Insider Secrets Podcast Episode #74

Featuring Guest: Kaaren Hall

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Guest Bio:

Episode 74 guest Kaaren Hall


Standout Quotes:

“Self-directed IRA’s are the best kept secret” – [Kaaren]

“Since day one, IRAs have been self-directible. It’s just making the rest of the world aware that you don’t just have to invest in the stock market or mutual funds” – [Kaaren]

“A lot of times people will find themselves lost in that fear. And they won’t do anything because of the fear”– [Mike]

“Everyone is interested in improving their financial situation.” – [Kaaren]

“At least know the risk, but don’t let the risk override your ability to maybe have some potential and to do something different. Because none of us have grown just by sitting still or hanging out on the sidelines.”– [Mike]

“Due diligence is really important. Investing is risky, there’s risk in every investment.”– [Kaaren]


Key Takeaways:

  • Personally and professionally, Kaaren describes herself with the word “enthusiastic”.

  • Kaaren’s company “uDirect” has guided tens of thousands of Americans through the process of diversifying their investment using self-directed IRAs.

  • You don’t just have to invest in the stock market or mutual funds; there are alternative investments. You need a special kind of custodian that will handle alternative assets- that’s where uDirect can help with navigating. 

  • Do your homework and understand that there’s a great side and then there’s a side to be cautious about (cryptocurrency). 

  • Less than 1% do we see actually lose money in an IRA

  • It’s better if you get the account open and funded, then go find your assets so that you can execute.  

  • Best piece of advice for new investors- understand what your own personal needs are. For example, do you want something that’s going to pay you off in the long run or do you need mailbox money every month? Where are your needs? 

  • It’s always easier to do due diligence and homework upfront than it is after the fact (looking into companies, investors…etc).

  • Join a real estate investment club or an investment club that meets your interests. Find out what other people are doing and how they are succeeding and then copy best practices. 

Episode Timeline:

[02:45] Introducing today’s guest, ‘Kaaren Hall’.

[03:37] In one word, describe yourself.

[04:03] A brief history from Kaaren Hall.

[05:40] Kaaren explains what a self-directed IRA actually is.

[06:52] Difference between a Roth IRA and a traditional IRA.

[11:15] 529 college accounts, ESA’s, SEPs, and HSA’s

[14:14] Investing with IRA’s.

[20:07] Filing tax returns with IRA’s for UDFI or UBIT.

[25:30] Setting up an IRA.

[29:03] How to make high-stake decisions.

[31:50] Kaaren’s Insider Secret.

[34:06] Wrapping up.

To get in touch with Kaaren visit or email at


[00:00:00] Kristen: Welcome to this week’s edition of Insider Secrets. The show that turns multifamily investing into reality. Each show we interview guests who are seasoned professionals, actively closing and managing real estate deals. Your host Mike Morawski has more than 30 years of multifamily, real estate investing and property management expense.

Mike is the founder of My Core Intentions. And he’s been involved in over $285 million of transactions. Focuses on helping you create short term cashflow and long-term wealth. Here’s your host, Mike.

Mike: Hey everybody, welcome back. Good afternoon. It is Mike with Insider Secrets. Insider Secrets is brought to you by My Core Intentions. And I always ask you, what are your intentions? So I really want you to think about it today. I want you to [00:01:00] think about what are your intentions for showing up right now to listen to this episode?

So we’re going to talk today to a good friend of mine, Kaaren Hall. Kaaren, you want to say hi real quick to everybody?

Kaaren: Hi, thanks so much, Mike. It’s good to see your face. Haven’t seen you in a while and being there in Chicago. So I love the Zoom so we can connect.

Mike: Yeah. Isn’t it whoever thought that a while ago, a few months ago that we should have bought zoom stock. Yeah, zoom has just made things a lot easier to connect and talk to people. And you’re right, it has been a while since we’ve actually seen each other and you and I have known each other for a number of years. We have some mutual friends and I think that’s great. But I’m excited about you being here today.

I said before we got started that I have been thinking about this episode because I think that there’s a lot that we’re going to talk about that the listeners are going to have an opportunity to dig into. And when it comes to retirement funds, IRA’s, traditional, non-traditional, we’re going to get into all that.

But before we do that, let me just do some housekeeping. [00:02:00] So if you are just joining us, what I’d like you to do is please go like us, love us, follow us, subscribe, all that crazy stuff. Just help our ratings, go to Instagram and Facebook, YouTube, all those platforms where you spend your time, cause I’m on all those platforms. And subscribe Insider Secrets and My Core Intentions. Help our ratings and help us get a little bit more exposure.

