How You Can Retire With An IRA Worth $1,000,000
by Ron LeGrand
I know this sounds like another one of those glorified headlines to get your
attention without containing a lot of truth. Well, I know it's a very strong
statement and it sounds too good to be true. But what if it is true? What if you
could have a cool million dollars in your IRA within a few years so you'd never
have to worry about retirement income? What if you could do this without writing
another check to your IRA?
I have some good news and some bad news . . . The good news is: You can! The bad
news is: It requires work! Is it too much to ask for you to do some work for a
few years so you can retire rich? You've got to work at something anyway, you
might as well get rich while doing it. The information you're about to read is
unknown to most of the world. Most people think the way to grow your IRA is to
make annual contributions and let the manager of the IRA invest it in stocks and
mutual funds. Then, over a period of 20 to 40 years, it grows into a large sum
of money for your retirement. That's the thinking of conventional wisdom.
Let me tell you how I feel about conventional wisdom. It's almost always wrong!
Let's take a look at a better way. Check it out for yourself and see if you
agree. I speak to groups of people all over the country and sometimes I ask how
many in the room have an IRA. I have never had more than a third of the class
answer yes. So, why don't more people invest in an IRA? Here's what they tell
me: They can't turn loose of the $2,000 or $4,000 maximum contribution. Having
the money at hand for immediate usage is a lot more important than retirement.
They never thought about it. They feel they can invest in other investments that
can produce more income. They know they should but never seem to get around to
it. If you're one of these people, it's probably time for you to wake up and
take action before it's too late. You see, an IRA is about all we have left that
our "Uncle" will allow us to use to grow filthy rich without paying taxes along
the way. I don't have to tell you money grows a whole lot faster if the IRS
isn't taking its 25 to 40% share as fast as you can make it. Every dollar you
send to the government is money that can't earn you anything until the day you
die. Every dollar you can stash away that's tax-deferred or tax-free can
compound throughout the rest of your life.
For example, let's say you kept an extra $10,000 out of the IRS's hands this
year and invested it at 15%, (which you easily can), and it compounded for 20
years before you started using it. How much do you think it would grow to? How
about . . . $197,155. That's about two hundred grand you could have available
for retirement by wising up and keeping the ten grand you're now giving away.
This is assuming you don't have to pay taxes as you go, and you don't in your
IRA. "But Ron, my accountant tells me I can't contribute more than $2,000 for me
and $2,000 for my spouse each year. Where did you come up with this $10,000
figure?" Your accountant may be right. There is a limit to how much you can
contribute. But wait! Go back and ask your accountant if there is any limit on
how much your IRA can make in a year from its investments. He'll scratch his
head and tell you no. . . There Is No Cap On How Much Income Your IRA Can
Produce! Incidentally, if you have the nerve, ask him/her what their net worth
is. Go ahead, I dare you! You probably won't like the answer. I want you to
remember, this is the person from whom you're seeking financial advice.
Also Remember: The Broke Can't Teach You How To Be Rich . . . They're Not
Qualified
"OK Ron, so tell me how I can make my IRA wealthy without making any
contributions." Keep your shirt on, I'm getting there. If you're a real estate
entrepreneur, you're making money from buying and selling or keeping houses. If
I've trained you, you're doing this by using little or none of your own money.
The objective is to create cash and cash flow by leveraging your brain, not your
wallet or credit.
Your IRA Can Do The Same Thing
That's right. Your IRA can buy houses, the same way you do. You have to do the
work, but your IRA gets the money, tax-deferred or tax-free. Here's a real life
example in progress. A student called me with a house in Atlanta that's worth
$575,000 in a gorgeous area. The seller owed $492,000 with a $4,200 per month
payment. She was $13,000 in arrears. After some back and forth she agreed to
deed us the house if we made up the $13,000 in back payments. We did our due
diligence, verifying the facts and value with an appraiser. We've closed on the
house and currently own it. But, instead of taking title in a trust with me as
beneficiary, I took title in a trust with my IRA as beneficiary. I had my IRA
administrator send the check to the closing attorney for the back payments, as
well as instructions on how I wanted to take title. He created the trust, I
didn't even have to appear at the closing.
