Navigating Real Estate Investments with Self-Directed IRAs
On this episode of Next Level American Dream, Abigail and Sean are joined by Bernard Reisz. Bernard is the Lead Strategist at ReSure Financial. His expertise is guiding people through Real Estate taxes, legal strategies, and finances. During the episode, Sean and Bernard touch on the use of Self-Directed IRAs in real estate.
- What exactly is a Self-Directed IRA?
- Why are so many investors beginning to use SDIRAs?
- Would real estate be a good investment opportunity for people using SDIRAs?
- How could someone learn more about this or set one up?
How to contact Bernard Reisz:
Transcript available below if you would like to follow along with the episode:
people, IRA, tax code, invest, tax, QRP, money, mutual funds, Self-Directed, Bernard, real estate, IRAs, investors, wall street, assets, structure, account, directed, American Dream, folks
Bernard Reisz, Sean Thomson, Abigail Thomson
Abigail Thomson 00:01
Welcome to the Next Level American Dream Podcast brought to you by Thomson Multifamily Group. Your hosts, Abigail and Sean, will discuss how you can take your American Dream to the next level through real estate investing, business practices, and personal development. Join us as we share our experiences as a father daughter duo who are trying to accomplish our goal of financial freedom. We hope you learn more about how to define and achieve your American Dream. Here's another episode of Next Level American Dream. Welcome to the Next Level American Dream Podcast. We have a wonderful guest for you today, but first, please make sure you have subscribed if you haven't already. We also love getting your feedback through likes, comments, ratings and reviews. Today, Sean speaks with Bernard Reisz. Bernard is the lead strategist at Resure Financial and his expertise is guiding people through real estate taxes, legal strategies, and finances. During the episode, Sean and Bernard touch on the use of Self-Directed IRAs in real estate. If you found any value from today's episode, then please share it with a friend and help us grow. For more information on our sponsor, visit www.thomsonmultifamilygroup.com to start taking your American Dream to the next level through passive investing.
Sean Thomson 01:19
Hi, Bernard. Thanks for coming on The Next Level American Dream Podcast. Really appreciate you being here!
Bernard Reisz 01:24
Hello, Sean. I've been looking forward to this. Thank you for having me. If the little bit of chitchat that we've had pre recording is any indication, this is going to be a great episode.
Sean Thomson 01:34
Good. Well, to start off, just explain to our listeners some of your background and where you've come from, and then where you are today, and what you have going on now.
Bernard Reisz 01:42
So, the biggest thing that catches people's attention, soonest is the CPA after my name, and then the rest of the alphabet soup. What I'm really about is my own financial journey, and financial journey of my clients. It's a never ending learning experience. You've got to stay on your toes, be quick on your feet, because it's rapidly evolving. You've always got to be learning, and I think that's perfectly aligned with what Next Level American Dream is all about.
Sean Thomson 02:14
Yeah, we're always trying to do that. So well, let's talk about I think today, if it's okay with you, you have such a broad spectrum of things that we could talk to you about, and we're probably gonna have to have you on five or six times even cover what you what you work on in financial freedom in your financial business. Well, let's talk today about self directed IRAs. If that's okay, if you don't mind just sort of lay the groundwork for what a self directed IRA is. And for someone that maybe has an IRA or doesn't, you know, doesn't kind of really know what a self directed IRA is?
Bernard Reisz 02:44
Yeah, let's let's do this is a great topic. exciting topic. It's a topic where there's lots of once you start digging in on the internet, you'll find lots of information. The thing is, there are a lot of good information, a lot of bad information, a lot of partial truths. So we'll try to tell people exactly what it is. There's a quote from, oh, who's this quote from where it says like, the blackest of all lies is a half truth, because it's much harder to combat. So the self directed space is interesting in evolving. And let's dive right in. So the first question is, what is self directed and self directed IRA? So, first thing we got to understand is self directed plans and structures come in many different flavors. So self directed IRA, is one group of self directed plans. But there's another group of self directed plans, which would be self directed, qualified retirement plans, and qualified retirement plan just so we can save time, the episode we'll say QRP for short. And it's kind of just like we don't nobody says Individual Retirement arrangement, we just say, IRA. So, for qualified retirement plans, we'll use the abbreviation QRP. So, those are two groups of plans and belong to kind of two different sections of the tax code, but they can all have, they're all tax favored. And they can all be truly self directed. So before we dive into what those are, the key thing is that the tax code which gives us these accounts, says very little about what you can or can't invest in. It's more or less silent about what's allowed. What's an allowable investment investment for these vehicles. But for some reason, we've all got this association between retirement plans and the stock market, but that association is totally a complete figment of our imaginations. Somebody placed that there very deliberately but but If we just have to kind of get rid of that association that was implanted by people that care to sell us things, and the stock market, so the QRP and Ira are creatures of the tax code, and the tax code says close to nothing about what they may invest. In fact, it's about 90% of the tax code about retirement plans, only applies to retirement plans when they're used for real estate and other alternative assets when you're investing your IRA 401k or some hqrp. In stocks, bonds, and mutual funds, about 90 to 95% of the tax code on these subjects are inapplicable. So the tax code was clearly written with real estate investing in mind for retirement plans.
