[00:00:01] Speaker A: You're listening to PTC point of view, brought to you by preferred trust Company, the preferred custodian for all alternative investments. We're here to provide retirement savers like you with the tools you need to succeed. Need a confidence boost when it comes to investing outside of the stock market? Do you want the power to build a tax sheltered nest egg that will last through your golden years? You've come to the right place. Turn up your speakers and turn off cruise control, because we're taking you on the alternate route to investing with your IRA.
[00:00:40] Speaker B: Welcome back, listeners, to another episode of PTC Point of View. My name is Izzy Urizari, director of marketing here at Preferred Trust. Today's guest, I have Chris Trembley, director of operations. Welcome, Chris.
[00:00:52] Speaker C: Thanks for having me.
[00:00:53] Speaker B: So this episode is all going to be about the best ever conference. Chris and I attended that event last week. Looks like it was the 7th, 8th and 9th event was in Salt Lake City. Great event. It was our first time going and we were pretty excited. One of our company partners actually told us about it. Shout out to Spartan Investment Group for that. And this event was literally supposed to be best ever. Everything in real estate, there were tons of companies there, everything from syndications funds, all into the multifamily space, storages, pretty much everything across the board in real estate. So it was really fun. So I thought we would just jump on here. Chris and I would talk a little bit about what happened at the event. A lot of the questions we got from the investor side, but also, also a lot of the questions we got from the investment sponsors that were there and how they can deal with us here as a self directed IRA custodian. So we're going to jump right into it.
[00:01:44] Speaker C: Sounds good.
[00:01:45] Speaker B: So one of the first questions we got was a gentleman came up to us and was talking about how he got hit with Ubit last year in his investment. So, Chris, let's jump right into it. Let's tell listeners what ubit is, how it happens and how to proceed if that does ever get hit with on their IRA or personally.
[00:02:04] Speaker C: So normally that happens with a debt investment. So it's hard to exactly know exactly what happened in his IRA. He doesn't currently have his IRA with preferred trust company. He has it with another self directed custodian. But he obviously was quite concerned. He had these tax documents. He didn't know why he was getting hit with ubit. And I don't necessarily know it was on the fault of necessarily the custodian either. I think maybe there was some miscommunication there between the type of investment it was and how it was being held in the IRA versus the tax information that was supposed to be provided by the investment sponsor. So I think what the gist was, was that he was investing private equity, private placement. He bought shares into a company, and when the k one s were produced, there was some misinformation on the k one. I think it was also following his tax id number personally, instead of the tax id number of his custodian. Right. And so it was sort of hard to tell. But what I did recommend, Tim, is super important. When we set up any type of private equity investment for our clients, when we set up any type of investment, period, it's important that we have the investment documents from the investment sponsor so that we know exactly what type of investment it is, exactly. If it could trigger anything from ubit, for ubit. And so that's one of the things that we recommend that we do. Of course, every investment that's within your IRA, it follows the EIN number of the custodian, not of the individual Social Security number. So. And the other thing that was concerning was he said, well, I received all the k one s. What do I do with them?
[00:03:48] Speaker B: Which he shouldn't have.
[00:03:49] Speaker C: Right. It should have been sent to his custodian. So the name of the investor should have been his custodian for the benefit of him falling under their tax id number with their address. So I, you know, I just encouraged him to send that on to his custodian and really communicate with his custodian and make sure that the investment that was being held in his IRA was being held properly.
And so. And he was going to do that. So, yeah, I think sometimes there's just confusion on how it's supposed to be titled. A lot of investors, their first time into these equity or debt placements, and so they're not completely clear. They know it's a good product, and they want to make an investment with these companies. And it's just important that when the investments made, it's actually purchased properly within the IRA and all the documentation behind it's proper.
[00:04:36] Speaker B: Before we jump into the next question, I just want to make sure. Can you tell us what the acronym stands for? Ubit. What is that?
[00:04:43] Speaker C: Unrelated business income tax.
[00:04:45] Speaker B: Got it. So, for our listeners out there, I know we use terms around here, unrelated business income tax. That's what it is. Ubit.
[00:04:51] Speaker C: Yes.
