The Stock Market is Booming, Why are People Leaving?

Mike: Hey, everyone. It’s Mike Hambright with FlipNerd.com. Welcome back for this episode of the FlipNerd.com Expert Interview Show, where we meet with experts from across the real estate investing industry. This is episode number 299. We’re getting close to that awesome 300 number. My guest today is Bryan Ellis. Bryan has been on the show before about a year ago. He’s a great guy. He’s got just great information he’s going to share with us today. Bryan’s a real estate investor, a speaker, he does a number of things. He’s the man behind the hugely popular Bryan Ellis Real Estate Letter and the host of Self-Directed Investor Radio.

So, as you know, we now have the show in two parts. And the first part today, Bryan’s going to talk to us a little bit about why the stock market is booming and people are still leaving. Why is that happening? Then, in the second part of the show, the taking action segment of the show, Bryan is going to share a powerful and previously unknown loophole that makes it possible for you to totally have your cake and eat it too with your self-directed IRA. So that’s right, prohibited transactions may be a thing of the past for you. Bryan, how are you, my friend?

Bryan: I am doing better than I deserve today, man. How about you?

Mike: Hey, you really can’t say it any better than that. That’s fantastic. It’s great to have you on the show again.

Bryan: Thank you. Thank you.

Mike: I’m going to thank you in advance for sharing the information you’re going to share with us today because I know it’s always good stuff. So for those that don’t know you, maybe didn’t see the last episode, which, by the way, was episode 240, if anybody wants to review back to it, why don’t you introduce yourself and tell us a little bit more about who you are?

Bryan: Absolutely. Mike, presently, I am the host of the Self-Directed Radio Show. That’s my podcast where we focus on sharing information with affluent investors who are really interested in just making their own investment decisions. They don’t necessarily trust Wall Street. They want to figure out a better way. So we tend to guide those folks. And as part of that, we connect them with opportunities to invest their money and the education they need to make that happen. So, really, my whole goal is one thing: just to help my clients make great investments that are simple, safe and strong. That’s what we’re all about.

Mike: That’s awesome. What’s interesting is, as a former corporate guy, I’ve been a real estate investor for about eight years now, but there’s so much lack of knowledge out there as to how you can invest your money and how you can take more control. When you get into that real estate space and you start to learn about some of the tools I know you’re going to share with us today, it’s kind of like it just opens up this whole world of possibility.

Bryan: Yeah. It really is. Here’s the thing, Mike, most people don’t even realize that they can invest in real estate or anything other than stocks or bonds or mutual funds. That’s not because of the law, that’s because of marketing. It’s in Wall Street’s best interest for you to think that. That’s just not the truth.

Mike: Absolutely. Speaking of Wall Street, I know we’re going to kick off the show here talking about, obviously, the stock market’s been a roller coaster over the past few years and it’s come roaring back here as of late. And who knows what’s going to happen during the election cycle? It’s all over the board here. But what’s going on there?

Bryan: Well, it’s really interesting. I am not one to say that you can’t make money from stocks. You absolutely can make money from stocks. But it’s a tough thing, it’s a wild thing and it’s a crazy thing. What we see right now, anecdotally, is that a lot of people with large portfolios are stepping away from the stock market in recent weeks. I say that, “anecdotally.”

I recently had a conversation, a lunch meeting with a colleague of mine who runs a self-directed IRA company. He said that they’ve been opening new accounts left and right the entire. He’s surprised about that. If you think about it, it makes sense because what happens is at the beginning of the year, the stock market was where it was and then it fell off hard. I don’t know if you remember, back in January and February, it was ugly for a while. It was really, really ugly. It dropped about 10%. And that happened very quickly.

In the last six weeks, it’s basically all come back. In fact, it has all come back. That doesn’t happen frequently. So what you would think, Mike, is that in the last six weeks, the market’s been booming so everybody’s going to want to stay in. But that is not what we have observed happening. People are still getting out.