Now in this case, my IRA did have to come up with $13,000 to make this deal work
but normally when I get a deed, it's free or pretty close to it. Keep this in
mind and don't get hung up on the down payment. Let's look at the results: We
received $83,000 in equity for $13,000. We've obtained a beautiful home in the
same area several Atlanta Braves have homes as well as Whitney Houston. We've
purchased with no liability and can sell the same way. We simply took over the
mortgage "subject to." So, what's our exit? It's simple. Sell the same way we
bought it. Get as much down as possible, preferably $80,000 and deed it to
someone else. Worst case scenario we get $40,000 or $50,000 down and take back a
second. Or, take something in trade. Easy in, easy out.
Let's review: If we get $80,000 and subtract $13,000 before a payment comes due,
we'll net about $65,000. That's $32,500 for my partner and $32,500 for me.
Whoops, that's not true, that's $32,500 for my IRA! Tax deferred. What if I did
three or four of these a year? That's a hundred grand I helped my IRA earn, tax
deferred. And we're only talking about this year. What if I did this every year
until I didn't want to anymore because my IRA had more money than I could spend?
You Can Do 5 Or 6 Deals In Your IRA On An Annual Basis Without It Being
Called A Business
At least, this is what I've been told by the people who administer IRA's. Of
course, there are a few rules and more questions. I strongly suggest you do not
do this without good, competent advice and participation. I must warn you that
Uncle Sam frowns on buying a house in an IRA with the intent of flipping it
quickly. They may tax you on the profit. Perhaps you may want to hold it in the
IRA awhile before you flip it. Perhaps you'll only do one or two a year. I can't
answer these questions for you and frankly, many accountants can't either. Seek
the best advice you can find and do what you feel is best for you. Your IRA must
be self-directed.
They'll understand what you're looking for and they taught me how to do this.
Call them ask for a Self Directed IRA package. They will put your money in a
money market account until you tell them what to do with it. When you find a use
for the funds they'll write the check according to your directions and mail it
to the address you give them. It takes less time to carry it out than it's taken
me to tell you about it. Next, you must learn and understand the meaning of
self-dealing/directing. It can be deadly to your wealth. You cannot sell your
houses to your IRA. You shouldn't get your IRA involved in any deal you or your
entity was previously involved in. If your IRA buys a house, it should go
directly from the seller to the IRA and not pass through you. Don't take back
notes on houses and give or sell to your IRA. Keep it clean. Enough said about
that. Do your homework. Mid Ohio has an entire book answering all of your
questions. I only have a newsletter article to get you started in the right
direction.
Now, you may be thinking I'm advocating you using your IRA money to buy houses.
Not hardly. The last thing I want you to do with your IRA cash is to buy real
estate. Why?:
Because You Don't Need Money To Buy Real Estate . . . And Neither Does Your
IRA
Put some deals in your IRA that don't require cash. Next, take that cash when
they sell and buy all kinds of neat stuff to increase the yield on cash. Stuff
like discounted paper, defaulted paper, mutual funds, hot stocks, etc. Here's
the point. As long as your money is tied up in real estate it can't be getting a
high return on semi-passive investments. It can only grow as fast as the real
estate will allow. So, let's get the best of both worlds. Create cash by
actively buying and selling houses with little or none of your IRA's money.
Next, let's take those profits and make them grow by at least 15% per annum
outside of real estate.
Tax Deferred Or Tax Free If You Have A Roth IRA
Make certain you ask about a Roth IRA and take time to learn its potential.
You're never taxed, you can use it for a first time home or education for your
children and you never have to take it out. Of course, there are exceptions and
rules. So, take the time to learn about the ROTH and use it. If you qualify I
promise you it will be a huge return on your time investment. I know! About now
you're saying: "Well Ron, you just told me not to use my IRA's money to buy a
house and yet you did exactly that with your own IRA." Guilty as charged! In
fact, I'm quite often guilty of actually doing the stuff I tell you about. I
guess that makes me a bit weird, doesn't it? I actually practice what I preach!
But you interrupted me before I finished. I said don't use your IRA to invest in
real estate but what I meant was, not for long term. If my IRA writes a check
for $13,000 to buy a house with the expectation of getting back my $13,000 plus
$32,500 within 60 days, is that OK? I don't need a spreadsheet on this one.
