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DisclaimerDisclaimer

Quest IRA, Inc. does not provide tax, legal or investment advice or endorse any products, services or investments of any type

All information and materials are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants and financial advisors before entering into any type of investment.

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Being a real estate investor means Being a real estate investor means understand the use of moneyunderstand the use of money

Money means different Money means different things to different people in things to different people in different stages of life.different stages of life.

In order to understand money we have to In order to understand money we have to understand peoples needs, and match the understand peoples needs, and match the

needs with the proper tools.needs with the proper tools.

Eats is the main bucket. Eats is the main bucket. The one we all know. The one we all know. This is the most This is the most expensive use of money.expensive use of money.

Other uses of moneyOther uses of money

You need to match You need to match the need of money to the need of money to the proper tool that the proper tool that allows maximum use allows maximum use of the money.of the money.

What is a “Self-Directed” IRA?What is a “Self-Directed” IRA?

An IRA in which the IRA owner directs all investments in the account. There is no legal distinction between a “self-directed IRA” and any other IRA except with a truly self-directed IRA the account agreement allows the broadest possible spectrum of investments.

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DiversificationDiversification

What are the benefits of self-direction?What are the benefits of self-direction?

IRSIRA Investor


Social investing! Social investing!


Take control of your retirement and invest in what you know best!


• Traditional IRA– (including rollovers)

• Roth IRA

Types of PlansTypes of Plans

Employer plans:

• SEP IRA

• SIMPLE IRA

• Individual 401(k)

• Roth 401(k)


Special plans:

• Coverdell Education Savings Account (ESA)

• Health Savings Accounts (HSA)


ALL of the above accounts

can be self-directed!

What types of plans can be self-directed?What types of plans can be self-directed?

Restrictions on IRAs

People Restrictions

Transaction Restrictions

Investment Restrictions

People Restrictions on IRAs

Disqualified Persons = Those persons who cannot benefit from or enter into transactions with your IRA or other plan.

Think of your IRA as Mr. IraThink of your IRA as Mr. Ira

You Mr. Ira


Disqualified persons may not enter into Disqualified persons may not enter into transactions with Mr. Iratransactions with Mr. Ira

You Mr. Ira

NO

NO


Mr. Ira Fiduciary

Disqualified PersonsDisqualified Persons


Fiduciary “F”(includes IRA Owner)

Member of F’s Family

Corporation “C” if F owns

(directly or indirectly)50% or more of vote or

value of stock

Partnership “P” if F owns

(directly or indirectly)50% or more of capital or profits

interest in P

Trust or Estate “T” if F owns

(directly or indirectly)50% or more of

Beneficial interest in T

10% or more

partner or joint

venturer with CF’s Spouse

F’s Ancestor

F’s LinealDescendant “LD”

LD’s Spouse

Officer or Director of C

Highly Compensated

Employee of C (10% or more of

wages)

10% or more shareholder of C

Person with management

or administrative functions of P

Highly Compensated

Employee of P (10% or more of

wages)

10% or more partner of P

Trustee of T

Highly Compensated

Employee of T (10% or more of wages)

10% or more beneficial interest

owner of T

10% or more

partner or joint

venturer with P

10% or more

partner or joint

venturer with T

IRA

Prohibited Transaction RestrictionsProhibited Transaction RestrictionsAny Any direct or indirectdirect or indirect

Sale, exchange, or lease

Lending Money


Goods, Services, or Facilities


Investment RestrictionsInvestment Restrictions

Life Insurance Contracts


Collectibles

Collectibles are defined as:

• Any work of art;

• Any rug or antique;

• Any metal or gem;

• Any stamp or coin;

• Any alcoholic beverage.

An exception exists for certain U.S. minted gold, silver and

platinum coins, coins issued by U.S. states, and gold,

silver, platinum or palladium bullion.


What can I invest in with my IRA?What can I invest in with my IRA?

What investments are What investments are you knowledgeable you knowledgeable about?about?

You can buy that You can buy that in your IRA!in your IRA!