And I appreciate you for doing that and thanks for being a listener and for showing up. And I know that my intention for you today is that you’re going to get so much information that you’re going to want to go back and listen to this a number of times. So that you know exactly what to do with the information and how it’s going to affect you and your retirement moving forward.

But like I said, today, I am joined by a great friend of mine, Kaaren Hall, who is the founder of uDirect IRA Services. Kaaren is been in the real estate space for a number of years. She discovered a strategic way to put her 20 years in [00:03:00] the mortgage banking, real estate and property management business to use. The solution that she found was an untapped market for both her skills and the investor’s needs.

What a great place to meet, right? uDirect has guided tens of thousands of Americans through the process of diversifying their investment using self-directed IRAs with over 600 million under management. Well, that’s a lot Kaaren, and I know that a lot of blood, sweat, and tears goes into building a company and you’ve done that over the years.

But here’s what I’d like to know. And this is a question I ask all my guests is, in one word, what describes you personally and professionally?

Kaaren: I’d say enthusiastic.

Mike: Okay.

Kaaren: Definitely.

Mike: One thing I’ve always known about you is that you’re very enthusiastic, I love that. Hey, listen, I talked a little bit about your backstory and your history, but why don’t you fill some blanks in for us? Tell us how, where you [00:04:00] started and how you wound up where you’re at today?

Kaaren: Yeah. I really am driven because of, we all have our why and and the why is a great message to share with people. That’s ethical and benefits everyone. I think that’s where we want the space we’re going to be in.

So with self-directed IRAs, this isn’t where it started. It’s not like, when I was small, I wanted to grow up in self-direct IRAs, but it was a cool pathway. After almost 20 years as a radio announcer, I made the logical transition into real estate and so got first was a property manager for some years in Seattle managing several buildings.

One on the lake was amazing. Big huge buildings and learned a lot from that. Got a real estate license, was the actual realtor for a year. And then got into mortgage loan servicing and stayed there for a long time. I’d say about eight years. And I parked there because it was a great education. In fact, I find that a lot of what I do now in self-directed IRAs is like loan servicing because it’s account servicing. And that’s what we do at uDirect IRA Services. So it’s [00:05:00] really the same there. And then I got into loan origination from there and then went on eventually to get in self-directed IRAs when I met you in 2007 and worked for a couple of years and then launched out in 2009. I believe that believe it or not 12 years ago, and started uDirect IRA services. So everything came together like the radio background helped me with broadcasting, like we are now and certainly loan servicing and in origination, but also understanding what our investors are doing.

Mike: 2007, you’re dating me, aren’t you?

Kaaren: I probably was more gray here than you can see.

Mike: It looks great. Hey, so do this for our listeners. Explain to them what a self-directed IRA actually is. Cause there’s a lot of people, and I know over the years I meet with people and I’ll talk to them about self-directed and they have no idea. So explain to somebody what that is.

Kaaren: Yeah. It’s still like a best kept secret. I think that people who are active investors know [00:06:00] this, but we haven’t really been taught about it. You go work at a job and you’re focused on your job and your career and what you’re doing and oh, maybe you have a 401k and it’s invested.

But then when you leave that job and you can move the money elsewhere, self-directed IRAs are an option that you may not have even been aware of because you’re so focused on the rest of your life. So you’ve always been able to self-direct an IRA. When the IRS came out with IRAs in 1975, they said you can invest in anything except life insurance contracts and collectibles.

So since day one, IRAs have been self-directable. It’s just making the rest of the world aware that you don’t just have to invest in the stock market or mutual funds that these alternative investments have always been an option. But you need a special kind of custodian that will handle alternative assets. And that’s what we represent.

Mike: So how about the difference between a Roth IRA and a traditional IRA?

Kaaren: Yeah, that’s a great question. First off, the traditional [00:07:00] IRA was there at the day one. Roths came along, gosh, I think it was 87 that the Roth s came along. So no Roths are a lot newer. They have things in common. They have the same contribution limit, which right now is $6,000 you can put in there per year of earned income or if you’re 50 plus it’s 7,000. So those contribution limits are the same. But understand if you had a traditional and a Roth, you’re under 50, you could only put 6,000 in there combined.

So it’s not 6,000 and 6,000 it’s together, so that’s good to know. The traditional, the money goes in before tax. So you make your contribution, you tell your tax advisor, you get a tax credit. With a Roth, you can make a contribution if you have earned income.

And as long as your income isn’t too high, because you can make too much money to contribute. And those details are on the uDirect website, like how much and all the rules. But if you don’t make too much money, you can contribute after tax dollars to Roth. And that’s cool because that money grows tax-free.[00:08:00] A traditional is tax deferred, a Roth can be tax-free. As long as you made a couple of qualifiers events. One is turning 59 and a half and the other one is having a Roth for five years. So that’s the difference. They’re similar, but they have different specials.

Mike: I qualify for one of those.

Kaaren: Yeah. You’ve had a Roth for five years.

Mike: Thank you. I appreciate that. I like you even more now. What I’ve always liked about a Roth is that I could go do a real estate investment or one of your clients could go do a real estate investment and that money that they make in that real estate investment goes back in the Roth and it’s tax deferred or non-taxable or how does that work?

Kaaren: In a Roth, it’s tax-free that’s really great. And there’s today, no cap on how much your Roth can grow. Now, we’ve had recently some news come out about people with Uber IRAs, and they’re talking about maybe capping it. But I think it’s just political rhetoric, we’ve heard this before. But yeah, so otherwise it’s [00:09:00] uncapped the earnings. And so it’s a really fantastic tool.

Mike: So I could actually go make a million dollars on a real estate transaction and not be taxed on that money, as long as I did it inside of my Roth IRA, following those regulations and guidelines.

Kaaren: Exactly right. Yes. That’s exactly.

Mike: Isn’t that interesting? I think that there’s a couple of gifts that the government gives us. And that’s one of them and the other one is depreciation, but you don’t really ever know the government to give you any gifts. And these are a couple of those places that we could take advantage of. And what you said early on is that, it’s still one of those best kept secrets as a self-directed IRA.

And take a look at that. You would think that after 12 years more people would have caught on. But I know in what I do and I’m back syndicating deals and putting offerings together and people still, what’s a self-directed IRA? So it’s interesting. And here’s what I really think is neat is that people have the [00:10:00] ability to find money that they might not know that they have. So there’s a lot of people that say I don’t have money to invest in real estate. Maybe you do. Where do you think people find some of that money?

Kaaren: Exclusively, I would say the number one top spot would be from a previous employer. So maybe you used to work at whatever company and you had a 401k. Now the traditional IRA is the most popular because that 401k money or that employer plan money is typically pre-taxed. So often people will roll over that employer plan into a pre-tax account or a traditional IRA. Now they can convert and move that money from traditional to Roth, but they have to pay tax on the amount they convert in that tax year.

Mike: What’s a tax-rate?

Kaaren: Whatever your personal radius or so whatever your personal tax rate is. So most people will roll over a previous employer plan. It could be a 457 if you’re in the military, a 403B, if you’re a nurse or a teacher. [00:11:00] 401k, if you’re in a private enterprise. Those retirement accounts, when you leave your employer, you can just hike them on over to a self-directed IRA and then invest outside of wall street, in real estate and other things.

Mike: How about like 529 college accounts or SEPs self-employment pension plans?

Kaaren: Yeah. 529 I got to stop you because the 529 isn’t self-directable. A 529 and that’s a common misunderstanding of 529 is a college savings plan. So you can self-direct what’s called an ESA or Education Savings Account, also called the Coverdale. So those can be self-directed, so that’s one kind of account. The SEP is an acronym for Simplified Employee Pension. So if you were an employer, you have employees, or even if you don’t, you’re just self-employed you can get a SEP IRA. It has higher contribution limits, right?

So it’s up to $50,000 or 25% of your income, less or up, right? [00:12:00] But you talk to your tax advisor, tell them you want to make a SEP contribution and now they’ll do this like circular calculation for you and tell you how much you can contribute. But then that money can be tax deferred. Huge benefit.

Mike: You can set that type of an account up also?

Kaaren: Absolutely. We do the traditional, we do the Roth simple which is not obviously not simple. Cause the government calls it simple. It’s a savings incentive match plan for employees. It’s not as popular. We also self-directed solo 401k, which has got a lot of bells and whistles. It’s really cool if you’re self employed and have no full-time employees, there’s a lot going on there.

We also offer the HSA, the health savings account, which is like a Roth on steroids in a way because the money goes in tax deferred and can come out tax free.

Mike: Wow.