That's Exactly A 1500% Annual Return On Investment
I bet that's better than any money market or CD you currently have. I'll bet
that's even better than your stock portfolio's performance last year. Is It A
Great Deal? yes. Is It The Best You Can Do? no!
The Best Return On Your Money Is Called: Infinity
You see, if you don't invest money you can't measure the return. That's my kind
of deal. But hey! If you've got the cash you've got to do something with it. So,
can I be excused because I didn't get an infinity yield this time? Try to tell
your accountant or banker you can get a 1500% yield on your money. Watch their
eyes glaze over. Remember, all it takes to get a tax deferred infinite yield on
your IRA is for it to control or buy real estate without using its money. Can
you option a property without money? Yes! Can you wholesale a house without
money? Yes! Can you take a house "subject to" without money? Yes! Can you
lease/option a house without money? Yes! Can you send Ron a check for all this
priceless advice to make you rich? Yes! (Whoops, forget that one, I got a little
carried away).
Wait, here's more! Did you know you could do 4 or 5 of these deals per year in
your IRA without it being called a business and paying taxes? Did you know your
child or grandchild can have an IRA you can start without their knowledge, that
can become their own when they come of age? What a way for you to provide for
your child's educational future. Without Writing A Check! Without Borrowing A
Dime! Incidentally, if you open up an IRA for your child or grandchild, if I
were you, I wouldn't tell them. Can you guess why?
So, let's play with some numbers. Suppose you can set aside enough time away
from your J.O.B. to do 3 or 4 deals a year netting a total of $50,000. You
decided you were going to do the same thing for the next five years and then
quit. You know you can get a 15% return in your sleep, which you can. What was
your total contribution?: ZERO!
Your IRA Made Money, You Didn't Contribute It.
What is it worth in:
- 5 Years? $387,548
- 10 Years? $779,498
- 15 Years? $1,567,849
OK, let's now suppose you get a little ambitious and do better deals making
$100,000 each year in your IRA.
What's it worth in:
- 5 Years? $775,096
- 10 Years? $1,558,996
- 15 Years? $3,135,698
Remember, I'll put $32,500 in my IRA on this little deal. If you're an active
real estate entrepreneur it's no big thing to let your IRA have a few of your
deals. Most people spend more time buying a car, planning a vacation or taking
in a football game than planning for retirement. So, what about you? Is this
going to be another scanned over article to be quickly cast aside because your
favorite TV show is about to air? Or, could this be a valuable piece of
information that will have a major impact on your future because you decided to
take action? Hey! I'm only the messenger boy. My job is done. Yours is next.
When you check into the nursing home. . . may you own it, free and clear.
Bio:
Ron LeGrand is a nationally recognized real estate expert and trainer with 25
years experience in both residential and commercial properties and a 20 year
history of hard money lending and brokering. His experiences include personally
buying and selling over 1,600 single family houses and completing over
$300,000,000 in Commercial Property deals with student partners all over
America.
He’s obtained current real estate developments across America with market values
exceeding two billion dollars, all under his control. His properties include
office buildings, industrial, commercial, mixed use and residential land
development, luxury condominiums, marinas, etc.
Mr. LeGrand is a highly sought after platform speaker whose addressed audiences
as large as 20,000 and as small as 100 in hotels and convention centers across
North America, sharing the stage with leaders such as Donald Trump, Robert
Kiyosaki, Rudy Giuliani, Tony Robbins, Larry King, Dr. Phil, Suze Orman, and
many others. For the last 20 years he’s been helping thousands of ordinary
people take their lives back and create financial freedom by implementing his
systems for success as real estate investors. Today he’s considered the
country’s leading expert and is referred to by many as the “millionaire maker.”
His book is in stores and online and over the years he’s created dozens of home
study products, held live training events on various real estate related
subjects. He spends much of his time passing on his experience at those live
training events, held in various parts of the country, while simultaneously
running over ten different business he owns and controls.
Ron LeGrand's 41 year marriage to his wife Beverly has produced four children,
nine grand children, and two great grand children.