Sean Thomson 05:56
Really? Yeah. That's interesting. So what is it? What it so since there's you're saying there's not many things that you can invest in? What are their? What would you find that kind of stuff that would get you in trouble?
Bernard Reisz 06:10
Where things can get you in trouble that because while you can do a lot, there are also almost an infinite number of ways where people can make missteps. Okay, and missteps can be very, very costly in the retirement account space. And I think we're we're probably headed with self directed retirement accounts, is kind of self directed 2.0. I think self directed 1.0 is kind of behind us, I think there's going to be a greater need for compliance as these vehicles get more and more popular. So the rules, right, well, we've been talking about is the asset types that can be invested in and nowhere in the retirement literature, does it have a list of things that you can investment invest in, there is a short list of things that you cannot invest in. Right, right. And so kind of anything else is allowable, by default. So it doesn't say anywhere, oh, you can invest your retirement account in mutual funds. But nor does it say you can invest your retirement account in real estate, or cryptocurrency or hard money loans or tax liens, or pre settlement financing, or any of these, it just has a very short list of things that you can't invest in, kind of and those are there's a little the disallowed investments are the list is a drop longer for IRAs, and four, but the main things that are disallowed are collectibles. Life Insurance has some nuance to that. But for the most part, anything is fair game, where you have to be conscious of the rules. There are certain rules that apply to IRAs. And then there are certain rules that will in complexity that apply strictly to QRPs. So for IRAs and qualified retirement plans, you've got to be cognizant of the prohibited transaction rules, which can get forni the prohibited transaction rules are not about the types of assets that you can invest in. It's about who can be a party to a transaction involving your retirement account. And I'm pretty sure once I give you a little more context, these are going to be very familiar to you. And in many cases, navigating them is straightforward. But like everything else, there are gotchas gotchas abound. So those rules, what they're designed to do, is ensure that you use the tax benefits of these accounts, to for long term savings, they're designed to ensure that you cannot use these accounts for your current benefit, because Congress is worried that hey, if you can somehow use this money for your benefit today, you're not going to make prudent long term investment decisions. So, that kind of what they did is they said that if you in certain relatives of yours and certain business partners and certain entities that you own are involved in are involved in the same deal as your retirement account. That is a prohibited transaction. In for an IRA that is the kiss of death. A prohibited transaction means the IRA is no longer an IRA. So these are not to be taken lightly. And the QRP world there's a tax associated with it, but it doesn't disqualify. So there's a benefit there to using QRP over IRA or with regard to prohibited transactions. There's all this... How does it sound?
Sean Thomson 09:57
That's good. I'm trying to decide which direction we need to go next because we talked about the asset classes, there's it's pretty wide open. I think a lot of people don't understand that there are other investments besides stocks, bonds, mutual funds, you know, because they've been told so much from from Wall Street and their corporate employers and things like that, that that's really all that's available. And there's a whole world of investing out there. And real estate, I know, there's, you know, five 610 different things you can do with your money and invest in real estate. So we've talked about that. And like you said, the prohibited asset classes are pretty, pretty small. So that leaves a whole bunch of things wide open for you to invest in. And then secondly, we talked about, like you said, the prohibited transactions, that really, that was a tough one for me, because in multifamily, you know, I can't I can't even use my own my own investment accounts, in my own deals, which is really quite frustrating. But you know, I understand the rules and stuff. But so that's that's difficult. But I was I want to talk about you're using that term qR p quite a bit. Can you explain to me before we kind of move on is, so an IRA is one thing, and then a QR P is is a different thing? So explain maybe what those two things are?