Mike: Taking their money off the table to say, “Hey, I’m back to even or where I was. I’m not going to risk it anymore.”

Bryan: That’s exactly the motivation, actually, Mike. It’s basically cut and run. I’m at 0 again. Let’s get out and do something else now.

Mike: You don’t even know this about me, but my undergrad was in finance with a specialty in investments. So I worked for a very large bank for a few years. My wife was an investment banker on Wall Street. So we were very trained to be stock market type folks. Then, when I got . . . I wasn’t a portfolio manager, but I worked with portfolio managers.

You started to hear over and over again that their goals, their metrics are always to try to beat the S&P 500. You start to have this realization that why not invest in the S&P 500? And then, over time, you realize that most . . . this is just my personal belief now, which is why I have very, very little in the stock market at all, I just have no control. You just start to feel like it’s all just a bunch of financial engineering, ultimately.

You used to say, the Peter Drucker thing, the Warren Buffets of the world, find the products that you like, that you use, that you understand, that you believe in, and invest in that. But that has very little to do, ultimately, with the financial performance of the company behind it, right?

Bryan: That’s absolutely right. That is why I think real estate doesn’t fit very well in the whole Wall Street model. Wall Street, generally speaking, it relies on the ability to create financial instruments that don’t actually exist.

Mike: Right. A lot of derivatives.

Bryan: Even stock doesn’t actually exist. The stock and the company it represents are two different things entirely. But, with real estate, they can’t do that. There is a certain amount of real estate and that’s it. So it doesn’t really fit well with the leverage or the creative finance that is necessary for the financial investment bankers and such.

Mike: I’ve found, in my experience, when I thought I was savvy and finding investments and stuff like that, which, unfortunately, has never really worked well for me even though I was in that industry, is that I spent all my time trying to decide upfront what I wanted to buy without any anticipation of what I’m going to do with it. As you know, when you get out, that’s a critical thing to know.

People just want to kind of be more passive. They want to invest, but in the stock market, you always have to be thinking about what’s going on. Should I get out now? Should I move somewhere else? I find that when people invest in real estate, for example, or other products that are real estate related, that you kind of know what your endpoint is. You have your horizon and maybe a lot of it is because it’s very cash flow centered.

Bryan: Absolutely. Cash flow is real; equity is not. Now, that’s not to suggest there’s not value in equity. There absolutely is. Thank God for it. We’ve done very well from it. But cash flow, you can count. That’s a beautiful thing. The stock market is on a roller coaster and one of the reasons I think that so many fairly wealthy people are getting out, other than just being able to cut and run while they don’t have any losses, Mike, is because there is now, as of the last 15, 20 years specifically, another factor in that that makes it completely uncontrollable.

And that is the Fed. The Federal Reserve, the way that they change their policies on a week-to-week or month-to-month basis has a massive impact on the way the stock market works. How can you understand that? How can you predict that? How is that related o the companies you’re investing in? The answer is it’s not. So people who want to control their money get out of stocks and into real estate or other options.

Mike: What do you think is happening? I know you have your ear to the ground a lot more in this space than I do, with the Baby Boomer effect? Mentally, Baby Boomers are willing to take less risk, right, so they’re moving into things that they maybe understand more or that are deemed to be less risky. But at some point, a lot of that money is going to start coming out of the market for the same reasons. They’re using it, they’re living on it, they’re getting older. How is that going to impact us over the next 10 or 20 years, would you say?

Bryan: It’s not going to be a good impact on the stock market. Baby Boomers, by and large, that’s my client base, people in that age range and in that demographic. Those people are wising up and it’s kind of slow. It’s starting slow. But the reality is that there is not a lot of fundamental strength to the stock market. And nobody understands it.

It’s been my observation that as a person gets older and they are more dependent on their current assets and not on growing assets, but their current ones, they tend to focus more on things that they actually understand. So I don’t think that the stock market holds a lot of promise in terms of keeping that capital. That is trillions of dollars of capital.