Kaaren: Yeah.

Mike: Pretty interesting. So there’s a lot of options. Again, a kind of a look at some of those gifts then that the government provides for you by doing that and even in the medical plan. It’s interesting. [00:13:00] So over the years of doing this, what have you discovered about people and their relationship with money? And maybe reasons people don’t pay attention to this. Have you come up with any thoughts or ideas around that?

Kaaren: I think that everyone is interested in improving their financial situation. We all have that in common. I’m pretty sure. So as you just delve into that and try to learn more and more, you think how could I have more wealth? And so you start investigating, maybe you joined meetup or you listen to some podcast or something. And maybe you find an asset class that you really like, and could be like a tax lanes.

It could be a raw land. It could be so many different kinds of things. Syndications, notes, performing and non-performing debt. So you start learning about the different ways that people do invest. And then you start to ask yourself the question. Okay, I saw somebody else do really well on this. How can I do that?

And like you said, where do I start? I don’t have any money to retire. And then you realize that [00:14:00] you’re going to hear, once you draw your attention to this, you’re going to understand that your previous employers plans can be all your current IRAs can be moved over to one of these kinds of plans. Self-directed plans to help you accomplish your goals.

Mike: Interesting. You mentioned something that made me think do you only have to invest in real estate with a self-directed or what else could you invest in?

Kaaren: A lot of the assets that people do invest in are tied to real estate. A private placement is usually maybe somebody buying a multifamily building. Or maybe a hotel or some sort of real estate project. A lot of the private placements that we see are related to real estate. And a lot of the notes are related to real estate. Secured notes on real estate are very common. So a lot of the assets that we work with are tied to real estate. But again, there’s precious metals that isn’t. 

We’ll say for example, Mike you decide, Hey, I’m going to start this new business. And so I think, Hey, I know you, and so I want to have my IRA invest in your business. My IRA could for [00:15:00] example make a loan to your business and help in a grassroots way, help business get started.A lot of people lost their businesses during the COVID situation. A lot of people are trying to find the capital to get back on their feet and restart their businesses. Your IRA can lend money or even have an equity position in a company like a startup. And then that company will pay you back either the loan or pay you the proceeds.

Mike: I think that there’s those couple of places that are investing, right? There’s the traditional, your stocks, your bonds, that whole thing. But then there’s that alternative investing bucket, right? Where you’ve got real estate, you’ve got gas and oil, you’ve got precious metals. Cryptocurrency today, are you seeing a lot of people invest in crypto currency through the self-directed?

Kaaren: Yeah. Sure a lot of people are running toward that thinking and I think if my personal opinion is that the blockchain is really interesting. I don’t know so much about the currency and I’m super conservative so I’ll throw that out there. But [00:16:00] cause it’s your retirement money, but the SEC came out with a warning about cryptocurrency, basically because people invest in these ICOs, initial coin offerings. And some of them are legitimate, some of them aren’t. So you need to do your homework and understand that there’s a great side and then there’s a side to be cautious about. Due diligence, we just can’t talk enough about when you go to investing and doing your homework. Yeah, but crypto is definitely got everyone’s attention right now as does the blockchain.

Mike: Yeah. Interesting. Let’s go back to real estate right now. Cause that’s really what we’re here for. If I’m a sponsor, and I’m putting together a real estate offering and a deal and I want to utilize and I’m going to put some money into the deal as a sponsor, am I allowed to do that using myself directed?

Kaaren: You’re not. Because there are rules called prohibited transactions. And if you want to read about them, you can read about them at the internal revenue code actually. IRC, Internal Revenue Code [00:17:00] 4975 lists all the prohibited transactions.

Mike: It’s like enough paperwork to fill that room you’re sitting.

Kaaren: Yeah, it is. And so just boil it down for you. You’re not allowed to have any personal benefit from your IRA and you’re also not allowed to what’s called offer services to the plan. People or certain people are disallowed to your IRA. So as a disallowed person, you could not offer services to the plan if your IRA is investing in it. So if you took your IRA and invested in your own private placement, or you’d be breaking to two rules, you’d be benefiting and you’d be offering services. So you could get tapped twice there for prohibited transactions. What happens if you commit a prohibited transaction? What happens is it’s game over for your IRA. You get taxed, you get a 10 99 for the whole amount, maybe excise taxes. So you want to steer clear of those prohibited transactions.