[00:04:52] Speaker B: All right, let's go ahead and jump into the next question we have, which is dealing with 1031 exchanges. So first thing we always get, everybody always wants to know because everybody's trying to tax shelter the taxes that they're potentially going to get from when they sell a home, obviously. But they don't understand on how 1031 exchanges really don't work with self directed iras.
[00:05:10] Speaker C: Right. Obviously, when you're purchasing and then selling a property within your IRA, that's a tax sheltered environment as it is until you actually take out the funds, the cash funds to you personally from that sale, that's when the taxation happens. Right. And that's just common in any retirement account. As soon as something leaves the retirement account and comes to you, it's taxable. So within the account it's tax sheltered and tax free if we're in a Roth account. Right. So it doesn't really 1031 exchange. We don't handle those in an IRA.
[00:05:43] Speaker B: Well, I'm just saying this. I mean, if somebody does have a 1031 exchange and they have cash and they're wanting to reduce some of their taxable income, they could totally make a contribution. Right.
[00:05:52] Speaker C: They could make a contribution to their IRA. Exactly.
[00:05:54] Speaker B: See what I did there?
[00:05:55] Speaker C: Yes, I see what you did there. And if they have a sep IRA, even better, because the contribution limits are higher for a sep IRA. And if they do it, making sure that they maximize their contributions every year that you're not missing any year of contributing. That's a big thing.
[00:06:10] Speaker B: Yep. And for those that want to know, the time is now to contribute, Chris, what's the date on that date?
[00:06:16] Speaker C: So you have until tax day to make your contribution for the previous tax year. Right. For 2022. So you can make both at the same time? You can do 2022 and 2023 at the same time. We like to have it in a couple of days before so we can process it. But technically, I think this year, it's April 18, I believe is what they said.
[00:06:35] Speaker B: All right, let's jump into the next question we had, which a few people actually asked about. This is non recourse loans. What are they, how do they work? And why would I need them with the self directed IRA?
[00:06:47] Speaker C: So a lot of times a client is interested in buying a property, an investment property, through their IRA, but they may not have enough liquid funds in the IRA to purchase the whole entire thing. Right. And so they're thinking about going out and getting a loan with the IRA. And traditional standard financing is not compatible with.
[00:07:08] Speaker B: Right. So you can't go to a regular bank.
[00:07:09] Speaker C: Right. You can't go to a regular bank and the IRA be the purchaser or buyer of the property, and then you get a loan with it. So you have to go through the process of a non recourse, non recourse loan. And so there are companies out there that actually specialize in non recourse loans. You can also go the route of getting private money. Or, like we were talking with a gentleman at the booth, there are other options out there, too, besides non recourse loans. You can actually partner on a property with yourself, actually personally or with somebody outside of another individual or another IRA. So there's a lot of options to consider out there besides the non recourse loan.
[00:07:51] Speaker B: He has a really good question. I remember he was wondering, how do the payments. Who pays the non recourse loan? Is it the IRA?
[00:07:58] Speaker C: Yeah. So every month, the IRA. So, yeah, hopefully, it depends on what you're doing with this property as well. A lot of times, you're gonna rent out the property. So rental income will be coming in. Correct. To pay off. But, yeah, essentially, you want to also leave enough padding in the IRA, cash wise, to be able to make sure those monthly loan payments are being made from the IRA.
[00:08:20] Speaker B: Perfect.
[00:08:21] Speaker C: Yeah.
[00:08:21] Speaker B: I do want to touch a little bit more on what you had said, which was actually our last question is, how do people combine funds if they're wanting to buy real estate, like myself and you? If we wanted to get into a deal, and I only had 20,000, but you had 50,000, how would that work in the IRA?
[00:08:36] Speaker C: So you can partner. Two iras can partner together. An IRA, you can partner with yourself personally, as long as the vesting name on the purchase agreement and all the documents to purchase and the deed are vested separately. So vesting separately means preferred trust company for the benefit of Jane Doe traditional IRA 50% and Jane Doe 50%. So that vesting, that end, that separate. Vesting with the separate percentages is super important to make sure that whatever amount you're contributing cash you're contributing to the purchase is then construed in a matter of percentage. Right. It equals the percentage.
[00:09:15] Speaker B: Exactly. So if I only put in 25% of the deal on that, and I'm. Let's say we're getting $1,000 in monthly income, I can only get 250.
[00:09:24] Speaker C: Correct.