Mike: Why don’t you tell us more about what do you think is going to happen in the stock market over the years to come? I know you have a lot of . . . you’re like me. You’ve got an opinion on everything. So what do you think is going to happen? Let’s not get too political here because that could turn into a six-hour show. But with this election cycle, what do you see going on from that standpoint?

Bryan: Well . . .

Mike: It’s kind of just more . . . I know you’re trying to figure out, “How do I not get too political here?”

Bryan: Not even that. It’s how to answer that question honestly without making myself look like the fool that I actually am. No, I’m really great about making predictions, politics and the stock market. And I’m really bad at being right.

Mike: I guess let’s say it this way. Let me maybe answer my own question. Would you say that with so much . . . people are just frustrated with politics, generally speaking. So do you say that generally speaking, that probably fuels the fire to move to safer investments because there’s so much uncertainty?

Bryan: Yeah. I certainly would.

Mike: We’ll keep it simple. We’ll keep that discussion simple.

Bryan: I certainly do think that’s the case. We’re in a presidential election year. Who knows what’s going to happen? It’s going to be a wild ride for the next few months, at least in what we see in the media and such. I don’t really expect that the presidential election will have that much of an effect on the stock market between now and the elections. Once we start seeing what actual policy proposals are going to happen after the election, that’s when there could be tremors.

But you know what? Here’s the beautiful reality, Mike: I don’t care. I just don’t care. It’s not that I’m not affected. I am. It’s not that my clients aren’t affected. They are. But if you’re just smart about what you do and build a hedge, some pad, some margin for error into your investing, which you can do in real estate, you have to worry a lot less. And you can’t do that in stocks. It’s an easy sell. It’s an easy thing to convince people that they need to redeploy capital away from stocks and into wise real estate deals.

Mike: Obviously, a lot of your efforts, a lot of efforts of people that are in the self-directed space, there’s a lot of, I’d say, at a high-level, there’s mostly a lack of information out there. Then there’s a whole bunch of misinformation too about self-directing because, like you said, the traditional investment vehicles don’t want you to know that this exists. And, quite frankly, the typical people that are selling mutual funds and things like that, they don’t even know this exists. They don’t know the real estate market because they’ve just been taught to sell their products. So talk about the awakening a little bit. As people are becoming more knowledgeable here, what’s the trend there?

Bryan: This is a growing field. CBS Market Watch recently described this. I’m going to have to come up with the term they used, but basically, a stratospheric growth in the self-directed retirement accounts space. That makes all the sense in the world because right now, only about 2% of IRA assets are in self-directed retirement accounts. Now, I suspect it will never be half. It’ll probably never be 25%. But it wouldn’t surprise me if it got to 10-15%.

That would mean that this industry grows by a factor of five or 10. There’s a lot of growth coming. Frankly, it is really, really, really easy to paint a picture to people who don’t currently know that this is possible of why stocks are so scary. Because they already kind of know it inherently. That’s the thing that they have to be convinced of, is what they’re doing right now just doesn’t make any sense. That’s pretty easy to make that case.

Mike: That’s part of the problem. A lot of folks have money to invest. They don’t want it to sit idle and they don’t know what else to do. That’s a big problem.

Bryan: Historically, that has been a problem with self-directed IRAs too because a lot of people would switch over to self-directed IRAs and then they just let their money sit there because they had no idea what to do. Well, with the advent of services like what we provide at SDI360.com, that’s no longer really an issue. Real estate is becoming more of a retail investment than it has been in the past. In the past, it’s been all about the specialist, all about the guy that could go out there, find a deal, manage the contractors, find a tenant and do the management. That’s not how it is anymore and that’s really benefitting people who have self-directed IRAs.

Mike: There’s been a massive push in the turnkey space. I told you that we just recently launched PassiveRental.com, which is aimed at the same thing. For a guy like me that’s bought hundreds of houses, I’ve been classically trained to advertise, go buy the deepest buys, buy directly from the seller, hire contractors, manage the whole thing and it’s just a whole bunch of friction to get that done.