Investment ChoicesInvestment Choices

• Single family and multi-unit homes• Apartments• Condominiums• Commercial property• Unimproved land• Foreclosures• Limited liability companies• Limited partnerships• Unsecured/secured loans• Joint ventures

Investment ChoicesInvestment Choices• Foreign property investments• Deeds of trust and mortgages• Tax liens• Options• Debt Financed Property

• Must be a non-recourse loan• Will generate taxes payable on the profit from

the IRA to the extent that the property is debt leveraged.

If you are a investor you should have If you are a investor you should have an IRA so you can talk about itan IRA so you can talk about it

Steps to Purchasing Real EstateSteps to Purchasing Real Estate Assets in a Retirement Plan Assets in a Retirement Plan

1. Open a self-directed IRA

2. Contribute or move funds

into the self-directed IRA

3. Locate an investment

4. Complete the proper documentation to purchase the asset

(Buy Direction Letter, Private Placement Instructions, Note, etc…)

5. “Read and Approve” all the documents prior to closing

6. After your approval of all documents, Quest signs the closing

documents and funds your transaction

7. Asset is recorded in the name of your IRA, for example:

Quest IRA, Inc. FBO John Smith IRA #12345-11

8. All expenses come from your IRA and all income stays in your IRA

Steps to Purchasing Real EstateSteps to Purchasing Real Estate Assets in a Retirement Plan Assets in a Retirement Plan

John Wood and his associate Jay Wright want to purchase an office condo for $250,000 within their SEP IRAs.

1. They each transfer $150,000 from their IRA brokerage accounts to their Quest SEP IRAs to purchase the property.

Case Study: Rental PropertyCase Study: Rental Property

2. John and Jay make an offer to purchase the office condo in the name of their SEP IRAs, as follows:

Quest IRA, Inc. FBO John Wood SEP IRA account #12345-31 and Quest IRA Inc. FBO Jay Wright SEP IRA account # 23456-31.

3. John and Jay each complete a Buy Direction Letter (Real Estate). They send the Buy Direction Letters and the contract which has been “read and approved” by them to Quest.


4. Quest signs the contract and sends it to the title company along with an earnest money deposit of $10,000 ($5,000 from each account).

5. At closing, John & Jay review and approve all closing documents, then the title company sends them to Quest for signature.

6. Quest signs the closing documents and wires the SEP IRA funds to the title company to close (1/2 from each account).


7. The title company records the deed and the 2 IRAs are now the owner of record, as follows:

Quest IRA, Inc. FBO John Wood SEP IRA account # 12345-31 (as to an undivided 50% interest) and

Quest IRA, Inc. FBO Jay Wright SEP IRA account #23456-31 (as to an undivided 50% interest)


John hires a property management company to oversee the unit.

1. The property management company finds a tenant to lease the unit.

2. Rents and expenses are handled by the property manager.

3. Office condo has a positive monthly cash flow of $850 ($425 for each SEP IRA) which is tax deferred.


4. The property management company submits the net rent proceeds to Quest for the benefit of John and Jay’s SEP IRAs.

5. John & Jay track their accounts via their online statements.


Two years later, tenant offers to purchase the property for $395,000.

1. A sales contract is prepared for $395,000 and submitted to Quest for signature after having been “read and approved” by John and Jay, along with a Sell Direction Letter (Real Estate).

2. On day of closing, John and Jay review and approve all closing documents. Quest then signs the documents and returns them to the title company. Proceeds, after closing costs, are wired back into their SEP IRA accounts.


Realized Return for each SEP IRAInitial investment $125,000

Cash flow over 26 months ($425 x 26) $ 11,050

Gains from Sale ($187,500* - $125,000) $ 62,500

Proceeds to each SEP IRA after sale $198,550

* Net proceeds after closing costs

Tax deferred gain of $73,550 (59%) over 26 months!


Key Points to Remember

• John and Jay’s IRAs pay no taxes on the gains. They can reinvest the full amount of their profits on the next deal, free of taxes.

• If the accounts involved were Roth IRAs, Roth 401(k)s, or in some cases a Coverdell ESA or an HSA, the gain is TAX FREE FORVER!



