The Atlanta Real Estate Investor – Episode 08 – Clay Malcolm

The Atlanta Real Estate Investor – Episode 08 – Clay Malcolm

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00:56 - How Clay started in the IRA business

1:51 - How to get started in investing in your IRA 3:20 - Learning the differences in traditional vs IRA

24:26 - Learning things you can and can't do with investing in your Checkbook Control Model

26:00 - How does Advanta IRA help you 28:13 - Mistakes newbies can avoid 30:18 - How you can win big with an IRA FULL TRANSCRIPT OF THE PODCAST AUDIO Clay Malcolm: The LLC got all of its investors and went out and bought some large tracks of land. This happened to be early 2009. They hit the timing perfectly, four and a half years later that $93,000 share in the LLC was worth 970,000. Matthew Whitaker: All right, everybody. Welcome back to the Atlanta Real Estate Investor. I am one of your co-hosts Matthew Whitaker. My other co-host Spencer Sutton is out today so I am running solo, but I'm excited because I have an awesome guest here, Clay, Malcolm. Clay is the business development specialist at Advanta IRA. And a lot of people use their IRAs to invest in real estate. And so we're going to ask a lot of questions of Clay. Clay, welcome to the show. Clay Malcolm: Well, thanks for having me, Matthew. I'm glad to be here and always happy to talk to real estate investors. Matthew Whitaker: Clay, tell me how you got into the IRA business. Clay Malcolm: Yeah, it's a great question. And actually the reason is because I was a little behind on my own retirement planning. So as I was making a kind of a career transition and I saw an opportunity at a self-directed IRA provider, knew that would be great information for me. It was just kind of a match in terms of what I was interested in because I knew I needed to kind of jumpstart my own retirement planning and investing. And it's a niche industry. So a lot of what the companies need is somebody who can do education and do management and things like that. But typically speaking, the financial nuts and bolts and the tax nuts and bolts of what we do, you have to learn that once you're in the business. And so it was a really nice combination. So I got to not only pursue this professionally, but it's also helped my personal investing quite a bit so it was a good match. Matthew Whitaker: And this is kind of a black box for people. I've seen it successfully done with a lot of real estate investors. So lets kind of start at the beginning and really understand what an IRA is and the types of IRAs that are out there. Clay Malcolm: Sure. Well, I would say that at its core, what you're talking about is a tax tool, so a way to manage taxes in your world. So they were started in the 1970s with the traditional was first. And really, I think that had a lot to do with what the country was going through in terms of fewer companies having robust pensions and things like that. And so they wanted to have a way for individuals to be able to save for retirement with some tax advantages. And the tax advantages is really the key part here, right? So traditional is pre tax money in, so you get a deduction for it. That's tax deferred while it's in any account and then it's taxed when you take distribution at retirement age, hopefully at your income tax rate at that time. Clay Malcolm: And Roth just kind of flips the script. So you contribute post-tax money so it's already been taxed, no deduction, it's still tax deferred in the middle. And then if you take qualified distributions, that tax deferral actually becomes tax free. So each of those is a type of tax tool. Both of them can be used in combination with real estate investments. And so it really kind of depends on your overall financial picture and what you're trying to accomplish. But I would say that at its core, what we're talking about as a tax tool and combining it with some sort of real estate investment expertise. Matthew Whitaker: And so if I'm thinking between traditional and Roth, what are kind of the questions I need to go through to make sure I choose the right one? Clay Malcolm: Sure. Well, I would say first and foremost, I highly recommend you talking to your CPA or whoever is your tax person. And sometimes talking through it with somebody else will really help you as well. And your financial team may be your family. It doesn't really necessarily have to be a professional, but whoever is your tax and financial strategy team, I think you talk to them first. But a few things to think about are these, one, do you need a tax deduction in this tax year? So one of the nice things about contributing to a traditional IRA format, and that could be a traditional IRA, I didn't actually get to the answer in its entirety before. It could be a traditional IRA, a SEP IRA, S-E-P, a simple IRA or most 401ks are all in that same traditional IRA tax format. So they all give you some tax deduction in that tax year. So that's something you certainly want to be thinking about. Matthew Whitaker: All right. So let me just clarify what you're saying, sorry to interrupt. But under the traditional