Bernard Reisz 11:05
Yes, that's a good question. And this is one of those areas where people have to exercise, lots of caution. And there's a reason why the tax code has many different types of accounts. That's because not every account is a fit for every scenario, in every profile. Right. So in the IRA world, we've got traditional IRAs, we've got Roth IRAs, we've got Sep IRAs, we've got simple IRAs, and there used to be something called a SAR SEP IRA. In the qualified retirement plan side, we've got defined benefit plans, cash balance plans, 401k, and profit sharing plans, the term Keogh plan that used to be more popular. So these are, there are many, many types of plans. And each person has an every investor has got to find the one that's going to match them based on their tax and investor profile. And one of the things that out that's almost pervasive in the marketplace for self directed accounts, is folks that are essentially selling one or the other, as kind of a one size fits all solution. And that's going to that's I'm concerned that can lead right now, the, the regulation of the space is very, is almost non existent. So you can kind of get away with anything and everything. But as things grow in popularity, it can attract more attention. And, you know, the folks that are have plans that are not matched to their profile, they're carrying risk and liability, it's kind of when you overpay or you buy a property and didn't do a good inspection, and the roof or the foundation, you know, it's more akin almost to the foundation, right? You didn't inspect or miss something, you didn't do an inspection. And the foundation has some structural defects. And you think, Hey, I got a great deal. And that liability is sitting there, that is what's going on in the self directed in a big part of the self directed arena, right now, folks getting pushed into plans that are not a good fit for their tax profile. So what is the distinction between these there are many, many distinctions. The where it starts from especially qualified retirement plans are one of the most complex areas of tax and labor law. But if we strip a qualified with a QRP, down to its essence, and an IRA down to its essence, and we read kind of the first lines in the tax code, about each of these, an IRA is a trust established for the benefit of an individual. A QRP is a trust established for the benefit of employees, or a self employed individual. So there's on top of that, is our mountains and mountains of law and regulations, but at their essence, you know, kind of from the get go, that's what distinguishes them. On the IRA side, it's a plan set up for an individual QRP side, it's a plan, it's a trust set up established for the benefit of employees, or self employed individual.
Sean Thomson 14:31
And so there's a couple things a couple questions I have. So a lot of this depends on two things like sounds like so I know if you're let's say you left your corporate job recently you got you know, COVID struck and you're you've decided to go open your own business, you're gonna have a corporate 401k, maybe your IRA, and then you're going to now have to go do something else with that and you decide to move it into self directed, so determining where you're coming The money is moving from also plays a part in where it needs to go to right. Am I saying that
Bernard Reisz 15:06
to an extent? Absolutely. So we've been talking about, kind of, we're determining what type of self directed structure you can establish for yourself, to move your money into where the money is coming from, in most cases is not a huge factor. The only caveat is a Roth IRA, and after tax IRA cannot be moved into a QRP. And you'd be shocked at how many folks out there, let's say, let's say it's, I've even seen this on the web page of, you know, some of the folks selling QRP, move your Roth IRA in your Roth QRP. And that is an absolutely no go by this point. I think, you know, some, you know, people learn over there, you know, they sell enough of these, and they encounter enough, they learn a little bit, but I, it's actually been on the website of somebody that is, you know, presents himself as an expert in these things. And it says, Yes, Oh, sure. rollover your Roth IRA to your Roth QRP. And that is an absolute no go. But in the absence of, but other than the Roth, and after tax IRAs, more or less, you can move money between these all these different account types freely. So your corporate 401k can go to your IRA, an IRA can go to a QRP, though, you know, the only time you really get locked in is with the Roth IRA.
Sean Thomson 16:34
So the Roth IRA, so I guess it's just pre tax and post tax account that you kind of have to be really careful with. So if it's a pre tax account, you can essentially move it to any other pre tax account. Mm hmm. If it's a post tax account, you can move it to any other post tax account, except for a QRP.
Bernard Reisz 16:54
It. So essentially a post tax IRA stays IRA, you can move it to another post tax IRA. Yeah, but in the IRA world, and can so you can move it to a self directed you can move it from Schwab fidelity to Vanguard to a self directed structure where you can put it into investments that you choose, but it cannot be secure.
Sean Thomson 17:15
Right, yeah. But there are options that are available to you that allow you to invest in those other assets, besides stocks, bonds, mutual funds, anyway, it's just talking to your custodian of choice to make sure that they're getting you in the right place, right.
