265: Self-Directed IRAs Explained: Growth, Taxes & Opportunities with Matt Calhoun

Big Mike Fund Podcast
Big Mike Fund Podcast
265: Self-Directed IRAs Explained: Growth, Taxes & Opportunities with Matt Calhoun
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Join Big Mike on the Big Mike Fun Podcast as he welcomes Matt Calhoun, Director of Business Development at Equity Trust, the leading self-directed IRA custodian.

In this episode, Matt dives into the latest trends shaping alternative investments, including the rise of crypto, precious metals, real estate, and debt funds. He explores how Equity Trust is adapting with new asset classes, educational efforts like IRA University, and innovative options like the Universal IRA. From navigating market volatility and tax considerations like UBIT/UDFI to spotting opportunities in a shifting economic landscape, Matt offers actionable insights for investors.

HIGHLIGHTS OF THE EPISODE

00:00 – Welcome to the BigMikeFund Podcast
00:19 – Guest Intro: Matt Calhoun

01:29 – Industry Overview and Growth

02:38 – Asset Classes in Self-Directed IRAs

04:49 – Trends in Investment Preferences

06:45 – Shift Back to Real Estate

08:12 – Precious Metals and Market Trends

09:25 – Equity Trust’s Educational Efforts

11:42 – Market Volatility and Self-Directed IRAs

13:02 – Product Innovations

15:44 – UBIT/UDFI Tax Considerations

19:43 – Institutional vs. Retail Divisions

23:03 – Universal IRA Option

25:03 – How to Connect with Equity Trust

25:33 – Book Recommendation

26:28 – Final Thoughts on Cash Flow and Investing

30:11 – Closing Remarks

If you found this episode substantial and want to dig deeper into real estate, or maybe you want to discover better investment opportunities, be sure to check out www.tempofunding.com.

CONNECT WITH US:
Website: www.tempofunding.com
Youtube: https://www.youtube.com/channel/UCnJkdVoOsUy85ydkmot9iVA

LinkedIn: https://www.linkedin.com/in/mzlotnik/
Facebook: https://web.facebook.com/TFmanagementgroup/?_rdc=1&_rdr

X: https://twitter.com/management_tf

CONNECT WITH THE GUEST

Email: m.calhoun@trustetc.com

Phone: 239-333-4461

Website: https://www.trustetc.com/


Full Transcript:

Mike Zlotnik: Welcome to the BigMikeFund Podcast. I’m the Big Mike, Mike Zlotnik, and today it is my pleasure and privilege to welcome Matt Calhoun from the Equity Trust. Hey Matt

Matt Calhoun: Hey, Mike. Thanks for having me. 

Mike Zlotnik: Thanks for coming on our podcast. Matt is the director of business Development at the Equity Trust, and we are going to talk about latest and greatest in the world of IRA Custodians equity trust.

Uh, you think you’re the largest IRA custodian unless somebody else acquired other shops got bigger than you. If I remember correctly, you were the largest of self-directed custodians, so I’ll turn the floor over to you. What’s new with you personally? Always you know about you and the family first, and then we will move into the business. What’s latest and greatest? 

Matt Calhoun: Yeah, things are, things are good, things are busy. Uh, I have three kids at home, so all three kids under the age of six. Um, with six rental properties that I self-manage as well as full-time job here at equity. So, you know, definitely using my time wisely, um, each day.

So things are good there. Um, as, as far as like the industry as a whole, it keeps us busy. Um, we’re growing. Getting into different asset classes and just finding ways to, to get word out. Um, in a lot of times in the circles we run in, people do know about IRAs. They know you can use IRAs for alternatives.

Um, but as a general population, most people just don’t know it still. And it’s about getting the word out. Getting on podcasts like yours or just in general, speaking to people every day about the power of getting an alternatives with their retirement accounts. So yeah, doing well there. 

Mike Zlotnik: Well, that makes sense.

So most of my audience. Has experienced knowledge at least of the alternative, uh, custodians or self-directed custodians versus, you know, bank of America or JP Morgan Chase. You set up an account there and it’s self-directed. You just can buy stocks and bonds yourself, right? That’s, that’s about mutual funds with alternative custodians or self-directed custodians.

Folks can do pretty much anything. Well, I’ll turn the, the floor over to you. I guess it’s not pretty much anything there. There’s still limitations, but just give us a quick overview. And then you also mentioned that I guess you’re adding some more asset classes. What, what, what’s new? What, what, what did you add in the last, I don’t know, a year?