But when you realize that if I’m going to keep this as a rental property, it’s a long-term asset for me, I’m not worried about what can I buy it for today and sell it in a month from now, you’re more looking at the long-term and you’re comparing it to what’s in the stock market, it makes a whole lot of sense to pay more for that because you don’t have to find the deal. You don’t have to have staff to rehab it, you don’t have to have contractors and appraisers and all this other stuff. You can basically, effectively, pay a lot more in some markets that are historically really good cash flow markets.

Bryan: We have a slightly different view on that at SDI360. I think the whole turnkey thing is a very, very good thing. Having said that, the model right now is that investors who buy through those kinds of channels, generally speaking, pay full retail. That might work, cash flow-wise, but where it doesn’t work is if the market goes against you anytime in the near term.

Now, if you’re holding for 20 years, you shouldn’t care about that. You shouldn’t care about that. But the reality is it’s still kind of heavy on the back of your mind if you care about your money. So one of the things we do a little bit different is we only work with folks who can provide turnkey properties below their actual current market price. I think that’s actually really important. That makes it harder to find turnkey deals. If you can buy 10 or 15% below market value and still get it as a turnkey deal, then you’re really getting the best of all worlds.

Mike: Awesome. Well, let’s jump into the taking action part of the show, Bryan. You’ve got a little secret, something you’ve been working on for a while that typically one of the challenges has been a lot of fear around . . . especially if you separate the self-directed IRA from a 401(k) of these prohibited transactions, which could blow up your entire account and force you to pay a ton of taxes and stuff like that. It’s always been a little draconian. Some of these rules, you’re like, “Where did that rule come up with? Why does that make sense?” So I know you’ve got some information you want to share with us.

Bryan: Yeah. It’s a real mind bender, I can tell you that.

Mike: Go ahead. Let’s jump in.

Bryan: So here’s the deal, Mike. There is this thing called a prohibited transaction. For your listeners who are not necessarily familiar with that, IRAs and 401(k)s, there is a collection of rules that there really aren’t that many of. You can buy just about anything you want in those accounts.

But, generally speaking, there are a couple of guidelines. One of them is you can’t do anything that’s going to bring benefit to you or your family. You can’t do business with related parties. There are also just a couple of very narrow, specific types of assets you can’t buy. But, generally speaking, it’s about who you can do business with and what you can do with the money. You just can’t benefit from it in any way. Now, the relevance of that, Mike, is that if you commit a prohibited transaction, particularly in an IRA, it can blow up your account entirely.

A good analysis of it is if you have a $100,000 account and you commit a prohibited transaction, that could cost you, in penalties, taxes and interest, 60, 70 to 80% of that account. It could cost you the entire thing, but 60-80%, very feasible.

Mike: It’s something as simple as . . . I think you might have shared this example a while back, something as simple as you go . . . your house is done and you go personally purchase a can of paint or something to go finish up a project, “Let me just go get this done.” And then you reimburse yourself out of the account. That’s prohibited, right?

Bryan: That’s prohibited. That’s a rule breaker.

Mike: Something as simple as that, that people wouldn’t think twice about if it was not in a self-directed IRA account.

Bryan: An even more common example, Mike, is Joe Blow owns a house that he lives in and he’s got an insurance policy through State Farm. His IRA then buys a house inside the IRA. Joe Blow uses the same insurance agent to insure the property that’s owned in his IRA. Every month, that automatic deduction that gets taken out by State Farm to pay for his, now they’re taking out more to pay for the IRA property too.

That kind of thing happens all the time and that blows it up. The painful thing is there’s no easy way to fix that. So you still can’t do that, even with what I’m about to tell you. But the big picture thing of not being able to do business with related parties, we’ve blown through that entirely.

Mike: Why don’t you talk at a high level? Who typically is prohibited? I know you can’t work with, obviously, your spouse and direct descendants. I know you can explain that better than me.

