1608: Self-Directed IRA Retirement Investing with Kaaren Hall

Robert Plank 0:00 Most investors never realize they can use retirement funds to buy real estate to lend money or invest outside Wall Street. And Kaaren Hall is here to educate us about some of these possibilities. Kaaren has built a company managing over $1.3 billion in self-directed retirement assets, while helping investors break free from traditional account limitations. We're here at the Marketer of the Day podcast with Robert Plank. Our audience is business owners, entrepreneurs, and it's always important to know where to park your money, how to make it work for you, and so that way you can get back to building amazing companies and changing the world, all that other fun stuff. So, Miss Kaaren Hall, how are you?

Kaaren Hall 0:40 You're real good, thanks for, thanks for inviting me, Robert. Appreciate it.

Robert Plank 0:43 Heck yeah, happy to have you. And you, when I was younger, the money topics really bored me to tears, but then it's like, well, that's that, that's like to your detriment, right? If you can't kind of make some of this money stuff work for you, or to get educated about what can be done, and so I've turned over a new leaf, maybe. Since becoming a parent, I've said, "Hey, you know all this stuff that I just, I avoided or that overloaded me. I'm like, "Hey, you know, this is important stuff. And even if it is confusing or like boring at first, we need to figure out a way to maybe chat with someone like you to liven things up and make it fun again. And so, what do you have to tell us about this amazing world of self-directed IRAs that, that can be exciting if we choose to make it?

Kaaren Hall 1:27 Yeah, I mean, what's what? When, when money leads to opportunities, when money leads to quality of life, what's boring about that? Do you know what I mean? So, there's nothing boring about self-directed IRAs. It's a pathway, like I want this. How do I get there? A lot of times, money will get you there, and so in this case, it's how do you get to retirement? Like, how do you know? How do any of us get to retirement? And my answer would be that we have layers. It's not just, not just self-directed IRAs, which I'll explain, but we need to have multiple streams of income, even in retirement, like social security, we want to have personal savings, we want to have other investments, like maybe stocks we've invested in some mutual funds, maybe, maybe own a rental property, and then there's whole life insurance that with cash value and all these different things that you can invest in while you're working that will equal a good retirement, so you can rest, you know, when you're, when you're done with your working days, and have money to take care of yourself, and have a good quality of life. That's the exciting part, is, is that, is that goal in mind of, of retiring well, you know.

Robert Plank 2:37 Yes, I agree completely, that multiple streams of income are exciting, and especially this idea of being independent in your retirement and not on that dreaded fixed income necessarily, and just not depending on on just one source, and so it seems like the eighth wonder of the world, compound interest can get us there and doing things early and planning and not waiting until it's too late and saying, oh no, now I can't work. What do I do? And maybe setting some of these things up, and so what is there to know? Like, let's say I know nothing about self-directed IRAs, or very little. Like, what's the starting point?

Kaaren Hall 3:18 The starting point is just to take action, and that's, that's, you know, that would be one of my quotes, you know, it's about taking action, so you just make the decision. Now, a lot of us have retirement accounts for maybe working a past job, you have an old 401 k you could roll over, you maybe have IRAs, you've saved for retirement in some way, most people have, so to self direct, what that means is that instead of investing, you know, in stock market, like in a mutual fund, now you're going to invest outside the stock market into things like, I don't know, maybe your IRA is going to loan money to someone, and now your IRA is the bank, and they're the borrower, they're paying your IRA back the loan, you know, that they've taken, or your IRA can invest in even cryptocurrency, precious metals, real estate, like buying a house, and then the renters would pay your IRA the rent, that is possible, and it's not even new. This will, if it's blowing anyone's mind, and, like, oh, you can't do that. Yeah, I know, but yes, you can, and you've been able to do that for over 50 years. It's been completely allowed by the IRS. It's just like the best-kept secret. And so I've been in this industry almost 20 years now, and I'll tell you also, I wrote a book with Bigger Pockets called The Bigger Pockets Guide to Self-Directed IRA Investing. This is real thing, so you can really do this, invest outside of Wall Street into assets.