Mike: Yeah. Interesting. Somebody explained to me one time years ago about the [00:18:00] prohibited transaction piece and that I could not go buy a second home for myself as a vacation home. But my brother could go buy one and I could use it. And I could go buy one and he could use it.

Kaaren: Then you’re still getting benefit. Okay. So there’s still some indirect benefit there. But yes, you gotta be careful and not try to cheat the IRS.

Mike: So that doesn’t work either then is what you’re saying.

Kaaren: If I take my IRA and I invest in like in a condo new and you take your IRA by the one next door, and then it’s like at a vacation spot. We just stay in each other’s condos, and we’re still benefiting from our IRA. I’d benefit because my IRA helped you. And now I can take my family and we could stay on the other condo.

Mike: Interesting.

Kaaren: Yeah.

Mike: So much for the gifts. And they were really giving you some gifts. But but what people can do is I find in the sponsor and I put a private placement together. People can invest in there. That’s where that whole passive component comes in. On the syndication [00:19:00] piece where other investors can invest in your syndication. They can use their IRA money, maybe lost money, like from an ex employer or something like that you talked about, right?

Kaaren: Exactly. Yes they can and then they’ll get a K1 every year if they invest in a private placement and they’ll be seeing proceeds from time to time. And for example, what if you have a company and somebody makes a node investment. They could make a node to your situation, the company that you’re starting. And how the debt position instead of an equity position and then get paid back node wise as a borrower, as a lender, I should say.

Mike: Yeah. Interesting. And there’s other things you could, you just mentioned something too as a lender. People with their self-directed could do hard money loans.

Kaaren: Yes.

Mike: Which has been very popular too, where people have actually done quick turnarounds with their money. But how about this? Is there a relationship between using your IRA and any type of [00:20:00] capital gains taxes or anything?

Kaaren: Because the IRA is really a tax neutral situation where while the money’s in there and you’re being taxed, there isn’t capital gains. So that’s good. That’s one of the upsides of IRA investing. The downside is you also don’t get to take any depreciation or anything like that in an IRA when invest in real estate. Because it’s not finally a tax return, but there’s an exception, right? So sometimes the IRA does file a tax return. It’s called a 990T. So the IRA does that if it owes these two taxes, one is called UBIT, Unrelated Business Income Tax, and the other one is UDFI Unrelated Debt Financed Income Tax

So before I get going, if you want to make a little note, you can read about these taxes at The IRS website, publication 598, and it’s going to go in a lot more detail than I do, but it’s readable. It’s not like the tax code. So if I say, I want to buy a house with my IRA, but I don’t have enough. Then my IRA can take on a non-recourse loan and [00:21:00] buy that property. We’ll say for example, 70% came from my IRA, 30% was debt. I know here comes a rent check, 30% of that rent check that money my IRA earned because of debt. So that 30% is taxable it’s UDFI unrelated debt financed income tax. UBIT happens when your IRA invests in an active business. And so just know that exists and check it out ahead of time, make sure that you talk to your tax advisor. 

That’s the thing about due diligence. Before you write that checker or write a direction of investment form of Telus to disperse funds, make sure you talk to your advisors. As good investor has an attorney, a CPA, and other advisors that they can talk to. Before they pull the trigger. Hey, does this make sense for me given my tax situation? How does this look so that you make a really smart investing choice?

Mike: Yeah. Interesting. How about the relationship between that UBIT you called it, how does that work?

[00:22:00] Kaaren: Again, UBIT sometimes it’s an umbrella term for the UDFI as well. But UBIT, that is a tax if your IRA buys an active business. So say for example, your IRA invests in like some kind of franchise, like a Tommy Pastrami or something. So first off it’s an active business. You can’t go in there. You and your family cause you’re disallowed. Can’t eat there. You can’t go there, but you can run a business. You can hire people to run the business for your IRA, but you’re going to pay this tax which is pretty high.

So you have to ask, is that a smart investment because of the tax? It may be cost prohibitive, really when you look at the tax, because it’s the same rate as the trust rate. But your IRA is going to owe that tax. So you talk to your tax advisor about it. They file or create a 990T for you. Your IRA pays the tax if any. But then when your tax advisor is creating that 990T, they’re going to be looking at, Hey, do you have deductions? And can you take depreciation? All these other deductions at the time that they’re filing that that tax form.[00:23:00]

Mike: Interesting. It really makes you think about different opportunities that you have as an investor, whether you’re an active investor or a passive investor, you have these choices, that your traditional IRA or traditional investing doesn’t give you because your hands are tied. It’s interesting. You found somebody that didn’t understand this, didn’t know this process, and then over time they become more grateful or really thankful that, Hey, thanks Kaaren for sharing this with me?

Kaaren: Sure. After being in this for so many years, almost 15 years altogether. Yes, I’ve absolutely found opportunities and retired. Sometimes it has to do with what you’re doing for a living that you’ve got some in. Maybe you’re in the medical field and somebody’s creating a medical device and you have your IRA invest in this medical device, which is an alternative asset. And because of your specialized knowledge, you picked a good deal.  And this medical device went to market and was successful. And you can use that for retirement. There are a lot of things, if you’re a mortgage person like I used [00:24:00] to be, and if I invest in nodes, so that’s something I know really well. So the catch phrase in our industry is invest in to have the best opportunity to give return.

Mike: So let me ask this. Have you ever seen people actually take a loss in the investment that they’ve been involved with their IRA? And how does that get treated?

Kaaren: Yeah, that’s a really good question. Less than 1% do we see actually losing money in an IRA, but it happens. And, 1% of 6,000 is still more, too many, more than we want to see. But with that, so what happens when your IRA invests and you have a loss, you don’t get to write that off, and maybe you were invested in the stock market during one of the downturns and you lost money. You didn’t get to write that off. You don’t get to write off that loss. It’s just gone. So that’s one of the things to know upfront.

If your IRA loses money, if it’s a bad loan or a bad deal, you don’t get to replace that money very easily because you have these contribution caps. No write off and also you have to, say [00:25:00] it’s a node or a private placement, you have to get a valuation from a third party, proving that the asset is worthless. But you have to prove it. And so we need to report. So because we’re not valuators, that would give us a whole different set of responsibilities if we became valuators that our industry doesn’t do this. So you have to have a valuator give an opinion of value. And then we as an industry will report that opinion of value to the IRS in the form of a 10 99 or 54 90.

Mike: Interesting.

Kaaren: Yeah.

Mike: So what are the steps to set up an IRA?

Kaaren: It’s really easy. It’s a three-step process. The whole thing self-directing is a three-step process. You open an account, you give us your information on a form and driver’s license for the Patriot act. And we work with you. We’ll get all the documentation, open your account. Then you’ve got online access to be able to get in there and look and see what’s going on. We also offer bill pay so you can pay bills, but you open the account. Then you’re going to fund it. It’s a contribution or you write a check and make a contribution. It’s a [00:26:00] transfer, like an IRA to IRA transfer. You move the money. 

Or it’s a rollover of a previous employer plan. So you get it opened, you get it funded, find your asset and then invest. So you give us, we call it a DOI direction of investment form. You complete that, give us the paperwork so we can take a look at it and decide, Hey, is this an asset that we wish to custody? And then assuming that it is, and everything looks. We fund the deal a hundred percent of the proceeds of your IRA share of the proceeds, come back to the IRA that owns the assets. And if there ever any expenses, it’s really important to know that the IRA has to pay those expenses. So if your IRA owns a house and you need a new roof. You don’t just go get a home equity loan of your own personal property and put on a new roof. No, that would be bad. That would be game over, prohibited transaction for your IRA. So you need to make sure that the IRA is paying off.

Mike: Got it. How about if I don’t have an investment that I want to invest in, but I want to open an IRA and just put [00:27:00] my money there. How does that work in a self-directed situation?

Kaaren: The money is going to sit there earning just a fraction, a small percent of interest, like what the market bears right now, a little bit of interest. But you have to really know that alternative assets on your thing before you open a self-directed IRA. And it’s good to have it there waiting so that when you find the deal, you can execute. Nothing like finding a deal and realizing, oh gosh, I have to scramble and get that money in. How do I do it as fast as possible? And everyone is in a mad rush to get that money in there so that you can do this deal. So it’s better, I think for a little less wear and tear on everybody. If you get the account open and funded and then go find your assets so that you can execute.

Mike: I’ve heard too, that you can meet somewhere in the middle on an asset where you use personal money and IRA money. Is that possible?

Kaaren: It is possible. There are some IRA companies that advocated I do not. [00:28:00] There is a ruling called DOL 2000-10 talks about this, but you’re disallowed to your IRA. And so if you co-invest with your IRA, even if you meet the terms that are set out, how do you tell the IRS who didn’t receive any personal benefit?

