates you being chained to a job that you’re not happy and you don’t want to be associated with just because you’re afraid of leaving because of the health benefits they have there. Or you have five daughters, or whatever situation might be, it’s like . . . yeah.

Jim: Yeah, like Max, but you know when you leave your job, the whole world opens up. I mean it did for me because when I left my job before I left my job, even though I had like an executive level job, I was doing real estate part time. And as I started wholesaling, I was doing my deals from work. I don’t think anybody else would ever do that and I’m sure they do. It’s a good way to do it actually. So I would recommend it. If you’re thinking about going full time, see if you can replace your job income by working part time on the side or a little bit while you’re at work, if you need to cheat like I did. And then when you get out, the whole world just opens up and it’s like, “Oh my gosh, there’s so much opportunity that it was missing because now I can focus. Man, I can find motivated sellers. I can write contracts. I can get assignment fees,” and really start to connect dots to on a phenomenal journey and an amazing life as you found out as well.

Mike: Yeah, yeah, absolutely. Well, Jim, I’ve got a question. I want to actually next, after we get over with this question, I want to talk a little bit about doing the same type of thing in Coverdell accounts. And we don’t have to get into much detail but you can do all the same things, mainly the same things as we just talked about to pay for education for your kids. Before we get there, I want to ask you a question of the week. So we go out and ask folks for a question that we should ask you. And the question we have for you, Jim, is what’s the biggest mistake you’ve made and what have you learned from it?

Jim: Oh boy, I’ve made a lot of mistakes. You know why, because I bought hundreds of houses. And any real estate guru who’s out there who says they’ve never screwed something up is just not telling the truth. So, I bought plenty of houses I shouldn’t have bought but I don’t really want to talk about those mistakes because real estate transactions are forgiving.
What isn’t forgiving is what happened to me. And like I said, growing up, my dad was an architect. He was a part time landlord and I watched him buy these duplexes and triplexes around our home town in Jamestown, New York. He did really well with them and I saw what he did and how he was able to pay off our house that we lived in when he sold the rentals and stuff and made it look so easy.
My wife, Cheryl, and I got married earlier on. She was 19 and I was 21 and we were watching my dad and we were like, “Oh we can do this. We can be landlords.” So I think we’re about 23, 24 really young. And there’s a lot of great young people jumping into real estates. So I’m sure you won’t make the same mistakes I made which is not having a clue what you’re doing. Think back, now this is back in the early ’90s.

Mike: Well, now people have been educated by HGTV.

Jim: Exactly and it’s so easy.

Mike: Isn’t that how it works?

Jim: Chip and Joanna make it look easy too. But this is back in the early ’90s. This is before we had Internet. And so I couldn’t get online and learn about investing. All I could really do is sort of watch my dad and I didn’t want to have to ask him how to do it. So I said, “I’m a young man. I’ll figure this out and do it my own.” So I found a great duplex. It was 20,000 bucks in Jamestown, New York. It sounds so good on paper. I’ve got two incomes, one up, one down. It’s a three bedroom down, one or two bedroom up and we jumped in. And we didn’t have a clue that the house was 20 grand because it was a train wreck, right?
We were in the snowbell. It didn’t have like storm windows, thermal windows, had a space heater upstairs that kept conking out. They had a boiler in the basement that didn’t work half the time and we didn’t have the money to do any of the fix up because I had the wrong financing. So like that boiler would fix and I didn’t have money to call a boiler man. So what did I do? I went down to Walden Bookstore at the mall. I bought this book on home repair. I looked up the chapter on boilers and I went in and I just kept trying to . . . I was an engineer anyways so you just figured it out and you fixed the darn boiler. But then more stuff would break and you wouldn’t be able to do it.
And then I heard property management issues. I worked full time as an engineer and my management philosophy was, “I’ll meet you after work, if you like the place, you have a deposit and you have a pulse, you’re in. I don’t need no application, no screening.” And then when they wouldn’t pay me, I kicked them out and that went really bad. I had people threaten me and all kinds of stuff because I didn’t know how to evict and I got them out the wrong way. So every mistake in the world.
And then we said, “That’s it’s. We want to get out of this town and move south.” And so we did that in 1998. So I lost close to 10 years of investing because when we moved and we sold that on a land contract, I didn’t lose a penny on the duplex, which is great. But my wife, Cheryl, said, “That’s it Jim. We are never going to be landlords again and you’ll never be buying a piece of investment property again.” It took me 10 years to get her back into buying. So that 10 years, I’m certain that I’ve lost well over a million dollars.

Mike: Oh yeah, I bet. You probably had a bad experience and I think people . . . One of the things, I’m sure that we both coach and mentor people. So I’m sure that you have the same philosophy as me. It’s like, “Hey you’re going to fail. That’s okay, but you just have to like learn from it and move forward.” And you know, as you know, most people do what you did and they just give up, “Well, this doesn’t work,” and they just kind of close that door. But it sucks when you have that experience on your very first deal. But that doesn’t mean you should stop necessarily. Right?