Robert Plank 4:44 Very exciting. So, you have some credentials, and so I'm curious about, like, what the process or the stories are when someone new comes to you. Like, they say, "Okay, well, I've maybe I've read your Bigger Pockets book, or I've heard about self-directed IRAs, and now I need help, like.. What's what happens? Like, do you have anything to share about when someone comes to you and says, you know, I'm so uncertain, I'm confused, I need some help, and maybe you provide some assistance?

Kaaren Hall 5:09 Yeah, that's that's every day, you know, that's what we're dealing with every day. So, one common way people come to us is maybe they've already made the decision, hey, I want to improve my financial future, so maybe they went to an event, you know, like a meetup, or they went to hear someone speak, and now they, there's an asset that they want to invest in, and they realize, hey, look, I don't have enough money, like in my checking account or my savings account, to take down this asset, but I do have this big 401 k from a previous employer, my IRA can buy it, and I can make a self-directed IRA, and that you could invest, so they'll call us and say, this is where my retirement dollars are, I can bring them over, this is the asset that I'm looking at. A lot of times it's private equity, like what's called a private placement, which is something that the Securities and Exchange Commission is involved in. They'll give someone permission to raise capital from individuals, and then you can invest in things like a whole, say, a multifamily building, like multifamily apartment building, maybe you can't personally own one, but you could have a fractional ownership, and your IRA could have a fractional ownership in an asset class like that, so your IRA can do that, so a lot of times it comes, it starts when you start thinking, huh, how do I actually build wealth? And then you realize, wait a minute, here's a way I didn't even think of, you know, here's a deal that sounds great. I'd really like to be part of it. Now, let me get this into my retirement account, so that it can grow tax-free or tax-deferred. I mean, that is the brass ring for sure.

Robert Plank 6:37 Oh, yeah, yeah, this is amazing. And I can imagine how people don't know that this is possible, or maybe it seems like too scary, or too complex, and, and that's where you come in, right? That's where you can provide some assistance. And I'm curious about maybe, like, where do people misunderstand or go wrong with their self-directed IRAs? What's the danger?

Kaaren Hall 6:58 Yeah, I mean, it doesn't have to be scary and complex, so we'll just take that out. I mean, there are rules, though, and you need to know them, and it's not so much what you can do, it's more what you can't do, right? So, what you can't do is commit a prohibited transaction. So, what's that, right? It's in its Internal Revenue Code 4975 that's where it's written, the rule book for rule book people, IRC 4975 So, basically, you're not allowed to have benefit of your IRA or your retirement account before you retire. It's for later, so you don't benefit today. So, basically, and also, there are disallowed people, members of your family, your grandparents, you and your spouse, children and grandchildren, a 5050 business partner, somebody who's a fiduciary to the deal, they're disallowed, so they're not allowed to benefit now either. Okay, so now your IRA is going to invest. What you can do, say, for example, is is have your IRA buy a condo, and your uncle can stay there, but not your dad. Okay, your IRA can make a loan to someone to start a business, like for example, your next door neighbor, you can loan your next door neighbor money, but not your mom, all right. So, they're not, you have to stay away from disallowed people, so it's a game of keep away, and that is a great way to think. And also, you're not going to benefit today, so your IRA should never give you personal benefit today. You own the IRA, it's yours, you will receive benefit in retirement, but an IRA is all about later, so just those are some of the rules to keep, keep away from. So, when you call us and you tell us about, hey, this is my asset, and you have questions, we have a whole staff that's going to, going to cover all that, just soup to nuts for you, walk you through it.