Bernard Reisz 17:28
Yeah, so here's the thing, uh, custodians, not, for example, QRPs do not require a custodian. And so what has happened in the space is the custodians. an IRA needs a custodian. And so what has happened is the custodians, for the most part, are promoting self directed IRAs. And those have their pros and cons are not always the best choice for everybody. But custodians are primarily IRA providers. Because an IRA needs a custodian. It's hard coded in the tax code. qR peas do not need a custodian. So custodians, for the most part, don't talk about that. But that has also left a void where people that realize, hey, we can just sell QRP paperwork to go in there and promote QRPs. But the truth is kind of neither here nor there. The truth is, this comes back to you know, navigating the financial world is that everybody's got a unique profile. And for some folks, an IRA is going to be the ideal structure. And for other folks, a QRP is going to be the optimal structure. And the trouble is, you're stuck in a place where you've got the IRA folks just trying to sell an IRA to anything that moves. And you've got the QRP folks trying to sell a QRP, anything that's got a pulse, and you're caught in the middle. How do you know what you should do? And the implications of a wrong move can be huge. And the upside to making the smartest move cannot be overstated. I mean, this can be worth hundreds of 1000s of dollars to millions of dollars, obviously, depending on the size of your retirement account, but you know, it's it's getting it right is definitely worth a small fortune and can be worth a huge fortune, if you have a big enough retirement account.
Sean Thomson 19:33
Right? Are there places that people can kind of find sort of an unbiased sort of third party information source?
Bernard Reisz 19:42
You know where that is? Where is it well, so that's we've set ourself up, I don't know this is like a pitch right over the plate here to try not to be too self promotional. So we've set ourselves up that we do it all and in fact, when people sign up with us, they don't Have to commit to any particular account type. And the reason why. And so people with with us, we've removed all the bias, because the reality is, is for the most part, right? Of course, there are good folks and not so good folks. But really, it's incentives and conflicts of interest, that are able to, you know, Wall Street, how did that get corrupted? Again, it's the system, it's not any particular individual, generally, right, it's just that you put somebody in a seat where the only way he can earn a living as if he sells things. Right, he's very quickly going to figure out exactly how to sell that as effectively as possible. And so the only way for, to really maintain your integrity is to remove those conflicts of interest. So we've set ourselves up so that we establish every type of self directed account. And our price structure, our profit margins are, don't change, regardless of the way we set it up. So if somebody wants to Q RP, but of course, we're going to educate them. And our business model actually requires that we work very closely with our clients. So the folks that are doing the one size fits all approach, it's a very attractive business model, because operationally, all you have to do is kind of change the name of the paperwork and send it out. And it's, there's really the operational side and the brain trust side, you don't really need anything there because it's the same paperwork again, and again, and again. And again, the real value is not in the paperwork, the real value is trying to help people navigate this. So they can get the best outcome in terms of the best tax strategy, and avoiding mistakes, because little mistakes in this space are very costly. So if you move money we've had some times we've seen people say, Bernard, can I do this? And I'm like, no, it's against the rules, like what's only 25 bucks, I'm saving 25 bucks is can blow up your retirement account. That's all it takes us. So somebody's getting the wrong structure, the right structure setup, can save them a bundle on taxes, but the wrong structure can also create a potential huge tax liability. What's going on now, though, is as with anything tax related, unless the IRS sees a mismatch on the tax returns? It flies under the radar until the IRS says, Hey, we're seeing abuse here. Let's go check this out.
Sean Thomson 22:38
Yeah, and then you're not it's, it's obviously too late at that point, really.
Bernard Reisz 22:43
So as long as the music is playing, you know, it's good. But when the music stops, so there's I've give a little more about my background, one of the things I was heavily involved in, and advising a company on promoting it was something called captive insurance, which is still around. Have you ever heard of captive insurance?
Sean Thomson 23:01
I have not.
Bernard Reisz 23:03
So it has many applications, and it has many tax benefits. But again, then it went ahead, you got these people out there promoting it to any anybody with a pulse when I say, Hey, this is the strike tax strategy used by Fortune 500 companies, there's no reason why you shouldn't use the strategy. What big guys use do what the wealthy guys do is that use it? Well, the wealthy guys use. And then it was essentially a tax job tax, Dodge, and now became what's called a listed transaction. And so it was the, as long as the music was playing, it was great. And every day new guys are showing up and selling it. And then the IRS said, Hey, this is not right. These guys are abusing this and became a listed transaction. There were lawsuits. They got messy. Have you ever heard of conservation easements?
Sean Thomson 23:55
No, but it's probably good that I haven't heard of these things, right?
Bernard Reisz 23:59
It is, and here's the thing. Everything in the tax code has a place. And it is true the tax code, certain sections of it are written to promote certain things, and incentivize rental retirement accounts are all about incentivize you to save long term, you'll get these tax benefits. And so conservation easements and other example something there was a benefit and incentive in the tax code that was abused and all these folks were pushing it get in here. And then you can go just go Google these things, and you'll find them so it was great for a long time. And then there were always these guys on the side that were saying, Hey, this is getting out of hand. The IRS is going to look at this one day. This is not aggressive tax planning. There's abusive stuff going on here. And even if you're not the abuser, firstly, if it's one thing people don't understand, is when somebody does something with their taxes, you can't blame it on the guy that sold it to you. Generally speaking, it's It's your problem. It's not theirs. It can be theirs to an extent, but it's primarily, you know, the taxpayers so that you can check out conservation easements and kind of see what happens. What it reminds me of a bit is Do you remember Disney's Pinocchio?
Sean Thomson 25:17
Bernard Reisz 25:19
Because I don't know. I don't think, you know, I actually showed it to my kids. But I don't know how many kids today See that? I wonder. Pinocchio? Yeah, Disney's Pinocchio. I think it's like from 1940 or something.
Sean Thomson 25:31
It's old. Yeah, it's been around for a long time.
Bernard Reisz 25:33
And so it reminds me a bit of been a Pinocchio, and I'm heading out to pleasure Island. Right? We like, you know, go go go, this is the greatest thing on earth, but the liability is there. And so that does happen. In the tax world, there's a lot of nuance. But there are always people out there that see an opportunity to push something and promote something, sell something while the music is playing. But people investors should understand that if the music ever stops, the one holding the bag is not the fellows. You know, the promoter also may have some you know, but primarily, it's the the person that bought into the into the thing.
Sean Thomson 26:16
Yeah, the IRS is gonna, the IRS is gonna come to me for money, not, not somebody else. So yeah, if I get into the wrong thing, that's the that's the hard part, though, from from my side. You know, I just we're going through this now with with our finances, in fact, where my wife is leaving a corporate job, we're trying to find a way to place our money. And there's, you know, we're self employed, and it's different. It's a different employment structure. And, and there's all these possibilities. And then we also have strategic objectives with the the money that we want to do, where do we want to invest? Right, so we, we have specific things that we want to try and invest in, you know, it's because we're multifamily property investors. That's obviously where we want to put the money, right. So, you know, we have to be sure we're in the right account to be able to do those things that, you know, optimally. And so structuring that has really been it's been quite a nightmare, you know, I consider myself fairly tuned into these things. And it's, it's just so confusing to try and figure out which one to go go with, you know, and when you talk to one person, you get one answer, you talk to somebody else to get a different answer. And, you know, so at some point, it's like, who, you know, who can really give me the idea of this is where I'm coming from, this is where I want to go, what what needs to happen, that's really kind of important, I think, you know, we're doing the best we can. But anyway, I didn't need to make that a commercial for you either. I didn't really realize I was doing that. I'm sorry. But it's good. It's good to know that there's someone out there that can say, hey, this, what do you Where are you coming from? Where do you want to go? Here's it, here's what I would recommend. That would be that's, I think that's an invaluable tool or service for someone? Especially my position?
Bernard Reisz 27:57
Yeah, it's, I appreciate that. And it's, it's incredibly valuable. And there really is, it's, that's not what's out there, what's out there are folks pushing one thing or the other we are where we will typically spend a few hours, you know, initially and then always available on an ongoing basis. For us, it's a real kind of heavy lifting, determining the structure for each client. And also being that we give them the flexibility to choose from any account type. Sometimes that changes over the course of the discussion. So you know, the way we do things is unique, I do think we're going to enter a phase where maybe this is going to be necessary. I can't say I want, you know, self directed retirement 2.0. But I think as it goes more and more mainstream, and it gets more and more attention, it's going to be, you know, there's going to be a greater need for and for people to make sure they're doing it right. Because little mistakes in this space are very costly. I'm sure you've come across UBIT, which is something we haven't touched upon yet. Right?
Sean Thomson 29:05
Yeah. When I was also gonna say there's so many of our investors, I guess I might have a bias in that regard. But so many of our investors that are coming to us, especially the newer investors, they're, they're running away from Wall Street, they just don't have any faith in what's going on in Wall Street anymore. And the accounts that they have are all managed accounts, they're getting feed to death in their in their retirement accounts. So they're really trying to find ways to get out of that. And the beauty of Wall Street was that you could just sort of throw your money at these guys and they would put it somewhere and hopefully make your money right you didn't really have to think about it, you didn't have to be responsible for it. And when you when you go to this self directed for you know, format, it's really up to you to kind of say here's I need to educate myself on these these segments of of investing, and learn how to how to put your money in where to put your money and who to put your money with. Those are all kind of your responsibility now. And to have someone that can help you do that. The process of B is really good. But I see a lot of people that are trying to get away get their money, at least away from the wall street guys for sure.