Jim: Right, you’re right about that. You should just plan to fail. It’s okay to fail. But the key is how quickly you’ll recover, how fast you get back up on your feet, and how quickly you move to that next deal. That’s the important part of failing. That’s where I screwed up. I didn’t have a network. I didn’t have anybody training me. I didn’t have a clue. I didn’t know what I didn’t know. My ego was in the way. I just said, “My dad makes it look so easy, it’s got to be easy.”

Mike: Right. And it also sounds like you’re trying to do everything yourself too, which I certainly advice people like don’t manage your . . . I don’t manage my own rental property. I don’t know who would . . . I would never will. And so certainly if you want to manage your own rental properties like get some scale first. Don’t manage one, right? It’s just not worth it. But people tend to want to save money or do the fix up themselves and stuff and it’s like, well, the real value of your time is finding another deal. Right?

Jim: Absolutely, I used to mow my own grass. We still do manage our own property. We’ve gotten good at it but we have systems and things. My wife, Cheryl, does it. She’s phenomenal at it. I don’t mean to jinx myself but we don’t have any tenant problems. Things are good.

Mike: Yeah, and it’s not for everybody. I mean, my point is that, especially if you’re trying to get started and you’re an aspiring real estate investor, that can hold you back just like if you go, mow the lawns yourself and do the maintenance yourself. And it’s hard to scale that, right?

Jim: Yeah, I mean I used to mow the grass. Cheryl would do the cleaning. But we’ve finally realized that was a bad idea because I got around the right group of people that taught me other ways to do it. So it was good.

Mike: Yeah, absolutely. Well, let’s talk a little bit more about the networking part. You kind of talked about your network and it’s something that I advocate a lot, I talk a lot about. Just building your network. And even stuff like investing in your HSA that we just talked about. You didn’t probably know about those things until you got around some of the people that were using and were starting to talk about them, right?

Jim: Yeah, I mean, that’s really the mistake I made. The mistake wasn’t buying the duplex and stuff. I mean I had the wrong financing, wrong house, whatever, but the mistake was I didn’t know what I didn’t know. And I didn’t invest on myself, there was no online training. And when I came back in and Cheryl, my wife, agreed, “Okay, we can go out and do this.” I said, “I want to do it different. I want to invest in myself.” So I joined a mastermind. That’s an easy way to do it. That’s where I met our mutual friend David Phelps. So I started to get around people like Dr. David Phelps who’s been a dear friend now for 10 years.
And when I got in the right room with the right people who were willing to help me and when I got stuck, I could reach out my hand and they would pull me out of the mud if I got stuck in the mud. And then learn about systems and processes and deals and how to buy money with other . . . Buy real estate with other people’s money and tax advantage accounts and all that other stuff, everything changed.

Mike: Yeah, I think it’s interesting. What kind of advice would you give to people? It sounds like, because I know how you feel like when you look back at that rental, you said, your ego got in the way and you’re talking about how your dad made it easy. Like you were probably embarrassed or didn’t feel like you needed to ask for help. Like, “I can figure this out. I’m a smart guy.” I mean, that’s kind of what it was. But a lot of investors are that way like, “I could figure out. I don’t need this. I don’t need a coach, I don’t need a mentor, I don’t need any help. I can just go do it.” So what advice would you give that person if they’re listening right now that might be are making that mistake or are about to?

Jim: You know, there’s a lot of great information on YouTube but don’t build your whole business based off the YouTube education. And be careful who you go with. I mean there’s a lot of great opportunities out there. You know, I talked about Collective Genius and others earlier. And then on the other hand there’s a lot of really poor ones that I know people that have dropped $35,000, $40,000 in to and walked away with nothing. So you do have to do due diligence. But the importance of getting in the room with the right people, I can’t over emphasize the importance of building your network.
And you’ve got to have a network of people that can reach out and help you when you get stuck. You also need networks of people helping you find deals. You need network of people for private lending. You need a network of bird dogs, a network of wholesalers, contractors, everything comes back to network. That’s why we like to say, “Your network equals your net worth.” I didn’t know that in my early 20s. I wish somebody had told me.

Mike: Yeah, and I don’t want to talk a whole lot about my background but people that have listened to this show religiously know that I’ve always been a huge advocate of networking. And it evolved to a point to where I started a podcast, almost three years ago and here we are episode number 326. And what’s that meant for me even though I was at the top of my game in terms of investing or at the time was and just continued to advance, but it allowed me to start to meet other people like you and build relationships with people and join some groups and kind of take things to a whole another level. Again, not that everyone has to go start a podcast and do that but you can do those things in your market for sure.

Jim: You know, I started a podcast maybe six months ago. It’s called, “The Investor Success Podcast,” Mike. And I didn’t know if was going to like or not. And it turns out, now that I’m six or eight months in, I really do like it. I like being able to talk to people that are thought leaders in our industry about what they think about real estate investing.