Robert Plank 8:40 Well, very cool, and I can, I can appreciate the, maybe the, I don't know if fun is the right word, but you know, when you kind of, you can navigate the minefield, right? And perhaps that you know the rules are there for a reason, because you know it's written in a law, they don't want people to like abuse it, but then it's like, well, if you're someone that knows how to navigate this property, then you can really win financially, especially when it comes time to growing that account that you know you get, you get to it after retirement, and I'm always curious about money mindset, right, because it's like if someone comes to you and you know you and the team, they all enjoy numbers and they all enjoy the planning and the strategizing, but if that customer client, if they're just, if they, if they don't, they're not properly tuned in. It's not fun at all. And so, if we're not careful, like, money can be a thing that we dread, or we ignore, or is that our enemy? So, I'm really curious, like, you know, when, when I talk to, like, the accounting geeks, or the money people in general, they seem to just have this really just like positive outlook, so I haven't thought about this at all, like some people that that get numbers and money and others don't. What's the difference?

Kaaren Hall 9:48 I don't even.. that's not even in my sphere of reality at all. I don't know anybody that it isn't pro money, because again, money is a vehicle to get us where we want to go. I think everybody's.. if I gave you. You, you know, $1,000 would you be happy? Yeah, you'd be happy about there's some money, and you're probably.. oh, I know exactly what I do with it. I don't really ever talk to anyone who's afraid of money or anything, because it's a tool we can use. It's just a tool we need to understand, and, and so, with understanding, you know, with understand that, that's why people listen to your podcast, you know, because then they can understand different things, and in this case, you can understand this little-known way to invest your retirement. I just don't talk to people who are afraid of money. You're not going to be afraid of the $1,000 I would give you, right? That doesn't scare you at all, right? Not at all. Yeah, so there's nothing to be afraid of. It's just you just take some time, learn about it, and before, especially before you invest, understand the asset. Don't just go off and invest in something you don't know. Understand the asset, very crucial. But once you do, and you're sure, then go forward. You know, I mean, yes, there's risk. Yes, there's risk, but that's life. You wake up in the morning, you drive your car, there's risk, but we have, we always take a certain amount of that. I'm not too afraid of the risk of getting in a car accident that I don't drive to the office. Do you know what I mean? That's a risk I'm willing to take, and the same thing with investing our money. Once we have a pretty good idea of what we're doing, we understand. Go for it, you know.

Robert Plank 11:16 Of course, yeah, there's risk in everything. It's just how, how much, and.. and how do you calculate it? And so, yeah, speaking of due diligence, do you have one of those due diligence stories for us, where, like, maybe you were like looking into a possible path, but then maybe it didn't work out, or there was, you know, just problems that came about later.

Kaaren Hall 11:35 I have so many due diligence stories, like, where do I start? But the number one thing is to understand your contract, and now we have AI, so there's no reason you can't stick that contract in AI and say, hey, you know, are there any pitfalls in this investment, or what should I be watching for, and or when, if I invest in this contract, when will I get paid, and you know, at what rate, at what frequency? You can ask questions without having to do a lot of you know, mind numbing, you know, pull all the words apart, kind of, or hire an attorney, you know, you can hire an attorney, is really good idea. How always have a good legal counsel to help you with your contracts, but, but we've got ChatGPT for free to help us, and of course, ChatGPT isn't perfect, but it's another way to kind of look, look at assets. But yeah, so I hope that answered your question.

Robert Plank 12:23 Yeah, yeah, it does. That it's a tool that you use just like anything else, and you know, of course, we don't want to rely on it or have it answer for us, but it helps focus our attention where it needs to be, right? If there's a big long contract, or there's, you know, even just like self-directed IRA in general, run the numbers, have it just kind of ideate with you and give you some feedback, and then you can go in, you know, do the research and ideate again, but it's like it seems like a much more efficient cycle than what we used to pursue, and, and so you are an entrepreneur, business owner, right? You, you're not just someone that that runs the numbers, you also have the Bigger Pockets book, you appear on podcasts, you do all these other things. So, I'm curious a little bit, Miss Kaaren, about your own journey. Like, what has it been like for you in, you know, building your own nest egg and in building your own business? Like, what are the ups and downs there?