Has anything changed? Has anything gotten, you know, before it was a hot topic allowing people to buy crypto. Uh, and some custodians got in and then they pulled out. And, uh, I’ve seen that rodeo before and I don’t know what other asset classes, precious metals have been around for a long time. Real estate has been around a long, long time.

Both equity and debt, private funds. Mm-hmm. Like are, are, have you added any other new asset classes that folks can actually invest into that they couldn’t before? 

Matt Calhoun: So won’t surprise. So we’re subject to whatever the US government allows, retire accounts, and they really have never updated anything. Uh, crypto’s never mentioned, so most of this just involves around investors get.

Curious. They want to chase bigger returns. They want new asset classes, and the custodian has to find ways to evolve and allow that. Uh, we don’t get go like government guidance in most cases. We adapt to some litigation here and there, but for the most part, we’re up to our own devices. So, you’re right, cryptocurrency is still kind of the big one.

I’d say most custodians now have found ways to hold crypto. And you’re right, a couple years ago, they’d find small ways they’d outsource it. Um. Equity is one who definitely has taken a, a big stand into getting into the crypto space, whether you’re supporting back offices for people who are doing their own, um, or just kind of offering it through third party providers.

So yeah, crypto is definitely, I think, grabbed on. There’s no guidance, there’s nothing that’s said, yes, this is definitely viable class. What’s really directly somebody, the US government is you can’t hold life insurance. You can’t hold collectibles, and then you’re kind of left to figure it all out from there.

Um. We kind of treat crypto in similar ways to precious metals. As you mentioned, precious metals being probably a top two or three asset class in retirement accounts in, in our space. Uh, and we kinda treat it the same. Try not to have personal possession, have a third party involved, things like that. But essentially we’re guessing at that point we’re just making sure we can, you know, hold it in the retirement account and not get the account holder in any trouble.

The government there. As far as new asset classes, people are just getting into new asset classes or they’re moving out of things they were doing and getting into, into debt, getting into real estate, private stocks, and we see some startups here and there, but those kinda go in waves. Um, right now I feel like we’re riding a debt wave where people are getting into debt funds and debt debt investments, but real estate’s always a.

A solid investment for us. It’s always holding its percentage of what our investors are doing. Um, and the precious metals is always kind of like a good third spot as well. 

Mike Zlotnik: Yeah. I appreciate the overview. Uh, I, from what I heard at least, this is very consistent with what’s been going on in the industry in general.

Um, many investors have been. Um, somewhat hurt in the last, you know, few years with the, uh, equities in the, in real estate, having adjusted commercial real estate, especially, uh mm-hmm. With higher, for longer interest rates. Um, and then the banks have tightened up. So the private credit mm-hmm. Essentially what you just said, debt funds mm-hmm.

Have been a way to replace where the bank stepped out. And, um, a lot of capital from self-directed IRA has, has flown into, uh, these lending funds simply because, uh, equity felt like it was a lot of people got burned and hurt. So the, the safer path is of course, debt funds that loan in first position. Uh, so it’s a natural kind of, uh.

Flight to safety per se, and mm-hmm. Sounds like that’s exactly what you’ve seen. Although now this is interesting. I’m ju I, I would love to hear your perspective. I don’t know if you’re beginning to see this a little bit more loosening up. In other words, investors realizing that many evaluations of reset whether what people wanna call something else, but it’s been a reset.

Mm-hmm. So now, uh, real estate. In my book, in my understanding, is already very attractive on a relative basis. If you buy right, if you get a deeply discounted motivated seller, you can get into a deal at a great basis. Uh, you could be make way better upside than just being, being purely a lender. Have, have you seen any, any initial shifts?

’cause it takes time. All this stuff takes time. Yeah. Have you seen a little bit more interest into these deeply, you know, any, I know you guys don’t. Evaluate opportunities, so you can’t tell Yeah, it’s a good deal or a bad deal. You, you, you just know, uh, what percentage went into that file, what percentage went into sort of an equity deal.

But I’d love to hear your perspective. Yeah. At least seeing, you know, any light in the tunnel, uh, yet. 