Mike: Yeah. Well, it opens your eyes. I mean, I bought hundreds of houses and I did it a very specific way. And then I started to meet people that for example buying multiple markets and have virtual model or they only do commercial properties. You start to learn these other things and you’re like, wow, that’s really interesting. It really kind of opens up your world because people think like real estate is real estate. I don’t know anything about commercial. I don’t know anything about investing in apartments. I have friends that do and I have friends that are the best in the business at it. But if you threw me into it, I could figure it out eventually, but the first thing I would do is call the people in my network that I know that know what to do. Right?

Jim: Right. Hey, I was out looking a commercial property a couple of days ago. And this is just sort of a funny side story. But we walk into this building and you ever hear of like the escape room businesses? It’s like where you have people go in. They get locked in like a room and they get people to [inaudible 00:33:29].

Mike: I’ve seen a couple of movies where they used them. Yeah.

Jim: Okay, so this entire commercial building was like, 3,000 square feet, is like the escape room business. I walk in with a broker and there’s a sign that says something about zombie apocalypse and then there’s like blood prints on the wall. I’m like, “What the heck is this place?” He’s like, “Oh, this is the escape room.” So I’d never experienced something quite like that.

Mike: Wow, that’s interesting. Well, Jim, we have just a few minutes here. I wanted to kind of circle back around and talk a little bit about Coverdell accounts and I know that . . . I don’t think you necessarily use them because your kids are older and education is out of the way but there’s a lot of the same things you can do with the education account that you can with a health savings account, right?

Jim: Yeah, absolutely. Coverdell is a phenomenal tool. You can use it for private school. You can use it for some of your school expenses. You can use it for college. And burdening these kids coming out of college with phenomenal amounts is loan dead is scary to me. So why not do what we do best as real investors: invest for it, build that account balance up, and let that pay for their college. All these deals we’re talking about everything from a subject-to deal to buying rentals can be done inside of your self-directed educational account. It’s a great way to go. Also in a self-directed IRA for your retirement.
And for me now, because I’ve got two grandkids who one of them turned one today. He’s downstairs. But I’ve got them set up to inherit a Roth IRA. Okay? And we are starting to invest in to that account right now while my father in-law is still alive. And that can also do these same deals and that’s how we’re going to pay for my grandkids college education, is through the inherited Roth IRA someday. So there’s all these different tools and it’s like, think of it as having like a giant toolbox and all these stuff for your disposal and you just pick this tool, this tool depending on what you’re doing and who the motivated seller is and what the deal is and what the deal flow is, just pick out all these tools and you get to engineer your own deals that way.

Mike: Yeah. It’s funny because for a long time I’ve thought about stuff in terms of number of deals like for example, I want a new car. Well, I need to go do a deal. And just like, you can start to . . . Typically, we kind of, I don’t want to use too negative of a word, where we kind of launder it. Like, I do a deal and then I get the money and then I go use that money to buy what I want. But it’s just like, well, just use the deal and put it in there to pay for your education, pay for college, pay for health insurance, pay for a lot of things, right?

Jim: Yeah, absolutely. And people are crushing it flipping houses and stuff this year. I mean, so you’ve got to think about how you want to engineer and craft your life and take the path that’s best for you and your family because nobody should be hesitating right now, Mike. I mean, this is a lot better real estate market than in the last several years where it was on the down turn. It’s a great time to invest.

Mike: Well, Jim, for folks that want to learn more about you, to where do they go to learn more about you and then tell us how to find your podcast?

Jim: Okay, well, I’ve got a special gift for your listeners today. And they can go to and they can download a contractor documentation kit so you don’t get yourself in trouble when you’re flipping houses. So it’s got a contractor agreement, an indemnity. It talks about how to understand the different classes A, B and C of contractors. And that whole kit is there at

Mike: Awesome. Okay.

Jim: And then as far as my podcast, check out Investor Success Podcast on iTunes, Stitcher, iHeart whatever, just Google it. Investor Success Podcast.

Mike: Okay, we’ll get a link down below too. So Jim, thanks for joining us today. Thanks for sharing some information. And I think this is timely for a lot of people. There’s a lot of discussion through this political, this election cycle, about healthcare and what a mess it’s turned into. And so a lot of folks don’t know that there might be a better way.

Jim: Yeah, I’ve enjoyed it. I mean I’m motivated. I’m ready to go. I’m going to meet a motivated seller in just some few minutes.

Mike: Good luck to you.

Jim: Thanks.

Mike: Thanks, Jim. Great to see you and for everybody listening in, thanks for joining us for another episode. We look forward to seeing you on the next one. Have a great day.
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I'm the content manager here at and have a passion for real estate investing and have a background in writing and business. I focus on providing content that is aimed for newer real estate investors and those who have the drive to become a full-time real estate investor. With so many strategies to utilize within the real estate investing industry, I aim to break down any barriers and showcase that real estate investing is obtainable and can truly bring financial freedom.