Kaaren Hall 13:20 Wow, you know. Okay, it's yes, all right. So, at one point I had a zero net worth. I was a divorced mom of two kids with a mortgage, and what am I going to do? You know, and so I needed to start building some wealth. Obviously, I had, you know, had a condo at the time, and then the great recession, and it was, you know, so went through some definitely rocky times, like many. Well, we've had black swans, right? You know, the great recession, COVID. We've gone through some things. So, I did the same thing, but I started working with a financial advisor, and she would tell me to invest in something or get life insurance, or it's like, I don't want to. But then I did. You know, I would take her advice, and now I am so insured, I am just insured, and I feel really good about that. I some whole life, so that's one of the, like, we talked about multiple streams of income. I have cash value and life insurance, because I did that 20 years ago, you know? I like, when's the best time to plant a tree, either today or 20 years ago? So I started doing that, and just making little incremental steps toward building wealth, and then when I opened the company in 2009 that was, you know, all my money and investing went into the company, my investing my time, my money to to develop what we have, you know, now, you know, what is it 17 years later, you direct IRA services, but as a result of being, uh, being a CEO and owning a company, I've been able to invest in other things. I see so many opportunities, like every day I see opportunities, but another thing is like precious metals. I've invested in some precious metals. I have obviously, we have a defined benefit plan, we have uh. I have, I have rental property, so rental property is good. So, it's, it's in the Midwest, because I live in California, and it's hard to cash flow in California, but I have a rental property in California with renters. They pay the rent, and there's, there's, you know, margin of cash flow there. So, and building a little equity, so it's just a matter of taking the baby steps. What can you do today? Like, today, maybe you can get some whole life insurance. Today, maybe you can make a contribution to an IRA, and a Roth IRA. Hey, that's going to grow tax free for life. And a pre-tax IRA, like a traditional, maybe you get a tax break for that, you know. So, so maybe you contribute today to say a traditional IRA, get a tax break, and save for the future. We call it pay yourself instead of the IRS, so they're in. You don't have to just go out and, you know, be Jeff Bezos. You know that doesn't happen day one. You, you take the baby steps and you start by contributing. You start by making micro investments and building and building a building. And when you put your mind to it, you find opportunities that they just find you.

Robert Plank 16:02 Oh, yeah, yeah, it's like, if you like the red car syndrome, right? If you see, if you think there's no red cars, and you get one, and next thing you know, you see red cars all over. So, it's like, if you're, if your mind is trained and looking for the opportunities in front of you, then you'll see them everywhere, but if you're untrained, then you won't see them, and it's not like the opportunities weren't there. It's just that you had this kind of money focus, and you say, well, what, like you said, what's the small micro investments, the small increments I could take today that in 20 years ago I'll be like, oh, I'm so glad I set that up and just added a little bit and had this more long term strategy and thinking, and that I was more responsible with money, and considered the present plus the future, instead of just living in the moment, which seems to be the default setting, right? And then that's how people end up kind of making bad choices, or getting into debt, or making stupid purchases, and it does kind of suck a little bit to do that delayed gratification, but won't you be so much more proud of yourself if you looked into the rental properties, the precious metals, the cryptocurrency, the IRAs, and all these other things that may be added up, compounded over time. And so it's been a nice education speaking with you, Miss Kaaren, to just find out about, you know, what's possible. It's been inspiring, but you're the star of the show here, and I want to make sure we focus on what is important to you. So, in this conversation we are having, do you think there might be a missing question that I should be asking you? I just don't know to ask you.

Kaaren Hall 17:33 No, I mean, you did a really good job, I, but again, I think that it does, you just take action, you know. This is one thing that I learned way back in those early days is from Tony Robbins about taking massive action, and that is what it takes to make anything happen, and that's been just the absolute, like, you know, driving force of my life ever since those Tony Robbins classes, is if I want to do something, don't just do one thing, take massive action, do everything I'll do everything I can think of toward that goal to make it happen, so yeah.