Matt Calhoun: Yeah, and you’re right. We, we don’t. Basically predict things or look there, but we do see trends. Um, it’s easy to see when people keep calling you every day. You say, well, I’ve had a lot of those phone calls lately, and we kind of see one they invest in, uh, 2024 for commercial real estate.

No surprise was down for us. Like not as many people were getting into those deals. Uh, I’d say Q4 and early in Q1 we, like I said, we’ve seen the debt increase quite a bit. Um, I do see where we’re starting to come back on commercial real estate. Um, it does seem like a. A different conversation of going to quality, but it seems like people are going to quality providers now.

Um, you, you know how real estate is. I’m, I’m a real estate investor myself. Um, once you’re in the asset class, it’s hard to get out. You want to be back in. So if people are on the sidelines right now, um, they’ve been waiting for a year to get into another real estate investment. They’re looking right now to get into more.

So I think the buying opportunities that are there and people are flocking to good solid providers that they know they can invest their money into. So. I do think for 2025, we should see a good comeback in, in that space for IRAs as well. 

Mike Zlotnik: Yeah, I gotcha. And of course, recency bias, right? You mentioned practice metals.

Practice metals have done really well. It’s one of those things where when something is, has done well and hot people continue to pile up. Um, and of course the future is unknown. Uh, gold has been, you know, a great, in a great bull run, but we mm-hmm. We’ve had, interestingly enough, we, we, we just did a presentation.

On relative, relative value, and we can be subjective. You, you, you, you, you have to be ag uh, I guess agnostic of the assets. You, you, you can’t really pick and choose. It’s not your decision. It has nothing to do with you. Correct. We can talk about opportunities and, um, you know, I just, I’m just gonna mention this.

I. Uh, for no other reason. You know, I saw Goldman Sachs, uh, predicting, you know, gold going to 3,100, but we are, you know, almost 3000. So it’s a little bit of mo by the end of the year. So it’s kind of like there’s still room to, to run out. But the, the great bull run of 24 in precious metals, it’s probably, you know, it’s very hard to replicate, lemme put it this way.

Sure. So, just curious at which point people will, um, will, uh, uh, start adjusting again and then back to, uh, uh, sort of. What is Equity Trust doing to educate investors? Uh, do you, do you continue to bring on, uh, operator? Sponsors? Uh, do you run your webinars about different strategies? Uh, some stuff is consistent and, and easy to talk to.

Precious metals is a great story. Of course. Talking about 24 Bull Run, easy. Uh, are you doing anything to basically bring the diversity of breadth of opportunities to investors and, and how do investors choose, at least in your, in your observation, have, have you seen any, any interesting, um, trends? I’m just, just, just, you know, picking your brain.

Matt Calhoun: Yeah, no, of course. So equity as a whole is, is pretty large, so I. Working in one division of equity, which is kinda the institutional side. We do a little bit more, I’d say grassroots, uh, education side. We’ll go to smaller events, larger events, and speak to people directly. Uh, we’ll do some webinars. We’ll bring some operators on occasion just to talk about some topics.

Um, but a lot of what we’re doing is, is educating small groups. Most of those investors are referred to us through deal sponsors. Um, but equity as a whole has like an IRA University, um, programs. Courses you can buy that. Talk about financial literacy and ways to get in. Uh, we have a team that travels around at least three times a week and does workshops through the money is program or different things.

So, um, yeah, it’s kinda all hands on deck. Get out there and, and get the word out, um, to get the industry going. It’s just good for the industry as a whole. Like I said, depending on how you measure it. Equity is one of the largest, uh, self-directed IRA custodians and a lot of time that’s, uh, all boats, you know, go with the tide kind of thing.

We get that education out and it’s going to. Boost self-directed IRAs across the country. Uh, so all that’s, you know, just educating everything. But yes, um, on the website there’s ways to see interviews with different experts as well as sub our team puts together. Just try and talk through account types, asset classes you can invest in Roth conversions, just different things that kinda apply to all retirement accounts, but some of it’s specifically to alternative investments with it.

Mike Zlotnik: That makes a lot of sense. And today, I, I would think there has to be a lot of talk. Again, we’re recording this, um, in, you know, early to sort of mid-March, well it’s mid-March. Mm-hmm. And, uh, the market is stock market. So significant volatility. It should be, it should be ringing a lot of bells and saying, wait, wait a minute.

Uh, yeah. Main Street, wall Street, going from a Wall Street may be the time to get into the main street and take control over your self-directed, uh, IRA. And you know, you have a lot of more options when, when the capitalist with the custodian, like equity trust and back to the real estate again, this story of.

Uh, stock market fees on the s and p 500 being over 30, and the market could be significantly, you know, up for a significant correction. And those folks, we’ve been too complacent. It’s time to wake them up and put them back into consideration of custodians and back to real estate. Right? 

Matt Calhoun: Yeah. For the last.

Two years, we have seen increases in alternatives. But it always kinda makes me wonder why. ’cause for the most part, you could have parked your money in the s and p 500 and made 20% each year. Um, those days are probably gone, at least as we’re saying right now. Like I said, in March. Um, it’s been a rough couple weeks in the market and I think people are still kind of licking their wounds, but now it’s time for them to like find out how am I going to make diversify?

How am I actually gonna get better rates of return? The days maybe of just setting it in the market and everything goes up, might be over for a while. 

Mike Zlotnik: Yeah, that makes sense. Uh, what other, you know, innovations, uh, any, anything new from the product perspective? ’cause most of the, you know, traditional IRA Roth, IRA, obviously a bunch of, um, you know, self-directed, uh, SAP plans, solo case.

Mm-hmm. Um. You doing anything new like group 4 0 1 Ks? I’m, I’m just kind of thinking out, out outside of the box checkbook IRAs, they’ve been around for a long time. I’m just curious, you know, what’s been bread and butter and what’s, what’s, what’s new, what people have been doing lately that, that you allow them through.

Obviously, I. 

Matt Calhoun: Yeah, of course. Uh, on the macro side, I think the industry is starting to catch up with some technology. Um, it’s been a, it was an industry that was a slow moving for a long time, passing paper forms back and forth. So I think most custodians are adapting to DocuSign and, and getting portals created.

So electronic 

Mike Zlotnik: submissions, electronic submissions of the by bidirectional letters and all that stuff. 

Matt Calhoun: Yeah, which isn’t groundbreaking stuff, by all means. It’s been around a couple 

Mike Zlotnik: of years now, it feels like. Yeah. 

Matt Calhoun: Um, it was just a slow, a adaption for, for that industry, but I think most custodians that you work with are going to have that at this point.

Um, that was kind of like a, you know, the top end had it for a while. I think everyone kind of has that now. Um, luckily not too much on the regulatory side has changed things. Um, you know, we did have the. Coming down the pipeline. They did pass where you could do a Roth sep. Um, I haven’t seen custodians that have actually brought that to the marketplace yet, but it has been passed by, by Congress where you can actually make Roth SEP contributions.

Before those were always pre-tax. Um, and I, you know, hit up our product team quite often about just, Hey, when can we get that? When can we get that? Just ’cause it’s a big deal for, for people who are self-employed. Being able to put a larger sum of money into a Roth bucket would be a big deal. Um, we have the Roth 401k, and, and that’s not changing, but it just gives an extra extra option for people, um, smaller to, to equity.

What’s different? Um, the institutional division, like I said, that I am working for, we kind of specify in one private equity, private debt by, by sponsors. Um, but we’re. We’ve always had a 10 31 arm, but we’re kind of putting that to the forefront now. That was always something we did kind of locally to our, to our offices.

Um, we’re kind of taking that nature. How is 10 

Mike Zlotnik: 31 relevant to self-directed, uh, accounts? The general don’t get taxed in theory. Right. So why, why is 10 31? 

Matt Calhoun: Yeah. Correct. Some of the business systems are the same, but Yeah. Well, we rarely ever do a 10 31 for an IRA, so it’s kinda just an extra business option.

Mike Zlotnik: Why would anyone want do a 10 31 rra? Why can’t they sell an asset and then just, just use the money to buy an asset? Yeah. Uh, instead of exchanging it. 

Matt Calhoun: Yeah. As I say, it’s pretty rare. We’ll do a few a year, but if a IRA obtains leverage to purchase a rental property is the easy example. A ubit UDFI tax can apply.

Um, you can actually 10 31 that. So instead of having that tax, you can actually defer the UBIT UDFI tax. On a rental property, so doesn’t always happen. But if your IRA did take out a non-recourse loan to purchase rental properties, a 10 31 could be an example. 98% of our exchanges we do are, are outside of retirement accounts.

Mike Zlotnik: Um, well on, on that front, and I don’t know if you have this data, but I’m just curious. 

Intro: Yeah. 

Mike Zlotnik: Um, so spoken with a lot of self-directed I investors who invested into. Some equity or own, you know, a rental. Mm-hmm. With an IRA without a clue that there is ubit UDFI that applies in theory. Yeah. Right. And then they sell exit and a lot of people don’t do anything.

They don’t file. Right. And I’m just curious, have you seen a lot of people filing? So where. Theoretically it’s due practically, uh, you don’t tell ’em to file, not your business. Right. I’m just curious. But, but if, if it is a, is a filing right. That SCP has to file and you have to make a payment. So are you observing that’s happening?

People actually sell a rental property with a mortgage and then they, they wind up actually filing. I’m just curious, just you seeing this in any kind of meaningful volume. 

Matt Calhoun: Yeah, so we’ve put systems in place to kind of check that. If we know there’s a mortgage on the property, we’ll update them. Hey, make sure.

All of our clients who have mortgages on their rental properties, we tell ’em they have to have a, a filing. Um, and we do a service. We’ll create e So you have to have a separate EIN number for the IRA ’cause that has to do a nine 90 t filing. Uh, we can even outsource the nine 90 t filing. So we have systems in place that will remind them that’s due as well as if they want to use our outsourced accounting team to do that.

They can do that. File, the EIN number file, A nine 90 T. Um. The, the complication becomes if, if your custodian just didn’t know it existed and you’re kind of on your own. You, we mentioned the checkbook, that would be an option where the custodian may not even know what’s going on with the rental property.

Um, and then as far as like sponsor led ones, you know, a lot of times we don’t get the K ones or we’re not checking every single K one to see when you ubit would apply anything like that. So that would be subject to the, the investor to check on their own. Um, if we’re let, if we’re known ahead of time, so if a sponsor says, yes, my deal is going to generate some ubit, um, we’ll alert the investors like, Hey, it’s, it’s filing time.

You should check your K one just to see if you need to file the nine. It, so we do our best. Um, at the end it is, you know, the responsibility of the investors to see, um, there’s probably times where, like you said, they’ve, they’ve done it and no one’s caught it or anything else. It really would just be if they get audited, it may be noticed then.

Mike Zlotnik: Yeah, so I actually, uh. Glad to hear that you have systems and processes in place to inform investors that your bid might be applicable and they should consider. Mm-hmm. I, I just seen many custodians don’t even, don’t even do that. Yeah. And then, uh, it’s, you know. And how many area accounts get audited?

Very few. So, uh, you know, if anything changed lately, uh, I’d love to hear that. But most of the times. You just don’t, don’t see custodians being audited unless you know something really huge. It is a big problem with, you know, with a borrower, with the owner, not the borrower, the owner. Mm-hmm. So they go through massive personal audit, and then they start auditing IRA accounts.

But beyond that, it’s just kind of a, it’s a sleeping, you know, quiet, uh, type of, uh, you know, but. Uh, let’s move on. It’s just kind of my observation. Yeah, yeah. The fact that, that, that you, you have system and processes to help investors make the determination. That’s great. Uh, what else, what else is, um, interesting new, um, sort of from.

Yeah, opportunities. Yeah. And also you mentioned institutional division versus what is, is there another retail division? What, just curious. 

Matt Calhoun: Yeah. Yeah, so there’s a retail division and then what we would consider even like larger enterprise opportunities where those would be like large crowdfunding platforms, API, so, so we kind of break it into three different divisions and that’s really just make sure the right service representatives get in charge and we’re able to put the right technologies in place like.

A full API integration or platform creation is different. We don’t handle on our side, but there is a division that will handle those opportunities. Um, and we just provide the best tools we can to, to sponsors, whether it’s marketing materials, webinars, different things there. Um, we do custom applications.

So if we are sending a real estate fund, we’ll embed the fund documents into our application. That way the investor can only do one application. They don’t have to bounce back and fill out SubD docs. I. Authorizations here, transfer forms, they just can do it all at one time, and that just makes a better investor experience along.

And then the retail is able to have those conversations about getting leverage on your rental property or buying gold or crypto on there. So it just helps tailor the client experience a little bit more. And then as the industry as a whole. Yeah. There’s, there’s been some consolidation definitely in the, in the real estate space or in the, uh, self-directed space.