heading, there are a number of kind of subheading IRAs. Clay Malcolm: Correct. Right. So there are, I would say that the traditional IRA format is the term that I was using for that pre-tax money in, tax deferred in the middle, taxed on the way out. So all of those account types that I just mentioned have that same format in terms of its taxation. Matthew Whitaker: Do you mind going through that list again? Clay Malcolm: Not at all. So traditional IRA is the one that most people know about. That's the individual version. There are two employer versions. There have slightly different contribution rules, but there is a SEP IRA, S-E-P, stands for simplified employee pension, but it's a SEP IRA, does need to be sponsored by an employer. And one of the things that I see often is that a lot of real estate investors are self-employed so they'll actually open up a SEP IRA plan for that company, that entity that is their real estate investing venture. And you can also do that with solo 401k. Clay Malcolm: So 401k's typically are in that traditional IRA tax format. Although if you adopt the right plan document for your 401k, for your solo 401k, you can have a Roth component to it as well. But again, with folks who are self-employed, I often see the choice being made, do I want to open up a SEP IRA or a solo 401k? And the reason is because it's an employer plan so the annual contribution limits are quite high. Think it was 57,000 this year for a SEP IRA and similar for solo 401k and things like that. So your ability to impact your tax picture is greater. Clay Malcolm: And then, I'll also say that there's a thing called a simple IRA, which is typically used at small companies, usually it's not self-employed people who will use that, but it also does have the traditional IRA tax format. So pre tax money and taxed on the way out. So those are those account types. And in opposition to those, or the other tool, is obviously the Roth IRA. Clay Malcolm: And then I'll also just mention this because a lot of people don't know that is your health savings account can also be invested in real estate. Health savings accounts are an individual custodial account and they operate almost exactly like a traditional IRA or a Roth IRA, although it combines those tax benefits. The tax benefits of an HSA are remarkable and they do not have the same distribution rules. And I could spend a lot of time talking about them. But I think for today, what we'll just say is that, remember that your HSA can also invest in alternative assets and lots of times that just means it's a partner. So let's say your IRA is going to invest in a property. Your traditional, sometimes it'll be you'll partner your HSA with your IRA, usually because it has a smaller cash balance, but you can do that and so get the same investment returns in your HSA. That's kind of the spectrum of account types. Matthew Whitaker: I think a lot of real estate investors, when we started talking about IRAs, their heads start swirling. It just feels like there's so many options and so many different things to choose from. How would you suggest somebody wade through that? You mentioned their CPA. My guess is, somewhere on your website, there's probably a tutorial that they can go through and really get kind of granular on each one of these. Clay Malcolm: Yes. I would say that in terms of your research on that kind of thing, does have a lot of robust education in terms of each account type and what its benefits are, what its parameters are, things like that. I definitely also think that calling a self-directed IRA professional. And if you sketch out your investment strategy or what you think you can accomplish or where you're good at, what you're comfortable with. A lot of times, if you talk about your individual situation, I can listen to that and say, "Okay, well these three types, they're not a great match for you. So why don't we concentrate on these other three and then you can talk to your team about it and distill it that way." So I think that it's a combination of having some kind of understanding of what the account types are, but then also talking to a few people. Talk to your CPA, give me a call and see if you can kind of come to some consensus on which tool works best for you. Matthew Whitaker: I think you nailed it. I think part of having this as part of your team and kind of going back and forth between your CPA and an investment specialists like you, makes a lot of sense because we go through this one time, maybe two times in a lifetime. And you have the mental model where you're going through this on a consistent basis and have seen people successfully do this. So it does make sense to reach out to somebody like you, ask the right questions, go back to your CPA, kind of vet those based on your situation. I've seen this done really successfully with some really good friends of mine. I personally have never done it. So I was excited to get to talk to you today because really wanting to kind of understand this better so that I can also take advantage. Explain to me where, I always hear this word self-directed IRA, how does that fit into this