• John and Jay are in total control of the process from beginning to end, but Quest is the actual buyer and seller of the property.

• John and Jay did not take money from their IRAs to buy property and put the money back into their IRAs – the IRAs simply bought an asset and later sold it at a profit.



• IRAs can partner with other IRAs or even non-IRA money.

• All expenses and proceeds must be split in accordance with their ownership percentages.

• John and Jay could have had the checks deposited directly into their IRAs instead of hiring a property management company.


O.P.I.O.P.I.Ways to profit NOWWays to profit NOW

OTHER PEOPLE’S OTHER PEOPLE’S IRAsIRAs

Create your own private financing source

Borrower’s Perspective:Making Money NOW

There are TRILLIONS of dollars in retirement accounts!


At every gathering there are MILLIONS of dollars available for investment.


“Let me help you recover your stock market losses with loans secured by real estate.”


Emphasize that as a real estate investor you are Emphasize that as a real estate investor you are helping the economy recover by improving helping the economy recover by improving property values and that their investment is a property values and that their investment is a socially responsible one.socially responsible one.


Provide the prospective lender with the details Provide the prospective lender with the details of the transaction, including your price and of the transaction, including your price and comparable sales to show value.comparable sales to show value.


Have a “success book” available!Have a “success book” available!


PartneringPartnering

Ways to profit NOWWays to profit NOW

SalesSales


Investment CapitalInvestment Capital


Spread the knowledge,

then use their money!

The big problem when startingThe big problem when starting

Special offer! VIP programSpecial offer! VIP program1) Real Estate • Check vesting on sales contract• Makes changes to sales contract – correct vesting and address• Contact title company to introduce our selves • Contact title company to get information on closing make ourselves the point of

contact• Help client review the title commitment • Help client review the closing documents.• We make sure the closing documents are correct before we send them to the client.• Fill out the Direction of investment for them• We tell them where to sign read and approve. If they don’t want to write read and

approve, we stamp it and create a line for them to sign • We email the FED REF# to the title company as soon as we have it so they can track

the wire info• Be in contact with the client’s RE Agent for communication purposes• Execute and overnight the original closing documents prior to closing• Follow up with the Title Co./Attorney’s Office to make sure the recorded Deed is

mailed back to Quest

Special offer! VIP programSpecial offer! VIP program2) HUD Real Estate• We do all of the above for Real Estate plus• Get on the phone with client/ realtor to make sure offer is placed correctly on HUD website• We contact HUD immediately after offer is accepted to make sure everything is correct and where we need to

send contract and earnest money• We spend more time with HUD clients to make sure nothing is dropped because we know how easy it is to

lose a deal because of HUD

3) Notes• Fill out the Direction of investment for them if they need help• We review the promissory note to make sure vesting, maturity date and interest rate all match to the

direction of investment.• We review the deed of trust note to make sure vesting, maturity date, interest rate all match to the direction

of investment• We make sure the property matches the direction of investment• We contact the title company to make sure they have the docs and if they have any questions• We help the client review the HUD and make sure our fees are on there• We email the FED REF# to the client/title company/ borrower as soon as we have it so they can track the wire• We follow up with the Title Co./Attorney’s Office to make sure the original Note and recorded Deed of Trust

is mailed back to Quest

Special offer! VIP programSpecial offer! VIP program

4) Private Entities • Fill out the Direction of Investment for them if they need help• We review the Operating agreement to make sure they are no disqualified

individuals to the IRA. • We review the subscription agreement and check for vesting, managing members,

address, tax identification number

• We try to help out with the questionnaire but of course, we can’t provide tax, legal, investment advice.

• We contact the company they are investing in to introduce and see if they have any questions

• We email the FED REF# to the company as soon as we have it so they can track the wire

• We mail the signed original agreement to the company along with the private placement instruction letter via USPS the same day we fund the investment

How can I get more information?How can I get more information?

www.QuestIRA.com

800-320-5950

[email protected]

For More Information:For More Information: