Insider Secrets Podcast Episode #82

Featuring Guest: Daniel Blue

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Episode 82 guest Daniel Blue

Guest Bio:

Daniel is the President of Quest Education, a company that helps entrepreneurs obtain capital for their companies, pay off high-interest debt and use self-directed retirement accounts to invest in alternative assets With over 10 years of educating small business owners, Daniel has a knack for helping individuals get creative with their finances that leads to life-changing results.


Key Takeaways:

Networking is very valuable and necessary in becoming successful.

Adversity can be a gift that makes us stronger and teaches us lessons. 

Quest Education helps teach people how they can access money in their retirement accounts, their 401ks or IRAs, penalty, and tax-free.

Have an exit strategy and a time horizon in mind when investing, this is especially important to consider when you’re a new investor.

Standout Quotes:

“The comment you made at the end here about your mistakes, that’s what we learn from, we grow from that. That’s how we become who we are today.”- Mike

“I just remember sitting in my car, my car was stopped and I didn’t have any music playing, it was just silence. It was just me in the car. I remember thinking like, “okay, what are you doing with your life? Your daughter’s six months old, here you are on Thanksgiving day being a druggie, being a selfish douchebag. What kind of example are you setting for your daughter? Your daughter’s going to be 3, 5, 10, 12 years old really soon and she’s not going to look up to you in the way that she needs to. You’re not setting a good standard.”- Daniel

“A lot of that comes from your childhood, like how you think today is because of what happened when you were 6, 10, 12 years old and that was it for me. I didn’t forgive my dad, I wasn’t at peace. So I was able to get to a point where I was just like, you know what, instead of being negative towards that happening, I looked at it as a blessing.”- Daniel

“The more money that these companies like Fidelity and Wall Street have under management, the more fees that they can generate. So they’re not going to teach you ways to use your own money in ways that benefit you, but don’t necessarily benefit them.”- Daniel


[01:55] Introduction to today’s guest, Daniel Blue,

[03:06] One word that describes Daniel personally and professionally.

[04:18] Where Daniel came from and what his childhood was like.

[07:14] A defining moment in Daniel’s life.

[09:51] Facing adversity and how it impacts you.

[13:00] What Quest Education is and what they’re doing now.

[15:48] Self-directed IRA’s vs. Solo 401k’s.

[19:03] Using your retirement account money to invest. 

[21:57] Active investing makes Daniel cuss.

[26:37] How Quest Education can help you with your money.

[28:21] Daniel’s ‘Insider Secret.’

[30:18] Advice to new investors.

[31:23] Bonus question round.

[32:59] How to best contact Daniel.

[34:38] Closing remarks.



[00:00:00] Kristen: Welcome to this edition of insider secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of my core intentions and would like to help you make your real estate investing dreams a reality.

[00:00:22] Mike coaches you to buy investment real estate, creating short-term cashflow and long-term wealth, your host and real estate coach. Mike Morales has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.

[00:00:39] Mike Morawski: Hey, welcome back everybody, good afternoon. It’s Mike, your host of Insider Secrets brought to you by My Core Intentions. I always like to ask what are your intentions? What are you working on? Did you get up this morning? Did you decide that you are going to do something specific today?

[00:00:55] Maybe it was enough sales calls. Maybe it was a call that you had to get on to look at buying a piece of property from a seller. What are you doing to drive your business forward today? And how intentional are you being around that? I’m going to be on with a guest today that I’m excited about that’s going to talk to us about being intentional about what we do in business and how we grow our business. One thing I want to say is if you’re looking for some direction, if you’re looking for some guidance or anything that I can do, don’t hesitate to reach out and direct message me. And please follow us on social media, Instagram, Facebook, LinkedIn, wherever you find yourself on social media, wherever you find your valuable content, please subscribe and like us and love us and help our ratings.

[00:01:40] Find us on YouTube, if you are a subscriber to Insider Secrets, you can say to Alexa, “Alexa play the most recent edition of insider secrets.” So that’s a new feature. We love that. Anyhow, let’s dig right in. Today, my guest is Daniel Blue. I’m really excited about Daniel being here. He’s a regular contributor with and he’s the owner of Quest Education Company. Daniel say hi to our listeners.

[00:02:08] Daniel Blue: Hey, Mike, thank you so much for having me, looking forward to talking some different ways to help some of your real estate investors, accomplish their financial goals a little bit quicker.

[00:02:16] Mike Morawski: Daniel, you know, I haven’t had an opportunity to meet you, but I’ve heard about you and I’m real excited about you being here today. Let me tell the listeners a little bit about you. Daniel helps entrepreneurs obtain capital for their companies and pay off high interest debt and use self-directed retirement accounts to invest in alternative assets. He has over 10 years of educating small business owners. Daniel has a knack for helping individuals get creative with their finances and lead them to life changes. Daniel, welcome to the show.

[00:02:47] Daniel Blue: Hey Mike, again thank you so much for having me.

[00:02:50] Mike Morawski: I’m glad that you’re here. One thing I read in your bio here that really interests me is that you help entrepreneurs obtain capital and pay off their debt. I want to really dig into that as we get into the show here today. One question that I ask all my guests in the beginning Daniel, is in one word what describes you personally and professionally?

[00:03:15] Daniel Blue: I would say competitive. I come from a family with not a lot of money. My parents had me signed up in sports as a kid. I didn’t grow up wanting to become an entrepreneur. I’m a college dropout, but I find myself in a position now where I own a company, quite a few employees and we have a mission to help people access money in the retirement accounts, penalty and tax free.

[00:03:36] So I’ve had kind of an unorthodox path to get to where I’m at in the financial space and I would attribute that a lot too, just being competitive with myself just every day, trying to get better. That’s how sports work, right? You know, every day you’re trying to get the reps in and you’re trying to get better at your craft. And then same with business.

[00:03:53] Mike Morawski: Yeah, that’s awesome. Just having that word in the back of your mind that you’re competitive, I have to imagine would keep you focused every day, moving forward, kind of pushing yourself. A lot of times people say, “Hey, what about your competition?” I always say I don’t have any, it’s myself. Cause we can defeat ourselves. So fill in some gaps for us, how’d you wind up in the space that you’re in? Tell us about growing up and how you’re doing, what you’re doing today.

[00:04:18] Daniel Blue: Yeah. So I grew up like I mentioned earlier, not a ton of money, middle-class. We weren’t poor, but we didn’t have an abundance of money. Lived in California and kind of had a normal childhood growing up until I turned 12. I was 12 years old when my parents got divorced and at the time my dad was a big person in my life. In the sense of, he was my soccer coach, took me to school. I was really close with him and he just abruptly moved to Mexico without giving me a reason why, he still lives in Mexico today. So when he moved to Mexico and my parents got divorced, I just had a lot of questions and developed a lot of anxiety and stress. My mom was forced to work full time and provide for me.

[00:04:54] Now she’s a single mother and she was a child protective service worker, social worker. So she was working long hours. I had a lot of unsupervised time at home and I just got into a bunch of trouble. I ended up hanging out with the wrong crowd, getting involved in drugs, skipping school.

[00:05:08] When I turned 17, I was approaching my senior year of high school and my mom was just like, “Hey, in order for you to graduate high school, you’re going to need to move because if you don’t move, you’re not going to graduate and you’re probably gonna end up in jail, so I want you to move to St. George, Utah.” And for those who don’t know St. George Utah is a very small town in Utah, close to the Zion National Park, beautiful scenery. We knew one person, one family in that small town and God bless that family, they took me in and I turned my life around. At that point, I was able to graduate high school but unfortunately, I still was struggling with some of my past. I didn’t know who I was, I was still lost and didn’t have core values, I didn’t have standards. So I ended up following the wrong crowd again. 18 years old, I signed up for college, that’s what society told me to do. Didn’t know what I was going to study, but I signed up. I dropped out 3 months later because I ended up networking. Networking has been a big part of of my journey, Mike. I can’t remember putting together a resume. I’ve always gotten jobs based off of knowing people and building relationships. So at 18, I built some relationships, got involved in sales, started making six figures.