whole world? Clay Malcolm: Yeah, well, it fits into it in a kind of a clunky fashion. So the term self-directed is really just a descriptive term, it's actually not a legal distinction and it's not an IRS distinction. All it really is, is a marketing term. And when you hear it, I think that the only thing that you can count on is to understand that that account has some sort of ability for the IRA holder to choose the assets that the account is going to invest in. So there are banks and brokerage houses who are also custodians for IRAs and they have self-directed IRAs. But their business model, their business model is, hey, we'll be the custodian for your IRA. While we're doing that, that IRA can only invest in the things that we sell, publicly traded securities, stocks, bonds, mutual funds. And so their self-directed IRA might be the choice between 10 mutual funds and 14 stocks. But it's self-directed because the IRA holder is actually deciding which of those to choose in their account. Clay Malcolm: So that would be a self-directed IRA, but it's in a banker brokerage house that only handles publicly traded securities. So I think that the other self-directed IRA providers are ones that handle alternative assets. So for instance, like Advanta does, we handle all kinds of alternatives. We're actually not very well built to handle publicly traded securities. So it's very common for us to have account holders who are also account holders at a bank or brokerage house, right, for diversification purposes. So they often have two IRAs operating simultaneously, and you can have as many as you want. But I would say that in the common vernacular, when somebody says self-directed IRA, often they are trying to refer to an IRA custodian that handles alternatives. But the way that the water gets kind of muddy is that that's not actually the case because anybody can offer a self-directed IRA, assuming that there's a choice for the account holder. Matthew Whitaker: Well, lets talk about that. What are the types of things specifically around real estate, so this is a real estate show, that you've seen people invest in using their IRA? Clay Malcolm: That's an excellent lead in because I do think that some people will say, they'll call me and they'll say, "Hey, I like my IRA to invest in real estate." And that's really just the beginning of the conversation because real estate is such a broad asset class. So I will say that IRAs can purchase physical property. So if you wanted to buy, for instance, a single family rental, or maybe a four unit apartment building. Or if your IRA has a large balance, then it may be a bigger apartment building or warehouse space or things like that. But any kind of physical property, whether it's commercial or residential is available, I've certainly seen. And my IRA is invested in a lot of these as well. So I'm kind of one of us or one of you guys out there who's an IRA investor, raw land is available. So I've certainly seen some successful land speculation deals. Clay Malcolm: I see a lot of participation in multifamily syndications. So if an IRA wants to participate in that, it's actually considered by us as the custodial entity to be a private entity transaction or private equity. But it is based on real estate so the IRA is purchasing X number of shares of this private entity or X percentage of ownership of this private entity that then owns the multifamily deal. So that kind of syndication is possible. We also see debt. There's a lot of debt instruments that are tied to real estate. So trust deeds, fix and flip loans, bridge loans, we even see mortgage style loans, things like that. Clay Malcolm: So an IRA can invest in any of those and even things like tax liens and options. The only thing that the IRS really prohibits from an asset perspective when it comes to the broad range of investments is insurance and collectibles, life insurance and collectibles. And so almost all of the real estate asset class is available. There are some prohibitions about your IRA can't buy a property that you already own personally. And you can't have credit arrangements or debt arrangements with yourself and some close family members. So there are some rules about that. But as a broad palette, almost any kind of expertise that you have in the real estate investing world, you can put to use inside your IRA to create returns in that tax advantage account. Matthew Whitaker: Yeah, I think leveraging your real estate knowledge in basically operating your retirement account is such an awesome because if you operate it as a, especially me as a real estate professional, if I flip a house in one year, it's tax is ordinary income. And keep mine, I'm not an accountant so double check this with your accounting professional. But then if it's over a year, then it's long-term capital gains or maybe short-term capital gains, but it's definitely taxed at a capital gains. So being able to do this within your retirement account, especially if you're a real estate professional, really has some absolute advantages. Clay Malcolm: Well, the thing I'll say about that too, Matthew, it's just that some