Bryan: The generalization, Mike, is that you can’t do anything to benefit yourself, your spouse or anyone that came before you or comes from you, any of your children, grandchildren, etc. or your parents, grandparents. It doesn’t necessarily apply to aunts or uncles or brothers or sisters. Although that’s a gray area, to be honest. But the rule is that. But a related party could be somebody that doesn’t share your bloodline at all.

For example, if you own a property in your IRA, and let’s just imagine that it is a beautiful, wonderful beachfront property in Hawaii, everybody wants to go there. And you let your boss go there one weekend. Let’s even imagine that your boss pays you fair market rent. It’s an in-demand property. You let your boss go, but he ahs to pay you. Does that bring you any benefit?

Mike: It could, yeah.

Bryan: Arguably, yeah. It could. So that’s a very dangerous area.

Mike: So it brought you benefit and, therefore, it’s prohibited.

Bryan: Yeah, exactly.

Mike: In theory.

Bryan: So the point is that the rules are very not black and white. There are a lot of shades of gray. That’s particularly true in this area of related parties. Now, here’s the beautiful thing. Historically, if you wanted to do something like maybe you have a property in your account and your brother wants to buy it or your father wants to buy it or you want to buy it. So as the controller of the account, you decide to do that. Well, you can’t do that. You can’t sell it to yourself, your father, your son, probably not your brother. But we figured out a really cool way around that.

That is this. Think about it like this, Mike, if you go to archaic legal systems, if you go to somebody that lives under Sharia Law, for example, in that legal system, if they steal a pack of gum, their hand is going to get chopped off. That’s the way it works. Now, did they commit a crime? Yeah, they committed a crime. Should they be punished? Yeah, they should be punished. But probably shouldn’t lose their hand because they stole a pack of gum. So there’s that version.

Over here in the States, there’s a different version. They’re going to get punished. They’re going to have to deal with it, but they’re not going to lose their hand. That’s silly. Well, it’s kind of the same way with IRA law. If you have an asset inside of an IRA law, it is subject to similarly draconian financial rules that we just talked about.

But what if we could change the jurisdiction? What if we could move that transaction from being under those draconian laws to something more simple, more forgiving? Well, we can do that. It’s through a method that most people are familiar with, at least conceptually. That thing is called a rollover. Have you ever heard of an IRA or 401(k) rollover?

Mike: Absolutely.

Bryan: Yeah. Basically, it’s just when you’re transferring your money from one account to another. There are some other technicalities, but that’s basically what it is. Here’s what we’ve learned. We’ve learned that when you do a rollover, you have 60 days to get the money from one account to the other. If you do that, it’s not taxable. There are no tax implications for doing that. But that 60-day period is no man’s land in terms of the IRA or 401(k).

This, by the way, is specific to 401(k)s. It’s another reason that people ought to use 401(k)s rather than IRAs when they can. So you have this property in your 401(k). you’ve decided to sell it. You bought it for $100,000 and now you can sell it for $200,000. It turns out that your father wants to buy it or maybe you want to buy it and live there. And you’re not quite to retirement age yet so you can’t just distribute it to yourself.

So here’s what you do. You distribute that thing out to yourself as a rollover. Now, it’s outside of the 401(k). Guess what? Prohibited transaction rules don’t apply anymore. They’re gone. It’s no longer inside of that account. They’re gone. Now, you take that asset and you sell it to your father. You sell it to yourself or whoever’s going to buy it. It doesn’t matter who buys it. What does matter is you sell it at a fair market rate. There can’t be any shenanigans there. And what has to happen is you have to take the proceeds of that sale and you have to deposit those proceeds within 60 days to another qualified account.

And guess what? Voilà! You have now transferred the assets of your 401(k) to a related party in a context where it’s okay. And if you had done it just a week before when it was still in your 401(k), it would have blown it up. It’s huge.

Now, that’s the basic idea. The ramifications go much farther, particularly for people who want to flip real estate in their 401(k)s. Do you want to hear about that?