Robert Plank 18:04 Of course, take massive action. I'm right there with you. And so, as far as us taking that massive action, you have that book, A Bigger Pockets Guide to Self-Directed IRA Investing. You have this company, you direct ira.com where you can take control of your retirement today, so if someone says, I'm intrigued, I'm enthused, I want to know more about what I can do for my future and for my family's future, etc. What's the next step? Where should someone go?

Kaaren Hall 18:33 Yeah, I mean, we're all over social media, like it's the letter u udirectira.com or just info at udirect ira.com and you know, hit us up. Just ask us if you've got a question, just ask us. That's what we're here for. I have a whole staff, we want to answer your self-directed IRA questions. Just dip your toe in and start learning, or if you already understand this and you want to go forward, I mean, if maybe you left an employer and you want to move the money over, and you, you know, some alternative asset that you want to invest in, then we're here to help with that. That's exactly what we do every day.

Robert Plank 19:07 Very nice. So, info@udirect ira.com, or udirectira.com and on the bottom there's those social links, you can see, you know, what's being posted there. Schedule a conversation, and Kaaren says that, well, either you might ask, well, what's this whole self-directed IRA thing? Educate me, or you might say, hey, here's my situation, I left this job. The idea of using it to fund the rental property sounds exciting. Tell me more, or if there's something even more specific, then reach out and ask that question, info at you direct ira.com and, and just, you know, figure out what's possible, buying real estate within IRA, and these different self-directed account types, for a 1k simple IRA, traditional IRA, this is all important stuff that we need to. Know about, so that way we can grow our wealth, reduce risk, and save money on our taxes. Sounds like a good deal to me. So, you direct IRA is the place to go to find out about syndications, cryptocurrency, promissory notes, precious metals, and so on. But what Kermin really wants you to do is schedule that con consultation or send that email, and it's just, it's real important stuff. So, let's work on our retirement plan today, perhaps years or decades before it's necessary that we will be glad that we took those micro steps to get there. So, Miss Kareen, it's time for the scary part of the podcast, where I try to stump you. I try to put you on the spot by asking about a fun or interesting quote or lesson that has served you. So, what comes to mind as far as a fun or interesting quote or lesson?

Kaaren Hall 20:50 I mean, my thing, one of my things that I say to myself is my quote is from a Dory from Finding Nemo. It's just keep swimming, right? Just keep swimming, because you know, I mean, it's, it's, it's, you know, every day we get up and we suit up and we show up, and as long as you're in the game, you're more likely to win, you got to every day get in the game, and when it comes to building wealth for retirement, every day, just a little bit, like, and you talked about Einstein's considering compound interest to be the eighth wonder of the world, that's huge, and it truly, truly is so, even if it's just micro contributions, micro investments, do it, because again, like you say, will add up over time, and you'll be, you won't regret it, like, oh no, I accidentally, I'm so sorry, I found the, this extra savings account, I forgot about now, you'll, you'll always be happy that you save for the future.

Robert Plank 21:40 Oh yeah, 1,000% and it's like, isn't there like a Warren Buffett where he says time in the market beats timing the market, and he doesn't mean just real estate, and it's like I think we've all been there at some point, just playing the mind game with ourselves, right, saying, oh well, I'll, I'll wait until this timing is right, but then a year passes, like, well, you know, the timing wasn't, it's never ideal, but it sure was right a year ago. Wouldn't you wish you'd done that back then? And so it, the time is now. So, whatever your situation is, if you've been thinking about exploring these opportunities, well, that's a sign that you should be reaching out to Corinne and her team at udirect ira.com and that email address is info@udirect ira.com. Have that conversation, deal with it, and you have some prosperous future ahead for you. The phone number is 714-733-1854, and we'll see you at number or letter udirectira.com. And thanks, Miss Kareen Hall, for showing up and helping us out, and I'm really grateful that you were here and told some fascinating stories and educated us. So, thank you for being here.

Kaaren Hall 22:49 Thank you.