people have a lot of expertise in stocks and mutual funds and things like that. and I don't. But through learning and being a part of groups and just wanting to, I learned a little bit about real estate investing. And so the ability of the account holder to put to use their own expertise and in a strategy that they're comfortable with, it just seems like such an empowering thing to be able to know what's happening and creating those returns. Rather than when I invest in the stock market, it's kind of I'll take a shot here and then I read about it later. Matthew Whitaker: Yeah. You're trusting other money managers, especially something you don't have control of. Whereas real estate, especially if you have a history of doing it and/or going to gain a history of doing it, you have a lot more control over your retirement account. Not saying that this ought to be your only outlet for retirement, but it certainly should be a piece of it as you start your real estate or as you continue your real estate career. Matthew Whitaker: Let's go back to the mechanics because I think we jumped out of that and started getting into some great subject, but I'd love to go back to the mechanics. So I contact you, we basically go through this flow of which one is right for me. And I obviously check that with my CPA. And then let's say I open an account. What are the maximum amounts, and it may be different, that I can contribute to this? What are the next steps at that point? Clay Malcolm: Sure. So I would say that the most common scenario is this, somebody will open an account with us and then they will fund that through a couple of possible means. So transfers from another IRA. So if you have a traditional or Roth or SEP or simple somewhere else at a bank or brokerage house, often you will choose how much of that money you want to move over to us. Matthew Whitaker: And that could be transferred tax-free right, from one IRA to another? Clay Malcolm: Correct, that movement of funds is not taxed and it's not penalized. So you're actually just moving it from one custodian to another. In fact, these custodian to custodian transfers, they're not even reported to the IRS. All custodians are beholding to state bank regulators. And so we're just assumed to be doing the right thing because we are being regulated. So transfers from old IRAs, lots of times, and this is a really common one for those folks who change jobs every once in a while, sometimes they'll have an old 401k or a 403(b), 403(a), pension plan at an employer where they no longer work. And as soon as they've separated from employment at that place, at that company that sponsored the retirement plan, it's mobile, meaning that it can be rolled over again without tax and without penalty. Clay Malcolm: Again, somebody opens up an account with us. They do a roll over from an old 401k or a couple of old 401ks, and they bring over the cash amount that they want to invest in real estate. And so transfers and rollovers are possibilities, but contributions are as well. So the account types don't actually change. The rules for contributions and distributions and the tax advantages are the same as you already know. Traditional, Roth, HSA, SEP, IRA, the rules for the accounts don't change. The only thing that's really changing is that that money is going to purchase a real estate investment, whether that's a property or a percentage of an LLC or whatever it is, whatever that real estate participation is. That's the thing that changes, you're buying a different asset. You're investing it differently, but the rules are the same. Clay Malcolm: And so the idea is basically somebody will then, and going back to the sequence, they will open the account. They will fund it with transfers, rollovers contributions. And again, each account type has an annual contribution limit so you do have to be cognizant of that. But once you have the cash in the account at Advanta, basically what you're looking to do is what investment am I going to make, right? So most of the time, people already have a sense of what they want to do. Usually it's either something that they've already done or they invest with a particular group, or they just have a strategy that they like. And so we work with them to make sure that it is documented that it is the IRA purchasing that investment rather than the person. Matthew Whitaker: Yeah, let's jump right into that because I think it's really important. Let's take something really easy, like a house. I want to buy a house in my IRA. Do I just write a check? Do I get an IRA checkbook? Do you fund that? What are some titling issues that we want to make sure we don't screw up? How does that happen? Clay Malcolm: Sure. Well, first thing I'll say about that is that your IRA is a legal and financial entity that is different from you personally. So it's your money and you get to control it, no question about that. But it does have a different name, it has a different bank account, it even has a different tax ID number then your social security number. So you basically can think about it as a remote control investor, right? You get to call all