Um, I think some companies, some of it’s just been, ownership has reached an age where they wanna retire. And some, you know, buyouts have been the way to go. My company was bought out a couple years ago too, so we were Midland Trust and then Equity bought us and made us the institutional division, I think almost, you know, two and a half years ago now.

So that’s definitely taken place. Um, so some people who’ve signed up with a custodian may have a different custodian now by choice or not. Uh, so that’s definitely been an update in the industry the last few years. 

Mike Zlotnik: Yeah, I’ve seen this and you know, I’ll add one comment. Uh, I’m not trying to to bash any custodians we’ve seen.

These acquisitions and, uh, migrations have been very, very difficult. Uh, especially asset titling and and number of other services. You know, one company buys another. In theory. It’s all nice and easy. In practice, it’s very painful and people wind up, actually, I. Because, you know, considering moving on to another custodian mm-hmm.

Because the new custodian is very different experience from the, you know, from the previous custodian. In some cases it, it’s, it’s positive. In some cases it is a rocky road and fees change, service level changes. They used to, you know, something, the relationship manager changes, et cetera. Uh, and do you have that VIP service, uh, for folks who need, you know, strong relationship manager?

Is this part of the, uh, service? 

Matt Calhoun: Yeah, so we’ve kept, back in the days in Midland, that was kinda our big thing, was we wanted one service rep for, for the client. Um, that way they have one point of contact and we’ve kept that going. So one point of contact, there’s no way a hundred number that you have to call and you might get a different person and it creates a consistent experience.

But also that person actually knows what you’ve invested in and knows you. Um. Downside. The worst client experience is when you call in, they just have no idea what you’re doing and in a passing you around to someone else. So keeping that direct point of contact has always been important, and we still continue to do that.

Mike Zlotnik: Yeah, I got you. I’m just curious. Again, not familiar enough with the equity trust. Um, so just, just going back to some, some, you know. Uh, situations where people wanna mix up alternatives and traditionals. So traditionals in the past, they just keep with a traditional custodian, and then you go into self-directed, you know, into alternatives.

Yeah. And it, it, it would be, um, company like Equity Trust. Do, do you have a, do you have a link? In other words? Uh, people can open one account and then they, they wanna trace stocks or this point of time where. They feel like they’ve done well in stocks, they gotta get out quickly and then move into alternatives.

You have a plug and play other than, okay, just go sell your stocks, get, you know, get cash, let’s do a transfer. And then until that happens, um, uh, so do you have that option? I’m just curious, does it exist? 

Matt Calhoun: Yeah, we do have that option. I mean, I will say people can still keep those old IRAs and, and move between their Schwab account.

They really like it. Um, but we have two different options. We actually have a sister company with. Equity brokerage that can hold it directly in-house. And then we also outsource it to groups like TradeStation one one. So they can do both. They have the, the equities options through a couple different places that we can all be held in one account.

It’s referred to as Universal, IRA on our, on our website. Just a nice marketing term, but mainstream. Basically they say you can hold public securities with your private all under one account. Um, some people don’t really like the idea of consolidating it down to one account so they don’t have statements from a bunch of different custodians, RMD totals from our different custodians.

So yeah, we have those options in place to, to hold it all under one account. 

Mike Zlotnik: Yeah. Gotcha. It makes a lot of sense. It’s actually universal. That’s a term. It’s a, it’s a, it’s a good term for the, uh, uh, for a broad area that gives you multiple options. Yep. Um. Any other comments? Um, any good book you wanna share?

Any, any, any kind of new, uh, uh, just any wisdom and, and, um, you know, how would folks reach out to you to wanna learn more about equity trust, about the offerings, maybe universal IRA Right? Just what’s the best way to reach out? 

Matt Calhoun: Yeah. For, for me directly. Uh, I dunno if you have show notes or anything, put my contact info on there.

Um, can walk people through different questions they have. Um, our website, we still have the, the Midland Trust website that’s active, but trust ETC is the general website as well. Um, if reach out, trust et 

Mike Zlotnik: com, right? Trust et.com. 

Matt Calhoun: Yep. Um, and I’ll provide a contact to my, uh, my calendar as well if I wanna book some time to, to talk.

Mike Zlotnik: Perfect. And any, again, final, final recommendations, books, what’s a good book? Anything that comes to mind that you particularly like where you read recently and kind of makes you, uh, think or, you know, food for Thought. Generates food for thought? How about that? 