Of what the rental income is, you pay 25% of this expenses on the property. If there's insurance, taxes, repair work on the property, you're going to pay 25% of that. So it just follows. Everything follows what the vesting percentages are. But a lot of times, a lot of people don't think, oh, I can partner with myself, but you really can as long as it's vested separately and you keep it separately. And so there's no co mingling of funds there.
[00:09:51] Speaker B: Regulations and compliance people. That's exactly what she's saying.
[00:09:56] Speaker D: Preferred trust company is hosting an event here very soon. It is called Pillars of finance. Pillars of Finance is an investment community created by industry experts for investors of all kinds. This year it is taking place virtually on April 4 at 03:00 p.m. if you would like to learn more information, go to pillarsoffinance.com or click the registration link in the podcast description. And once again, thank you for listening.
[00:10:22] Speaker C: To PTC Point of view.
[00:10:27] Speaker B: So let's switch gears a little bit. Those are a lot of the investor questions we received while we were at the event. We're going to switch over to the investment sponsors. A lot of the companies that were there that were offering real estate investments look to pair with a custodian, typically to help them raise capital. They may be going after only cash investors and not the qualified funds that we typically see in the iras. The first question we received from many of the investment companies was, how can I send funds to you guys? Because we are having a hard time looking for a custodian that accepts Achs. Okay, so let's jump right into it. One. Do we accept Achs?
[00:11:02] Speaker C: We do we accept Achs.
It is a touchy subject, I think, for many custodians, even for us from an individual level. We even had this happen this past week where somebody tried to send us funds for contributions.
[00:11:15] Speaker B: Yeah, you were telling me about that. Yeah.
[00:11:16] Speaker C: And then the bank pulled it back. Right. Because you have like three to five days, or there's a timeframe where the person who sends the funds can actually pull it back. And so that becomes a liability for sure for any company. The way we sort of look at it, from the standpoint of having a relationship with an investment sponsor or a company partner, that they're one in the same. But if we are building this relationship with an investment sponsor to have them come on board, company partner, they're sending us investors. The investors are opening iras to invest with their company. To me, that's the way we feel. It's a relationship that you built and a relationship that you trust. Now, obviously. Can that happen? Can they pull the money back? They're sending us money based on the interest, the dividends, whatever amount of income the client, for the client account, whatever the client is earning off of the investment that they have. With that company partner. Correct.
We have a bunch of company partners that actually each month send us bulk ach, like all the funds together, and then what we receive is an Excel spreadsheet.
[00:12:25] Speaker B: Oh, it just breaks it down.
[00:12:26] Speaker C: It breaks it down. And it says, x client gets this money. X client gets it and it breaks it down. It makes it very easy for us to deposit it into the client's account accurately and make sure that sounds like it's just streamlining.
Right. It's very easy. It's very streamlining. A ach today, there's no cost like a wire. There's banking costs to. Free is wireless, free is good. And a check is just so outdated and antiquated. You know, I agree with that.
[00:12:51] Speaker B: Listeners out there, don't send us a check.
[00:12:53] Speaker C: Don't send us a check. We don't really write checks anymore either. So over the years, we've reduced the amount of checks. We don't allow distributions via check anymore. It's either ach or wire. That's just what the world is becoming, more electronic.
[00:13:05] Speaker B: I see on the accounting side, they're always having to deal with the holding period, too. The waiting for it.
[00:13:09] Speaker C: Right. Waiting for the check to clear. Right. So you have to remember, too, when you're working with a company partner, you got this investment sponsor. All of these clients are making these investments because they are going to take the money that they're making, the income that's generating off of these investments, and they're going to use it to live off of. They are going to be taking monthly distributions and waiting for the company sponsor to, or investment sponsor to send us a check for it, then to clear, to make sure it gets to the client and comes out of their ira.
[00:13:37] Speaker B: We're already at day ten.
[00:13:38] Speaker C: Right. You're delaying the client being able to utilize the funds. Utilize the funds. Or we have a lot of company partners that the clients like to reinvest their money. Right.
[00:13:50] Speaker B: Go right back into the, goes right.
[00:13:51] Speaker C: Back into the investment. And so the long, longer it takes for that money to clear, the longer the client. You're doing a disservice to the client because the client's not making any interest or income off of that investment. It's just, it's sitting in there.
