This particular discussion turned out to be three pieces of a life-long investing puzzle that fit perfectly into each other. The combined strategies provide a vehicle to build and grow an investment bucket of funds through shorter and higher ROI projects, and then to build a long-term income producing portfolio while simultaneously building up retirement funds in a separate portfolio.
In the newest episode of Building Solid Foundations TV show, I was joined by Patrick Kappel of Reef Point Realty who has been building his portfolio of investment properties for about ten years. Kaaren Hall of Udirect IRA also joined me. As a long time real estate investor, land developer, commercial construction manager and land flipper, I love talking to experts about the diverse strategies that can be employed to build a real estate portfolio, or to just build wealth through real estate.
Essentially, one would use higher risk, high ROI projects to build up a base of funds. Projects such as my company manages through syndications. Then those funds would be used to acquire real properties, the values of which could be dramatically increased though 1031 exchanges over time (swap 'till you drop as Patrick calls it), or by using refi loans as the property appreciates to acquire additional properties . This, of course is best done in historically higher appreciating real estate markets such as California. At the same time, a 401k from a former employer, or an IRA, can be converted to a self-directed IRA to use for investing in real estate. That fund can then also build a portfolio as it grows tax-free. Kaaren is an expert at this part of the puzzle and warns about not having sufficient funds for retirement.
The best part for me is when Patrick explains how to make $4 million tax-free. You will have to watch the episode to get that secret; I will only tell you that it does not involve hiding anything from the IRS.