Matt Calhoun: Yeah, I was just talking to a colleague recently.

Um, everyone always. Talks about Robert Kiyosaki for Rich at Poor Dad, and I always tell him, you can skip Rich at Poor Dad. Go straight to Cashflow Quadrants. So I’ll, I’ll plug Cashflow Quadrant, old book, but I read it again for the second or third time in a while. Um, I think that’s where the, the bigger Game changer book that, uh, that Robert Kiyosaki wrote.

Mike Zlotnik: Yeah, that makes a lot of sense. And you know, it’s, it’s even more relevant today. It’s all about cashflow. I mean, I have to say that recent experience, um, this came from a conference. Uh, and, and I know we, we just kinda get a little off a tangent, but I’ll just set a couple of comments and I talked a lot of, um.

Professional operators, uh, and uh, many of them kind of gravitating to building ground up and, uh, deals without the cash flow. And I talked to them and my kind of position is similar to what the industry has shifted. More income focus. Why income focus? Because you have that predictability, that cash flow.

The cash flow is sort of the foundation of, um, long term guess retirement goal. You need, you need cash flowing investments. Uh, and on the other side, all these growth projects, they depend on the successful exit and the successful exit. You, you don’t know. What it’s gonna look like. There’s more speculation and uncertainty related to the ground up, and a lot of folks are doing ground up because it’s fairly, you know, easy to sort of build from, from scratch.

You don’t have existing property complexities, you don’t have the management issues. Some ways it’s easy, in some ways it’s harder, but at least you can’t get a deep discount on new construction. And the cash flow doesn’t start until. The, the backend. So again, cashflow quadrants are important. Um, and I know Robert Kiyosaki talks about what the, the owner versus investor versus, uh Sure.

Uh, I guess running your own, you know, self-employment and what’s the fourth one? I’m just trying to 

Matt Calhoun: remember. Yeah. So as employee, uh, yeah, employee, 

Mike Zlotnik: investor, self directed, owner, owner and uh, passive investor. Right. You basically own piece of the business. Mm-hmm. So folks always should think about it. It’s the all generated inferior cash flow, just a different type of cash flow.

So we sell directed IRAs by definition. Right? You’ve graduated to that. Fourth quadrant. I, I’m not sure how Robert Kawasaki calls it, but the quadrant when you are, you know, hopefully part owner where you are getting passive cash flow. 

Intro: Yeah. 

Mike Zlotnik: So. Alright. Uh, thank you kindly for your wisdom. Thank you for sharing.

Sorry that, that last comment is kind of fresh in my mind coming from a conference, but Israel Yeah, of course. Yeah. And, and I’ll add one more point. Uh. That looking into more investing. And you as a custodian, you don’t pay attention to this, but as a fund manager, as an investor, I do. Uh, a few years ago, um, when the interest rates were super low, you could buy a positive spread in, in between the capitalization rate and the interest rate.

Again, we’re going back, uh, a number of years ago of low interest rates. You can have a positive spread, then the interest rates spiked. So it became very hard to create a positive spread because the cap rates went higher, but not as high as the interest rates. So it became a ne, it became a negative spread.

Neg negative spread still exists today on many assets, uh, although valuations have softened up, but not enough. And, but the holy grail is still to find the deal. This is how you know you got a great deal as when you have a positive spread between the cap rate. In the interest rate, you can do that and you can invest.

It generates positive cash flow. Mm-hmm. And of course, in this environment, we’re still, still the great time to be a lender. This is exactly what you mentioned at the beginning of the podcast, simply because, um, high interest rate environment, high yields and loans, everybody wants to be a lender. So kind of market takes care of the business by itself.

High interest rates, people shift their money into lending, interest rates come down. People start thinking more about the equity. 

Matt Calhoun: Yeah, exactly. 

Mike Zlotnik: 1 million, well, uh, feet, you know, 40,000 feet view, but let’s call it a million feet view. So, 

Matt Calhoun: Yeah. Yeah, spot on. 

Mike Zlotnik: Alright, thank you Matt. Appreciate you coming on a podcast.

Uh, thanks Mike. Yeah, thanks for sharing and uh, yeah, enjoy the book, the Four Quadrants, probably, you know, Cashflow Quadrant. Rob, Robert Kiki, until the next time. 

Matt Calhoun: Thanks Mike.

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