the shots, you're creating all the strategy, but it is operating separately from you. And the reason it's doing that is because the IRS is going to give it tax advantages that the IRS does not give to you personally. Clay Malcolm: So the IRA will have its own name, it has some bank account. You funded that through transfer, rollover, contribution, whatever combination of those things. So when you go out to buy 123 Main Street, the titling on the offer and the closing documents and property management, if you choose to do that or vendors, if it's a rehab or whatever it is, all of those contracts and titling on all that legal paperwork is in the name of the IRA. Clay Malcolm: And the IRA signer, so an IRA is basically a little trust. It operates like a trust. And so the custodian, and in this case Advanta, is also the signer for your IRA. Meaning that the paperwork trail goes to you, the account holder, first. You look over the closing documents, let's say, read through all of those, make sure that it's the deal that you negotiated and that you want. Usually also negotiated it with your real estate professional. So again, you get to use the real estate professional that you like and that you trust. That document goes to you. You write, read, and approved and sign it, but it's in the margins, not as the purchaser, because it is the IRA that is the purchaser. So after you've read and approved it, then it comes to Advanta and we sign it on behalf of your IRA and obviously disperse funds at your direction to the closing so that the property becomes the possession of your IRA. Clay Malcolm: So all of the funds that are used for purchase, for maintenance, for insurance, for taxes, all that stuff comes out of your IRAs cash position. It actually gets dispersed from there. But all the returns also go back into your IRA. So returns from, let's say, rent, the rent goes right back into your IRA. Or proceeds from sale, those would go right back into your IRA, all underneath that tax umbrella. So again, if you think about it as a remote control investor, it does pay for purchase, maintenance, insurance, taxes, all that stuff, but it also receives all the returns. Clay Malcolm: Now you asked a little bit about the checkbook part. And so it's an interesting thing. There is a scenario, a strategy that some people use for something that's called checkbook control. So the scenario that I just outlined there is a direct IRA ownership of that property. And so the property is actually titled in the name of the IRA. In this case, it would be Advanta IRA for benefit of Clay Malcolm, IRA, that's the general naming convention. Clay Malcolm: Now, if you wanted to execute the checkbook control strategy, what that really is, is creating an LLC as a subset of your IRA. So your IRA actually purchases an LLC, 100% ownership. And the IRA holder will name themselves the manager of that LLC. And so metaphorically in one hand, they have a check of IRA money made out to the LLC to purchase it 100%. And in the other hand, they have the state documents saying that they are the manager of that LLC. And so they go to a bank and they open a business checking account. And as the manager of the LLC and the signer for the checking account, you actually have created the effect of you are writing checks on IRA money. So that's, what's called checkbook control. Clay Malcolm: And there's two things that I want to mention about that that are important. One is any rules about IRA investment follow the money. So those disqualified persons and prohibited transactions that I was talking about, for instance, not being able to buy a property that you already own personally, those rules follow the money. So the LLC does not absolve you from the rules. So you still need to call your IRA provider, make sure to check out everything that you're thinking about doing. But it does create the effect that the LLC then becomes the entity that is purchasing the real estate. So in the scenario that I mentioned before, it was the IRA, that whole long title of the IRA that is purchasing the real estate and all the funds are being dispersed from the IRA's cash position. Clay Malcolm: In checkbook control, there is a lump sum of cash of IRA money that gets moved down to the LLC, it is a subset of the IRA. And then at that point, because an LLC is a legal entity itself, it can be the title holder on the real estate. So instead of making the offer in the name of your IRA in the checkbook control scenario, you would make the offer in the name of the LLC and again, pay for insurance, maintenance, taxes. But all of those documents would be in the LLCs name rather than the IRA. And it really is just a choice. The IRA account holder gets to make that choice whether they want to have direct IRA ownership or use the checkbook control model. Matthew Whitaker: Does this save time contacting you and getting you to send a check? Let's say something breaks, I need to send the check to my property manager, and then you have to disperse funds out of the IRA. If you do this LLC model, you can essentially pay for it out of the LLCs checkbook. Clay Malcolm: That's