You just can’t. I would stay away from that one personally. And so it’s a self directed IRA is not meant for you to have personal benefit prior to retirement. That’s not what IRAs are about. That’s on the fringe outside very dark lines of the border of what self-directed IRAs let you do.

Mike: Good. I think that’s probably really good advice, because if something’s going to happen and you’re going to get disallowed and they’re going to call any tax due or anything, it really could jeopardize your retirement.

Kaaren: It could. And why would you do that? Because what 2000-10 says is if you have enough money to do the deal personally, or your IRA has enough and you just choose to [00:29:00] collaborate, then you can go ahead. If you have the money to do it personally, just do it personally and not take the risk is my conservatively point. Because you could lose.

Mike: Yeah. Interesting. So how do you make high stake decisions today? We’re in a world that’s gotten a little goofy and that maybe not but has gotten goofy. There’s pressures and things that go on. How are you and your business today, running a business is, we had that conversation before we started that the CEO, you have all this responsibility, how do you make high stake decisions?

Kaaren: Lot of time you prayer. Okay. Let’s start there. But also, it’s on the board of directors, but it’s a Vistage group and it’s a group of CEOs. So if I’m facing a really big decision, I’ll go to my group, and I’ve been since like 2014, I’d been invested and I’ll say, you’ve got this really big decision and I’ve got a brain trust over decisions with and it’s just amazing, some really amazing people in this group. And they all have different kinds of [00:30:00] experience from different angles, but it’s all business. And these decisions are almost always about people and negotiating, and the law. So that’s usually where I go for my brain trust.

Mike: I love Vistage. I was in Vistage for years. I was in Vistage before it was called Vistage. It was called something else back then.

Kaaren: It’s a great thing. Having a group of CEO peers and being able to help one another with input, it’s a great resource. It’s one of those out of the box things that we had been talking about. Like you’ve always got to look for an edge and how to do your business a little differently. And having a brain trust, that is a great idea.

Mike: Yeah. We’re old networkers anyhow. And that’s really how we all learn and grow. Technology wise, what do you think are the best sources of technology for you today that you use in your business?

Kaaren: We created some custom software for our customers internally to keep track. We just call it CMS, client management system, but we created some custom software to be able to service our clients to the best of our [00:31:00] ability to have all that information readily at hand. So there’s the custom information, but of course, social media is amazing when you can get on social media and put out the word about your company, really at no cost.

That’s amazing. And that has created lots of more millionaires and could probably count. So that’s how I use technology. And of course, do we have a high-tech business? I suppose we have a tech business in the sense that you can go online, you can look at your account, you can pay bills online, pull out your statement and make a copy of it and save it. And so we also interact with our with our account holders in a technology manner.

Mike: Nice. So this show is Insider Secrets.

Kaaren: Yeah.

Mike: And if you were giving advice to a new investor or not even a new investor, but you were giving advice to an investor today, what do you think your best piece of advice for them would be?

Kaaren: To understand what their own personal needs are. For example, do you want something that’s going to pay you off in the long run or do you need mailbox money every month? [00:32:00] Where are your needs? Then due diligence, I would suggest you talk to people who have invested with that asset sponsor before and find out how does that asset sponsor work.

How communicative are they and, do you need handholding? Do you not need handholding? And how does your personality match with that asset sponsor, cause sometimes that’s really important. I would also say to just do a little work, and learn about who you’re investing with. And due diligence is really important. Investing is risky, there’s risk in every investment, there’s even risk and just leaving it in your checking account, so what you got to take a risk, and if you’re going to and you’re going to invest that.

Mike: Yeah. It’s always easier to do that due diligence and that homework upfront than it is after the fact.

Kaaren: It is. A lot of times people are quick to pull the trigger and they’ll do something impulsively. Oh, I’ll just send this money over there, but just stop and think a second. What if I lost that money, how would I feel? And let me ask myself now instead of kicking myself later. What should I do ahead of time so I don’t regret it.

Mike: So the one thing I would say [00:33:00] though, a lot of times people will find themselves they’ll get lost in that fear. And they won’t do anything because of the fear. So I always suggest the people, listen, at least know the risk, but don’t let the risk override your ability to maybe have some potential and to do something different. Because none of us have grown just by sitting still or hanging out on the sidelines.

Kaaren: That’s for sure. Yeah, absolutely. And so if you feel risk at first, that’s another good reason to join a real estate investment club or an investment club that meets your interests. And find out what other people are doing and how are they succeeding and then copy best practices. Remember six Sigma, the book, no coffee, best practices. And do what they’re doing. If they’re succeeding, do what they do and find a way to get the same results.