[00:14:03] Speaker B: It's like everybody's in a holding pattern.
[00:14:04] Speaker C: Correct. So for a lot of reasons, we allow it, you know, but part of that is we vet our company partners. We don't just work with anybody. We're very particular about those that we work with and building that relationship and making sure we have a strong relationship with those companies, that there's an amount of trust that goes into that for us.
[00:14:23] Speaker B: Well, that's perfectly said right there. So once again, we do accept Achs. So if you're an investment company out there that is looking for custodian to streamline the process and get those payments as fast as possible to the clients so that they can then turn, either use that money for what they need to or invest it back with you. We're able to do that here. Let's jump into the second question which relates to customer service. And I think you said it best when we were at the event. Bigger isn't always better in terms of the custodian. Everybody gets so excited when they see these big names and they've seen this company around for so long and then they find out that client is just client number 1104 and they're waiting on hold for 3 hours and all they're trying to do is probably get a distribution. So let's talk a little bit about our customer service here and what we're able to provide, not just to company partners, but to the actual clients themselves.
[00:15:10] Speaker C: Obviously that's what we do. We don't sell a product, we don't have anything to sell. The only thing we're selling is our service. So to us that's first and foremost you have to put that up front. And yes, bigger doesn't always mean better. We've never wanted to be this huge, big corporate company that can't control its customer service and isn't able to provide the level of service that we've always been accustomed to. So we like to keep it small and we streamline everything. We've put so much into our technology as well.
Technology is huge. So then you know the technology, if you put everything towards that technology and make things streamlined, then you can concentrate on customer service more, then you can have those bodies to be able to pick up the phone, to return your emails, to return your voice messages. So yes, bigger is not always better. I don't like when I call another custodian to find out information and about account and I have to wait for 3 hours on hold or we'll have a custodian give us a call because they want to check the status of something and I have to call them back. And I'm just one of hundreds of calls. Like I don't even know what button to press.
[00:16:15] Speaker B: I think one of my favorite ones is like, oh, can you fax that to us? What? Yeah, you're still doing stuff via fax.
[00:16:20] Speaker C: Yeah.
[00:16:20] Speaker B: Or the best one is we only check our fax once a week. Oh, that's great.
[00:16:24] Speaker C: Talk about streamlines for our checks. Or bank authorizers. Authorizers. Twice a week. Like, that's. Yeah, that's not happening here.
[00:16:32] Speaker B: The other way is for any company partner or potential investor out there. Go check out the reviews. Go look at the better business bureau. Are they accredited? Go look at Google. How many reviews do they have? How often are those reviews being left? And then if you do see any negative reviews, really break down the negative review. Because why? The one thing I can tell you is that most people like to leave a review when it's a negative experience. It takes a lot more for people to write a good review, I can say this, than a bad review.
[00:17:02] Speaker C: And sometimes people are snap when they have a bad experience. That's the first thing.
[00:17:05] Speaker B: First thing they jump to do is.
[00:17:06] Speaker C: Go and write a review partner. And I think, too, I don't think we like to hide from the negative reviews either. I think any review is important, whether it's because we learn from our negative reviews. There may be something to that. Maybe.
[00:17:19] Speaker B: Yeah.
[00:17:19] Speaker C: I need to go back and check the customer service team. Maybe I need to go back and review the history of the account. Sometimes what we found is a lot of times, nine times out of ten, it's a miscommunication between us and the client. And then we can go back around and make sure we contact that client and make sure we make it right with them however we can and make sure that we're clear on our communication. So I don't think it's, you know, we definitely don't run from it. And I actually, those are the ones I like because I learned something about our company.
[00:17:49] Speaker B: You really like to address those?
[00:17:50] Speaker C: I do. I like to address those from internally and to our clients and let them know that we're addressing those. That's part of the reason why we do our client surveys, right? So we can figure out what's going on. It's not just all, you know, butterflies and rainbows all the time. We have stellar reviews and we work very hard at what we do. But there are those ones that come out that aren't so positive, and we want to make sure we address those and get in front of them. For sure.