correct. And I would say that the two reasons that people engage checkbook control most often are, one, for that facility of dispersing funds. Especially if somebody is going to do a lot of fix and flips or rehab work or things like that and there are a lot of vendors, you create some convenience in terms of those disbursements. I think that that's one of the main reasons why I see people choose checkbook control. The other one is that if you're going to have a lot of activity in terms of purchase and sale of assets, it can save you some money from us, from the IRA custodial entity. So Advanta would charge it in checkbook control. All we really see on our books for your IRA is one private equity transaction, right? You purchased 100% share of an LLC so that's all we have to charge for. The LLC could own 15 properties and be making transactions and wheeling and dealing all the time. But because it's not our responsibility to send the checks out and to do the accounting for it, we don't have to charge for it. So I would say that the second thing that I see people choose checkbook control for is if their IRA is going to have a lot of activity, it can save you some fees from the IRA provider. Matthew Whitaker: Very good. Matthew Whitaker: One of the things I would say too is always consult professionals. So attorney, CPAs, just make sure you consult professionals. Clay, I'm assuming you're not an attorney, I know I'm not. I told my wife, I was going to be an attorney and then she married a property manager. Clay Malcolm: Well I'll say this, I appreciate you bringing it up because some people will ask me, what is Advanta's role in this equation? How do I understand what it is that you're doing? And we are pretty neutral. So we don't give tax, legal or investment advice. Our job, what you're engaging us to do is to provide the account, to provide the administration and the bookkeeping so that we substantiate that your IRA's activity is actually taking place within the IRA. Because ultimately, what we're doing is preserving the tax benefits for you. But we're not telling you what to do, how to do the due diligence on a property, any of that kind of stuff. You need to go to your real estate team and your own expertise for that. Our job is really to just make sure that your account's in good standing so you get to keep the tax benefit. Matthew Whitaker: The two lessons I'm really gleaning from this are, first, it is worth your time to invest in understanding this and digging in. Sometimes when you're talking, my head's swirling, I feel like you're throwing out 401ks and 403s. And as somebody who's been self-employed their whole life and used to be just me years ago, I don't understand all of those. And so there may be some people on the other line that don't understand it. But what I am learning right now is I need to invest the time in really understanding this. And honestly, I probably can understand it enough in half a day's worth of time investment just to get 80% of the way there. Matthew Whitaker: And then the second thing is really finding somebody you trust that can help you wade through this process. I think it just makes a lot of sense, once you get 80% of the way there and you can speak the language and you understand what, because it's really important to understand people you trust, understand what they're telling you to. Once you do understand it, it's going to be important to find somebody that you trust that knows the extra 20% to make sure you don't hit any pitfalls along the way. Matthew Whitaker: Speaking of pitfalls, what have you seen people do incorrectly that all the newbies out there like me want to avoid? Clay Malcolm: Well, I would say this, that you do want to become familiar with the disqualified person and prohibited transaction rules, because those are the places where we see people trip up the most. So they will try to engage their personal funds in a deal that their IRA owns or vice versa. That can be a problem. The IRS doesn't like that. Matthew Whitaker: How do people avoid something like that, essentially commingling? Clay Malcolm: How does someone avoid it? Well, I would say this, that the rules are actually pretty easy in terms of their breakdown. So disqualified persons, so that's the account holder and their spouse, ascendent and descendants and the descendants spouses. So me, my wife, my kids, my grandkids, and their wives and husbands, and then my parents and my grandparents. So that lineal family of mine, they're all considered to be disqualified persons. And they have a few restrictions, I can't buy or sell to or from them. I can't do any credit arrangements with them. So I can't loan them money or have them pledge their collateral. They can't take use of the assets and they can't provide services for the IRAs assets. And I would say as a sketch, those are the things that you're looking for. Clay Malcolm: So, I mean, I went through it super quickly, I don't expect anybody to absorb it that fast. But that's not a lengthy process to kind of understand what those boundaries are. But I do think that I would recommend avoiding any of those