Equity Trust Roth IRA Holder Stars in His Own Success Story

Looking out from the balcony of his corner office in West Los Angeles, Jon Riley remembers being bitten by the acting bug when he first came to California. He actually got some acting gigs, attended film school, and wrote and filmed a couple of his own movies.

“It was a lot of money going in but nothing coming out,” Riley says of his experiences.

While he still wouldn’t mind a bit part in the film industry, these days the successful Equity Trust client is more than content to star in his own real-life drama – one that serves as a great “how to” for the rest of us…

Act 1: Start Your Own Business

Soon after moving to the West Coast from Aldine, Texas, the wannabe actor earned his master plumber’s certification. It proved to be a brilliant move that led to the opening of his “retrofitting” business – a niche service accommodating California’s top 200 real estate agents and countless homebuyers.

“California law dictates particular conservation and earthquake-resistant measures for resold homes,” notes Riley. “We go in and install 1.6 gallon toilets, automatic gas shut-off valves and a few other items to bring the homes up to code.”

Even in a challenging real estate market, the business continues to flourish.

Act 2: Take an Active Role in Building Your Retirement

Back in 2007, Riley converted his retirement savings to an Equity Trust Self-Directed Roth IRA. Since he was familiar with real estate, it seemed like a good place to begin self-directing investments.

“My Roth started out around $15,000 and now, in two short years without contributing in 2009, is getting close to $60,000. Forty-five thousand dollars tax-free is attractive but it doesn’t just happen,” he says.

According to Riley, due diligence and tenacity are keys to success. That profit came from a property he purchased in Big Bear, California in May 2008 for $18,500 and sold in April 2010 for $40,000. Add to that the purchase of 2,500 shares of Ford Motor Company stock for $2 in October 2008 and a sell price of $9 in November 2009 for a profit of $17,000. A few other well-timed stock purchases/sales brought the tax-free total up to the cool 45 grand.

After attending Equity University’s Networking Conference in 2009, Riley and his wife, Denise invested $15,000 each in an LLC created with other investors. The LLC bought a house in Glendale, Arizona and flipped it two weeks. A current investment for the LLC is some raw land in Florida. The couple hopes to post a 10% return by the end of 2010 with the LLC venture.

Most recently, Riley used his Roth IRA to purchase three additional properties in his home state:

• Two are in familiar territory – Big Bear. The first is a 7,800 square-foot parcel of raw land purchased for under $8,000. He expects to sell the land to one of the property’s neighbors in the price range of $25,000 to $40,000. The second property is a $20,000 lot in a great community with a mountain view.
• The third property, near the town of Arrowhead, was purchased for $11,500 and has a view of Lake Arrowhead.

That brings Riley’s total investment in the three properties to $39,500. He expects to see a return to his Roth IRA of $80,000 to $100,000.

To help fellow Self-Directed IRA holders duplicate his success, Riley offers two quick guide points. “First,” he says, “contribute the maximum to a Roth IRA each year. Next, look for any investment – no matter how small – where you can double your cash. Many investors who’ve made a lot of money started out with nothing – just like you.”

Act 3: Keep Moving Toward New Goals

Going forward, Riley has plans of adjusting his approach for the benefit of his wife, himself and two sons.

He and Denise have started The Team Riley – a real estate endeavor that matches homebuyers with real estate agents who possess strong knowledge of particular residential communities and geographic regions. Those top 200 agents his retrofitting business serves turn out to be a great starter network.

And with his knowledge and love of real estate, Riley will continue to purchase properties with his IRA and plans to open self-directed HSAs and Solo 401(k)s. He’s also beginning to investigate diversifying his portfolio by investing in tax liens. In fact, he plans to attend the 2010 Equity University Networking Conference to learn more about the subject.

“When I was a kid my dad tried lots of get-rich-quick schemes – herbal supplements, detergent, you name it,” says Riley. “He’s the biggest influence in my life because he taught me tenacity and to never give up. The investing that I do isn’t a get rich quick thing, it’s a get-rich-slow approach but when I tell him about it, he always says good things are going to happen.”

Sounds like a great ending.

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.