[00:18:12] Speaker B: Definitely. Let's jump over to the last question, or not really last question, but explain how we do this, because I know a lot of company partners, investment sponsors, they have a very hard time understanding the IRA business itself. They think it's hard because the entire time they've always sold cash. Everything's cash for them, which is easy. You know, it's just a wire. You're placed. We're all said and done. It can happen in a day where that's not always the case with qualified funds such as an IRA. So the biggest thing I want to touch on is that you don't have to be a professional in the IRA industry. That's our job. We don't want them to do that. Keep selling how you are selling. All you have to do is just use this as an extra tool.
[00:18:54] Speaker C: Correct.
[00:18:54] Speaker B: Whenever you're selling, go through the whole entire process. If you get stuck and the client says, I don't have the minimum $50,000 to invest with, you don't hang up the phone, then jump to your next thing.
[00:19:05] Speaker C: Do you happen to have qualified funds?
[00:19:06] Speaker B: You have qualified funds. Oh, you have some funds over at Charles Schwab, TD Ameritrade. Oh, you have an old 401K, whatever it is, those are all means of being able to invest with you 100%. That's when you get on the phone. You can either give us a call, we create consultation pages to streamline it. If you're on the phone with a client already, all you have to do is put the client's information in. You can book the time there, and one of our investors or one of our representatives will just give them a call during that time. And we go over the process.
[00:19:33] Speaker C: Correct.
[00:19:33] Speaker B: We go over the transfer process, the application, the entire thing. We go over it. That's not for them, 100%.
[00:19:41] Speaker C: You know, we don't expect them to be knowledgeable, all knowledgeable about the process of using an IRA. All you have to do is put it on the table for them, let the investor know that this is an option. Nine times out of ten, they've got that IRA. And here's another source of capital for your company, and we'll take it from there. Send us their name, send us their email and their telephone number, and we'll reach out to the client and we'll get them through the process just as quickly as possible.
And so, yeah, and then the reporting, like you said, we do provide that to all those companies that we have partnerships with so that they know exactly where they are in the process. There's definitely no questions. We do that daily reporting. One big reason is to eliminate the back and forth in emails constantly for the company partner not to have to stress so much and have to keep asking, what's the status of this are these funds in, especially the ones that.
[00:20:31] Speaker B: Have huge sales staff.
[00:20:32] Speaker C: Correct.
[00:20:33] Speaker B: That are bringing in so much volume.
[00:20:34] Speaker C: So much volume. They don't have time for that. They don't have time to keep going back and forth. So we provide all of that information on reporting. Depending on the volume you're bringing to us, it could be up to two or three times a day that we're providing that reporting because we know statuses change all throughout the day. We get funds in, investment documents are received, all these things. We want the investment sponsor to be in the know. Time is money. We get it. We were born. Preferred trust company came about because we had a real estate company that needed a custodian that would work fast. They couldn't figure out why it was taking the custodians so long to send them money funding for investments. They were losing deals because the custodians couldn't fund the investments.
[00:21:17] Speaker B: Time is of the essence.
[00:21:18] Speaker C: That's right. Time is money. And so we understand the real estate transactions which made why preferred trust company came to be in the first place. And so we really hone in on that. We understand these transactions. And believe me, for us too, we don't want to be sitting around waiting and chasing. We want to get these things rolling every day that people are losing money. I mean, they had their retirement accounts with us for a reason, because they're trying to build their retirement, not lose money.
[00:21:49] Speaker B: Right. Well, I think that's it for today. Again, thank you to all of our listeners for subscribing, getting all the notifications. When we drop a new episode, it's really important for us to make sure that, you know, we're providing a really good service here, but we're also providing the education. That's the whole point that we started this podcast, is to make sure that people understood and deserve the free education when it comes to self directed iras and retirements. Again, thanks, Chris, for joining us today. I loved going to the event. It was actually our first event. We knew.
[00:22:17] Speaker C: We worked together.
Salt Lake City in the snow.
[00:22:22] Speaker B: Yeah, I'm glad to be back in the desert.
[00:22:24] Speaker C: No kidding.
[00:22:25] Speaker B: So again, thank you to our listeners, and we'll catch you guys on the next one.
[00:22:28] Speaker C: Thanks.
[00:22:30] Speaker A: Thanks for joining us for another episode of PTC Point of View, where retirement savers meet alternative investments. Know someone who's struggling with their retirement strategy? Tell them about our show. Can't wait for the next episode. To learn more, visit our
[email protected], or give us a call at 888992.