pitfalls is always call your provider. So it's my job to answer those questions anytime you have them. Whether you open your account today or three weeks from now, or you opened it 15 years ago, call your team member that that's their job. And just say, "Hey, this is the scenario I have in my head. Are there any red flags? Here's the participants in the deal. What do you see? Is there anything I need to avoid?" So I would say that that kind of ongoing communication with your IRA provider is the easiest way to avoid that kind of thing. Matthew Whitaker: And tell us about some successes. Obviously, I don't want you to give any names, but people or situations you've seen where people are using this successfully, kind of some wins stories. Clay Malcolm: Well, the one that I tell the most often is it because it's just so dramatic is the person had a Roth IRA, this was several years ago. Roth IRA., they had made conversions from their traditional to the Roth format. And you can do that at any point you want, by the way. So if you want to change tax formats, it's called a traditional to Roth conversion. And at this point, there's no restrictions on how much you do so you can do that. So this person had, through contributions and conversions, had accumulated $93,000 in their Roth. That Roth participated in a, or bought a share of an LLC, which was gathering investors to go out and do some land speculation. So the LLC got all of its investors and went out and bought some large tracks of land. This happened to be early 2009. They hit the timing perfectly. Four and a half years later, that $93,000 share in the LLC was worth 970,000 when he sold it. Matthew Whitaker: Not a bad day. Clay Malcolm: So that means that, oh gosh, $877,000 or somewhere in there, that person will get completely tax-free as long as they take a qualified distribution because it was in a Roth. So the thing that I really liked about that was it was the right tool for the job. So people will often choose a Roth for investments that may have an outsized return like that because the overall tax liability or payment would be much less. And so the right tool and the right timing and some expertise in real estate. This is a person who is an account holder, but also who was in real estate. And so they marry their expertise with the tax tool and just hit a home run. Clay Malcolm: We see lots of other people doing things that are not quite as dramatic as that. My favorite scenario is just people who are engaging again, this is a Roth, it doesn't have to be a Roth. But the Roth IRA owns a rental property. let's say it's a duplex and they're in retirement age. So they're over 59 and a half, meaning that the early withdrawal penalty has gone away. And the rental income comes in monthly to their Roth and they put themselves on a distribution strategy. Often it's quarterly instead of monthly, because that gets a little complex, you just have to keep your eye on more balls. But the rental income is literally going into the Roth and then periodically being distributed. So they are getting tax-free income, rental income from a piece of rental real estate. And for many people, that's multiple pieces of real estate. Clay Malcolm: But it's just a way that somebody thought, "Okay, well, I know I like this rental property scenario for my investment strategy. How do I get the taxes out of there?" So on a small scale, we see a lot of that. There are lots of other strategies too in terms of cashflow versus equity. And your age has a lot to do with it as well and things like that. But again, that marriage of the tax tool with the investment strategy, it can be so powerful. Matthew Whitaker: And everyone's situation is so specific. If I had some questions for you, Clay, what's the best way to get in touch with you? Clay Malcolm: I would say my email is an easy way for us to schedule a time. So it's, it's cmalcolm, C-M-A-L-C-O-L-M, You can certainly give me a call (470) 695-0620. And I would say that's the easiest way. And like I say, you can either just call and we can chat if it's a good time for you. But often people will email me and say, "Hey, I'd like half an hour to just kind of go through some basics or run a scenario past you." So they'll email me and we'll set up a time and get all that information kind of disseminated to them. Matthew Whitaker: Yeah. And if somebody is even deciding, hey, is this even something for me? I think it makes a lot of sense to reach out to Clay and at least get all the information, go to the website, check it out, and just research this, look at it. Like I said, I mean, it's going to be worth my time to spend at least four hours kind of researching and better understanding this because the amount of money that can be saved over a lifetime is just a whole bunch. So very excited about that. Clay, thank you so much for your time and appreciate having you on the show. Clay Malcolm: You're welcome, Matthew. It's good to see you. Matthew Whitaker: All right, if you haven't subscribed, please do so, the Atlanta Real Estate Investor, and please leave us a five star review and we really appreciate you listening.