Mike: Yeah. Lets talk about it in the context of you don’t . . . I’m not sure if you’re saying any time to get this done, you need to constantly be rolling it over from one account to another or what’s the typical process. But go ahead and continue. This is interesting. Very interesting.

Bryan: To answer that question, here’s the reality. You still shouldn’t plan to use your IRA or 401(k) to skirt the rules. This is something you can use. You probably aren’t going to want to do this more than about once a year at most. The reason is because whenever you distribute property to yourself, the only caveat of doing this is that the IRS is going to hold back 20% of the value of the asset that you distributed, which you get back whenever you file your tax return. So it’s not like you lose that money, but it is a withholding that is associated with that rollover. So for that reason, you don’t want to do this all the time.

But you can do rollovers. There is a limit to that. I think it’s once or twice a year. It might only be once a year. I don’t remember offhand. But the point is this isn’t something you want to do every single day, certainly. But when that circumstance comes where you want to do a deal with yourself or your family, this is the way to do it.

Mike: Can you give some examples of if you wanted to flip properties inside of there? Let’s get into a more common scenario of when you want to do this instead of just maybe selling one of your properties to a family member or yourself.

Bryan: Okay. Here’s an everyday, frequent one. You want to buy a house, renovate it and flip it inside of your 401(k). A lot of people want to do that, but there is a problem. It’s a legally gray area. And when the IRS audits those things, they don’t make the same determination from one taxpayer to the next.

But the question is, is flipping an active business? If you flip a property inside of a 401(k) and the IRS determines that it is an active business, you’re going to be subject to a particularly heinous type of tax called UBIT. Unrelated business income tax is what, I believe, it stands for. But what it stands for is not relevant. The point is it’s a tax rate in the 35-40% range so you’re going to lose 35-40% of your profit because of that tax.

Mike: Now, kind of clarify this. It’s because you’re actively doing business inside of there instead of something that’s just more of a passive investment. Is that right?

Bryan: That’s right. The IRA and 401(k) are designed not to hold active businesses. There is a specific tax created to discourage that specific thing.

Mike: Which is the UBIT.

Bryan: That’s right. So let’s follow this through. Using the same strategy, you have that property. You bought it for $100,000. Now you’re going to sell it for $200,000. Let’s just imagine it’s a dream deal where you didn’t have to do anything to it, just to make the numbers easy. You bought if for $100,000 and you’re going to sell it for $200,000. But if you do that inside of your 401(k), your 401(k) will be subject to UBIT.

What might you do instead? What you might do instead is distribute that property to yourself, then sell that property to whomever you were going to sell it to. You won that property. The 401(k) does not own that property. You are not subject to UBIT. That is not a taxable event. That is spelled out in the code and in the statute. That’s not a taxable event so long as you take all of the proceeds of that sale and roll it back into another qualified plan within 60 days. And voilà, UBIT goes away.

Mike: It’s interesting. You can’t even lend to yourself. You can’t lend from your retirement account to your personal stuff because you’d be benefitting yourself, right?

Bryan: Well, 401(k)s are, again, superior to IRAs in that way. 401(k)s do have a built-in lending facility if you’re using a good plan. I think you can generally borrow up to, I think, $50,000.

Mike: Fifty to $100,000. Something like that.

Bryan: There is potential there. But, other than that, no, you can’t.

Mike: It’s always interesting. I personally have some scenarios where it’s like we have a retirement plan in our company. We’ve accumulated some money there. You talk about that you can’t control what’s going on in the stock market. Then, you get shackled with money in my account that I could use in the active of my current business, which I believe more in than anything else I do, but I have all these restrictions on what I can do with it there. So it’s frustrating. I just want to use my own money to run my own business that I’m the most knowledgeable in.

Bryan: No, I’m with you. That’s unfortunate and difficult. One that I’m not sure there’s a good way around that one.