Bernard Reisz 30:08
That because the truth is, and that's what comes back to me, but we spoke about you as an operator, and Wall Street, there's really very little opportunity for value add, right? There's no some people I've tried to explain this to and they, they don't get it. But I think most people get it the guy. And at the risk of offending the financial advisory industry, there's really nothing, there's not much that they know, or there's no secret sauce that they've got for turning your money into more money. They're going to give you a nice diversified portfolio of mutual funds, which you can easily assemble yourself. Right? There's no reason to pay more than 1% of your assets, right, which accumulates, you will this is an astounding number. And nobody thinks about it like oh, it's 1% that 1% fee accumulates just over 30 years to giving away potentially 60% of your net worth. And I'm making that up I kid you not say that, again, giving away that 1% fee adds up over 30 years to giving away to a reduction, a 60% reduction of wealth.
Sean Thomson 31:20
Right? That's massive.
Bernard Reisz 31:21
Yeah, that's crazy. And if you put it into numbers, right, depending, right, so I did this analysis for some that at $10 million to invest, right over a 30 year period, their investment advisors fee amounts to a $64 million reduction in net wealth. I know that number sounds crazy, but that's the number.
Sean Thomson 31:48
Yeah, wow. That's crazy. That is crazy.
Bernard Reisz 31:51
And the question is, what are they doing? In exchange for that? Right? You're giving up $63 million? Well, what's the guy doing in exchange for that? He put together a couple of mutual funds. Right? He's not, I wouldn't trust them to pick a stock, right? I wouldn't trust them to say, let's go bet on these stocks and make it big. So they're giving you a nice diversified portfolio. Right takes about 10 minutes to do that. Now, of course, there can be more value add on the financial planning side and tax side, but they're not doing that people are going through them thinking make me money. And they're getting something that can be easily assembled. Because there is no value add to your portfolio, your portfolio you buys your mutual fund, right? You own some Amazon some apple, you can look at it. Right? But can your financial advisor go down to Andrew jassie is getting the new CEO of Apple, buy apples, not Apple, Amazon's getting a new CEO, but up, it's only gonna go to Jeff Besos and say, Listen, I'm my client is investing in Apple, we've just bought a couple of shares for $10,000. And I see a value add opportunity, I think you should run your business like this. Right? Of course not. There's nothing they can do. They can just buy the stock and watch it. Whereas in the private space, right? Somebody go to Sean and Sean can say, Hey, I see this asset. And I can do something with this. Right? I can add value, right? Of course, there's compensation to the deal sponsor. But the deal sponsor is has the ability to add value, right. So that is a huge distinguishing factor factor between the private space and Wall Street, the Wall Street folks are kind of sales people that are not really adding value, and certainly not value in exchange for the huge cost that they impose in the private space in private real estate. If you're an operator, you know, and you know what I mean? When I say operator, because we had all that discussion, you're looking at that deal. And you're saying we're not buying this and then letting it run, we see how we can raise rents, we see how we can swap out some stuff and get huge ROI. You're adding value. And that's something that's more or less absent from Wall Street.
Sean Thomson 34:13
Right. And so I just so just to clarify. So when you're saying operator, that what your what your term is, or what you're saying is someone who owns and operates real estate as rental property. And we I use that term because you know, the difference between investors and operators are different. So investors just looking for a place to put capital and increase that capital. Whereas an operator is someone who's looking at an asset to acquire to own that asset for a very long time. And they're looking to maximize that asset and create returns for decades if they can, right so so I look at it a little bit differently. I call myself a real estate investor, but I'm really kind of an E real estate operator. And then I'm trying to collect assets and operate those assets for an indefinite period of time and make cash flow and make money year over year.
Bernard Reisz 35:02
Yeah, I'll elaborate a bit, right. Because in real estate, the real value add comes from the folks that know the assets inside out. And those are the folks that have a background in operating real estate. So there are lots of folks that got into real estate kind of the same way. Somebody might have gone into Wall Street and said, I want to sell stocks. There are folks that say, we're just going to sell real estate. But then there's the real estate operators, the people who have a background and actually running that. And those are the ones that really know how to drive ROI and drive value, and almost have it in their bones, you kind of have real estate flowing through your veins. And when I invest, that's what I like, I like investing with people that are at their core real estate people, not people that realize, Hey, this is a great way for me to raise money and take fees, they just were real estate people, and they run real estate operate real estate, and then they came to realization that we could just do bigger things. If we brought in more investor capital.