Mike: I remember years ago, I heard a comment by I want to say Jim Roan, which was “Success Leaves Clues”.

Kaaren: Yes.

Mike: I’ve always followed that. So if I look at the things that I’ve done everything in my life as a result of following other successful people who’ve left these fundamentals in front of me. But let’s shift gears a little bit. So it’s like the three final questions, right?

Kaaren: Okay.

Mike: We know that you’re out there on the west coast where most days it’s 72 degrees and breezy. And what is your favorite tourist attraction?

Kaaren: Where I live? Gosh, if you’re going to come visit in Southern California, I’m probably going to take you to Catalina island and have some fun day to get on the glass bottom boat. That’s pretty fun. Okay, there’s Disneyland 10 miles away from us. This is where we live. And grand canyon that’s pretty fun. Hiking is probably fun.

Mike: All right, great. I’m coming soon. Get ready, we’re going to Catalina Island.

Kaaren: Okay.

Mike: How about your favorite restaurant?

Kaaren: Probably Seasons 52.

Mike: Oh, wow. We have those here too.

Kaaren: Yeah. They count the calories for you. So it’s less, it’s more guilt-free

Mike: I thought you might’ve said something like Julios or something.

Kaaren: [00:35:00] Oh, I love Mexican food for sure. But yeah, I love seasons 52.

Mike: Yeah. And then the best book you’ve ever read?

Kaaren: Oh, my gosh. Of course it’s “Think and Grow Rich”. Besides the Bible, “Think and Grow Rich”. I’ll tell you what, Napoleon hill, when he wrote that book, I think he worked for Dale Carnegie for free, and he’s interviewing all these people and doing this for free, what a labor of love. And the truths that he talks about in that book. Just go on and on. I think about it almost a hundred years ago.

You think about it as like the twenties, like 1920, and now you’re in 2021. But it’s go the extra mile and how that kind of mindset where you think outside the box, it’s a great way to frame your mind. And I have, my kids have read it and if any young person comes to me like, Hey, what do you think I should do? I always say, start there. “The Richest Man in Babylon” and “Think and Grow Rich” are two starting books.

Mike: A couple of great good books. That’s for sure. I have a good friend who just finished certification training with the Napoleon hill foundation as a certified trainer. And [00:36:00] he’s taught “Think and Grow Rich” for years. Actually on Saturday morning, I do a podcast with him called Multifamily Unplugged, and we go live on Facebook on Saturday morning. So shameless plug there.

Kaaren: Hey, that’s awesome. So many principles that you can just pull out and just apply straight away and almost see immediate results. So it’s a really powerful little book there.

Mike: So Kaaren, if people want to get ahold of you, how do they get ahold of you and uDirect, to set up an account or roll their funds over?

Kaaren: our website, we’re all over social media, as you were mentioning. So please like us on Instagram, on we’re on Twitter, even still we’re on Facebook. We’ve got, what else? Then also I have a real estate investment club, aside from uDdirect. It’s a different company called it’s Orange County Real Estate Investors Association, which has a lot to say. So we call it OCREA. And we meet, we’ve been meeting since 2012, so for nine years. And we meet the second [00:37:00] Thursday of every month right now on zoom. So I also have where people are teaching, it’s not as selling kind of a club, it’s a teaching kind of club with education about different aspects of real estate investing.

Mike: Nice. Sounds interesting. Listen, I want to thank you for being here. It’s nice to get reconnected and learn a little bit. One thing I always love about bringing in guests like yourself on Insider Secrets is there’s always something to learn. Thanks for being here today though. I appreciate it.

Kaaren: Great to see you. Thank you.

Mike: And I want to thank the listeners for listening in today. We’re here every Tuesday, a new episode comes out. I’m glad that you’re here. Remember that if you’re looking for the most recent episode of Insider Secrets, all you have to do is say, Alexa, play Insider Secrets. Remember follow us on social media, like us, love us subscribe, and stay in touch. If you have questions or need anything, don’t hesitate to reach out to Kaaren or myself. Look forward to seeing you next week.

[00:38:00] Kristen: Thank you, Mike, and thank you for  joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Join us on social media and visit where you can get expert coaching on all things, multifamily investing in property management.

We’re looking forward to having you back again next week for more Insider Secrets.