Mike: Well, that’s interesting. I want to tell everybody that’s listening to this. You definitely want to seek counsel on this. It’s a gray area and I know Bryan agrees with that. Make sure you talk to your provider, your IRA provider.

Bryan: No, don’t talk to them. Talk to your lawyer. Tax counsel, not your provider.

Mike: That’s what we do. We try to find ways to not break the rules, but . . .

Bryan: Find the edges.

Mike: Awesome. Anything else on that topic? Anything else you’ve discovered? You do a lot. You’re in the space a lot. Anything else that most people think things are one way and you’ve kind of found some ways that maybe it’s not the case?

Bryan: Wow, that’s a good one.

Mike: There’s a lot of misinformation in this space, as you know.

Bryan: God, yeah. There’s a lot of misinformation. I guess the bottom line is to just understand that it is generally not a good idea to try to get either investment or tax or legal advice from your retirement account custodian.

Mike: They’re typically prohibited from really giving much in the way of legal advice, for sure, right?

Bryan: Yeah.

Mike: Or at least they try to stay away from it for various reasons.

Bryan: They are. You know what? I’ve got to tell you, you should think twice about any custodian that really tends to do a lot of promotion of third party investment opportunities. Not because the third party investment opportunities aren’t good. It has nothing to do with that. But because one of the biggest custodians out there is getting hit pretty hard right now because they promoted some other stuff that didn’t officially endorse these third party things, but the government has interpreted their promotion of this third party stuff as an endorsement. And it’s not going to be pretty

Mike: Yeah, that’s interesting. Well, Bryan, why don’t you tell us more? I’ll let you do a little plug for your SDI radio show while you’re here. If folks liked what they heard here, I know you talk a lot about how to use self-directed IRAs and a lot of tips and tricks and stuff like that. Maybe just tell everybody that’s listening right now why they should maybe come check out your show?

Bryan: Well, in episode 197, which we did last week, I talked about this cool strategy that we’re working called the tax short sale. Everybody’s familiar with the notion of the short sale when it’s a mortgage lender that’s being short sold. But what if you could go out there and find a property that had massive tax liens against it? Like income tax liens? And if there was a way to make those tax liens go away?

Well, where that makes my mind go is the person that owns that house, they’re up the creek and they know it. They have a property that’s worth less than nothing. What if we bought that house from them for little to nothing and then worked a little bit of magic to make that tax lien go away and now it creates a huge amount of equity? Well, that’s doable.

Mike: I’ve heard that the IRS liens are sometimes flexible. I think city liens and stuff like that, that probably depends on your municipality, your county and everything. I know where I’m at, here, they don’t budge. You can’t even figure out who to talk to. But I’m sure that’s different from one city to the next. And it makes total sense that they would budge on it because you can get your bait back in a week. How do you like that?

Bryan: Yeah, absolutely. But, see, that’s not the exciting part of it, Mike. Imagine this: imagine if you did that same thing inside of your 401(k) where this house . . . there was recently a deal that a member of the SDI360 team did where, essentially, the house was worth less, -$400,000 because of massive tax liens against it. So the house was worthless. You can legitimately pay basically nothing to become the owner of such a house and then have the tax liens negotiated away and, boom, maybe you paid $2000 to get that deed and another $3000 or $4000 for the legal fees to get rid of the liens.

Now your IRA is an $150,000 IRA from a $2000 to $5000 investment. That’s reality. That’s how you can blow up your IRA or your 401(k) by factors of 10, 20, 100 in very short periods of time. That’s what we talk about on SDI Radio. So check it out at SDIRadio.com

Mike: We’ll have a link down below the show here. So, Bryan, thanks for spending your time with us today. Thanks for sharing some of your knowledge. I definitely appreciate it.

Bryan: It’s my pleasure. Thanks, Mike.

Mike: It’s great to see you. I’m sure I’ll be talking to you again soon, my friend.

Bryan: Awesome. I look forward to it.

Mike: Have a good day.

Bryan: Bye-bye.

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