Sean Thomson 36:11
Yeah, you pull together more money, it allows you to do bigger, bigger projects really is all it is, you know, start off as doing a house or a small apartment, then you then you know, then you're doing 500 doors at a time and stuff. It's just scale. Really. Let's talk we'll circle back to IRAs here. So are you seeing more and more people sort of go from these managed plans and managed asset plan or IRA plans to self directed?
Bernard Reisz 36:37
Absolutely, it's definitely a space that is growing and expanding by leaps and bounds, it's, there's about $30 trillion plus in the retirement account space, a lot of it is locked up, you know, for whatever reasons, you got to be able to actually tap into that money. So I'd say good potential, you know, that is not really accessible, even if people want to self direct it. But there's a good 10 to 20 trillion. And that's like a, these are staggering numbers, like rolls off the tongue 10 to 20 trillion. $10 trillion, is more money than we can really internalize or simulated just like, right, so there's, yeah, last time statistics were done by the, you know, by the GAO, that's a Government Accountability Office. That was low, you know, two to $300 billion in self directed world that they were accounting for, I guess by now, it's probably grown to a trillion, but you know, it's still a drop in the bucket relative, right, I, you know, a trillion dollars sounds like a lot of money. But it's, it's so much money, that 1 trillion versus 29 trillion, is just a drop in the bucket.
Sean Thomson 37:47
Right, but it's an indication of people wanting to have more control over their, their financial future, you know, I think it's, I think self directed is, is something a lot of people sort of attracted to, because they want to control their destiny a little bit and, and like, like I was telling you earlier, just get away from just get their assets away from Wall Street and under their own control. And like, like you were saying, they want to find projects that they can feel like they're adding value or working with someone that's adding value and doing projects that are like they have more high touch, you know, and I think that's a big driver in this is that in the private private investment space, like you were saying, you can like you can you can call and talk to me about how our projects going, you know, and you can't do that on Wall Street, there's no way you're getting a hold of the guy who buys and sells your stocks for you, you know, it just doesn't happen. So I think people want they people want that connection to their money.
Bernard Reisz 38:37
It's the connection, but it's also you're talking, it's not just the person that buys and sells the stocks is is not really doing anything. I think, to me the main differences. Shawn is doing something they get on the phone with you, right, obviously, you know, the asset, but if they want to, they can say, Shawn, I think we should do this. And you can say, Maybe yes, maybe no. And you'll probably say, Hey, you know, this is why we this is the strategy, but you they can talk to the man in the driver's seat and the man that's calling the shots, and, and driving the ROI. You certainly can never, you know, if you own a diversified mutual fund, there's nothing you can do other than watch it and the folks that bought the mutual fund can't for you can either do anything other than watch it so they kind of they want you to they love perpetuating this myth that somehow they're making money for you, but it just ain't so. Right. They're sitting in an office somewhere, you know, there's no magic, there really is no secret sauce to it. Sometimes. Some investors, many investors have come to that realization as you're pointing out, and I think more and more are going to come to recognize that going forward.
Sean Thomson 39:51
Yeah, I think that's a good thing. You know, I think being responsible for your own financial future is a big deal. You know, of course I everything I do is I don't have any stocks or my wife does, but I have zero stocks, bonds, mutual funds, everything I do is is me, you know, I invest in myself. So it's real estate. And that's it for me. But so it's I think that's a good thing for everybody.
Bernard Reisz 40:12
And to put that in perspective, I'm not against stocks or mutual funds. Yeah. But I just think people have to just like hqrp IRA, people should understand what they are, what they are, and how to navigate it. The world of mutual funds. Also people should understand what it is and what it isn't. And of course, you can decide if once you know, what it really is, and how it really works, by all means, go there. What I'm opposed to is people getting misled and doing things because they've been misinformed or have been given only kind of part of the truth as they're shooting to pleasure Island.
Sean Thomson 40:50
Right? Yeah. Well, we'll have to, we'll have to have you back on Bernard, and talk more about this. It's such a broad topic. And there's so many details to go through. And it's almost impossible to do without knowing that someone on a personal level to get them really directed in the right direction. But hopefully, we gave some big brushstrokes that will help people kind of understand the larger picture, I think, but I appreciate you coming on the show.
