Coffee Connoisseur Brews Success
with Self-Directed IRAs

If you went to visit Jim O’Brien at work 20 years ago, you would have been lucky to see him actually drinking a cup of “Joe” at one of his coffee shops in central Florida. For 15 years, Jim successfully owned and operated 10 shops. While he had a love for the business there was no time to stop and enjoy the coffee.

Plus, while the shops were profitable, they weren’t making him rich. In coffee, “I worked an awful lot of hours for a little bit of money,” says O’Brien.

That was all before he discovered real estate investing and the ability to combine it with self-directed IRAs.

$80,000 Profit in 30 Days – Tax-Free

O’Brien had always had an interest in real estate, but hadn’t taken the plunge. Eight years ago he switched from coffee to real estate, becoming a real estate broker, and hasn’t looked back since. Now he says he “makes a lot more money, in a lot less time.”

Real estate, as with coffee, ignited a passion to be successful. It was good fit from the start. Helping Jim succeed was his discovery of a strategy that is little-known to most brokers. O’Brien was introduced to self-directed IRA investing.

“I think it’s a fantastic opportunity that a lot of people just don’t know about,” he says.

Self-directed IRAs are a great tool for real estate brokers, not only for themselves, but for their clients as well. Brokers that are familiar with self-directed IRAs are able to provide yet another valuable service to their clients.

One of Jim’s earliest self-directed IRA deals was in partnership with a fellow broker. They had located a piece of raw land in Florida that they believed could be profitable if properly rezoned. Using their IRAs in partnership they were able to purchase the property for $1,080,000. Within 30 days they were able to complete a zoning change that made the land more favorable to sell.

Days later they found a seller to purchase the property for $1,850,000 – more than $800,000 in profit that was tax-free thanks to being purchased and sold with their IRAs. Because his self-directed IRA owned a percentage of the property, O’Brien’s account received $80,000 tax-free.

Taking Advantage of the Credit Crunch to Survive in Today’s Market

While that kind of deal may be harder to come by in today’s market, O’Brien is still finding ways to be successful. The foreclosure crisis has flooded the market with great investment properties that have O’Brien ready to pounce. The only problem? There are more properties than he has funds.

O’Brien’s solution? He has begun to utilize the Private Bank Concept to make his deals happen. The Private Bank Concept relies on two things, people who need money for deals and investors with money looking to invest.

For example, if you have a deal in mind, but lack funding, then you seek loans from other investors’ self-directed IRAs to provide the needed funds. You receive the money needed and the investor receives an acceptable rate of return for the investment.

“Knowing how to raise the money is the key,” O’Brien says.

O’Brien uses this concept to his advantage. He is about to wrap up a deal in which he was able to personally borrow funds from one of his investor’s IRAs for a $120,000 rehab project. Thanks to the low cost of obtaining the capital from a private investor, Jim is able to list the property at a price that should easily sell, even in today’s market, and still turn a sizeable profit. Plus, his investor’s self-directed IRA profits from the interest O’Brien pays on the loan.

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Disclaimer:Disclaimer: Equity Trust is a passive custodian and does not provide tax, legal, or investment advice. It does not endorse or recommend any contributor, company, or specific investments. Any information communicated by Equity Trust Company is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your legal, tax, and accounting professionals.