Bernard Reisz 41:13
Sean, I love this. And you also you touched on, when people ask me, what's the kind of what should they watch out for any type of provider in the financial space, anybody that's got a one size fits all, if they've got one product that they're pushing, you can be sure, right? That, that they're not going to tell you what that it's not a good fit for you or they may not even know, anybody it's taken a one size fits all approach is, by definition out there to sell things, even to people that it's not a good fit for. So always look for somebody that's got nuance, and is not trying to promote that one size fits all approach. And I think this there's nuance and everything. And like you say, it's not just about kind of taking responsibility. There's nobody else that will take responsibility for you, other than yourself. And the financial sales, people want to promote that notion that they're taking responsibility for you. And there is nothing further from the truth. Countless incidents have demonstrated that beyond the shadow of a doubt, so when only you, and only you, and I tell it to people, I'm also human. And as much as I try to set things up, so that there's no conflict of interest. There is nobody that will take responsibility for you. Like you, so there's kind of no way around it, you've got to own it, because you do own it.
Sean Thomson 42:47
Right, exactly. Yeah, you got to be responsible for yourself that you're you're kind of on your own in a lot of regards in that area. But it's, you know, hopefully you can find some people that that can help guide you through those things as much as possible. But it's really, you really got to kind of be on your game to keep yourself straightened out. So it's important for sure. Well, Bernard, I also asked everybody on the show, you know, it's Next Level American Dream Podcast. So don't tell everybody kind of what do you see as the American Dream these days? And then are there maybe one or two things that you've used in your life that that helped you level up your American Dream?
Bernard Reisz 43:20
Awesome question. Am I allowed to think about it? I think the American Dream is, to an extent, nuanced answer, if I may, the American Dream really traces its way back to the ability of every person to have their own freedom and to kind of live the way they want and how they want and achieve their own success. Right. That's what this great country was built upon. Right. We for a time, I think, like you said that, you know, that went away, people were able, you know, you had that possibility, perhaps or the illusion of being able to transfer that to a company that takes responsibility for you. We know either that's no longer true, or maybe always was an illusion. And more than ever, we have people being able to exert their independence, to create sources of income sources of wealth, forces of success, so sources of financial success, but also to broaden the definition of success. I think we've come to a place where maybe back in the 40s 50s 60s, maybe the one thing that define success was was money today, that's still a big part of success. But I think there many other definitions of success. And I think that's part of the independence is not only just being independent, to achieve financial success, it's independence to redefine success in the way that suits you. But I do think on the other side, We are seeing the huge growth of certain companies that are coming to dominate be that and Amazon and similar companies that are dominating. And I just hope that that domination doesn't ever conflict with the level of individual independence that people have today.
Sean Thomson 45:19
Right. Yeah. That's a great answer. Thank you very much. Appreciate it. Well, Bernard, thanks for coming on. I feel like I said many like, you know, hopefully we we shared some things that will help some people and I asked you, how can people reach out to you and connect? You mentioned that you help you can help people go through this process of identifying these things? Is there a place that people can come to get you more information on a website or something?
Bernard Reisz 45:42
Sometimes, as opposed to just giving the website I just say, Google, Resure Financial or Google Bernard Reisz, that'll get you to the right place, you know, providers specific URL, sometimes that gets forgotten Resure Financial, Bernard Reisz, you can check him out on LinkedIn, and all those things will lead you you know, there is incredible amount of content that I put out. So people to create awareness about this space, both people should know what they can do, and have an awareness that it's more nuanced, perhaps, then others are going to let them know. So that content is out there, they can definitely visit www.401kcheckbook.com and www.agentfinancial.com.
Sean Thomson 46:25
Okay, well be sure so we post this on our site when we published the episode, so we'll be sure to put those couple of websites on there and your social contacts. We'll be sure to do that. I really appreciate you coming on. It was fantastic information. I can really tell you, you've got a next level of grasp of this stuff. So, I really appreciate you sharing that with everybody!
Bernard Reisz 46:55
It's all about next level.
Sean Thomson 46:57
Bernard Reisz 46:58
Thank you, Sean!
Sean Thomson 46:59
Yeah, thanks again, Bernard. We'll see you soon, hopefully!
Abigail Thomson 47:02
Thanks for joining us for another episode of Next Level American Dream. If you would like to learn more about what we talked about today, want to contact the team directly, or are interested in passively investing and being a part of our deal room, head over to our website at www.thomsonmultifamilygroup.com -- Before you go, please leave a review! Your comments help us create more episodes for you to enjoy.