[00:06:10] I didn’t know how to handle money because I didn’t really see a lot of money growing up. So I’m making six figures thinking I’m making millions, right? And you start spending more than you’re making, you start making really bad decisions. That’s where between 18 and 19 years old, I ended up actually having a daughter. I got addicted to Oxycontin, bought a house in 2008, right before the crash. So I made a lot of dummy mistakes, you could say during that time, but a lot of lessons growing up that I could look back at that time.

[00:06:37] Mike Morawski: Yeah, boy, you said a lot, you know, there’s a lot there to unpack. I love the fact that you said you were a college dropout because I didn’t go to college either, but you know, people said, “how’d you learn as much as you know?” I said, well, I read a thousand books. If you look at the bookshelves in my house they are just packed with business books and biographies and stuff like that. I think that that’s how we learn. The comment you made at the end here about your mistakes, that’s what we learn from, we grow from that. That’s how we become who we are today. I go back to that competitiveness that you say you have, and that comes from that. It’s interesting how our stories drive us forward in life. So what do you think was a defining moment in your life?

[00:07:18] Daniel Blue: Uh, This was November, 2009. My daughter Isabella was six months old at the time. I was two years into using Oxycontin every day, I tried to get clean so many times and it just never worked, I ended up just having seizures. For the people that don’t know, Oxycontin essentially is heroin in a pill. So when you try to get clean, you start getting sick, you start throwing up, you start getting the chills. People have seizures, it’s a nasty game. I did not beat that game for many years. November, it was Thanksgiving day, 2009 was the defining moment. It was a different day because my mom and my daughter were at my house. My mom was making Thanksgiving dinner and I needed to get pills that day. I didn’t have any and I made the excuse. I told my mom and said, “I’m going to go grab a red bull at the gas station and I’ll be back.”

[00:08:03] So I left the house and I’m driving around the neighborhood, calling everyone I can to purchase pills, that’s where I got the pills on street, and no one was picking up. Imagine that, all the drug dealers are having turkey with their family. I was just running around for hours trying to get my fix. It got to a point where I knew I hit a dead end, I knew I was not going to be able to get the pills that day. And I knew what was coming up, I knew I was going to start getting sick the next day, I was going to start withdrawing. I just remember sitting in my car, my car was stopped and I didn’t have any music playing, it was just silence. It was just me in the car. I remember thinking like, “okay, what are you doing with your life? Your daughter’s six months old, here you are on Thanksgiving day being a druggie, being a selfish douchebag. What kind of example are you setting for your daughter? Your daughter’s going to be 3, 5, 10, 12 years old really soon and she’s not going to look up to you in the way that she needs to. You’re not setting a good standard.”

[00:08:55] I just had a really tough conversation with myself, a conversation that I hadn’t had at that point. The next day I made a few phone calls and I ended up moving to Vegas. I knew if I were to leave the city of St. George, I would get new phone numbers, new friends, new environment, and a new change of scenery. That’s ultimately what would help me get clean. Not rehab, not drugs, because when they give you prescriptions to get off of pills or heroin, they give you drugs to get off drugs. It’s pretty crazy that that’s even a reality, but it is. I stopped cold Turkey and that was because of that defining moment and who would’ve thought moving to Las Vegas would have gotten me clean. I’ve been clean for, this will be 12 years and Sin City has been a special place for me in staying clean.

[00:09:37] Mike Morawski: Good for you. And are you working out 12 step program at all?

[00:09:40] Daniel Blue: No, you know, I went to a couple of NA meetings, a couple of AA meetings. I dug it, I liked what they were doing. I think for me it was forgiving. It was being at peace. It’s interesting, you look at where you are today or where you were 5 years ago and the things that have been troubling you that have been negatively impacting you. A lot of that comes from your childhood, like how you think today is because of what happened when you were 6, 10, 12 years old and that was it for me. I didn’t forgive my dad, I wasn’t at peace. So I was able to get to a point where I was just like, you know what, instead of being negative towards that happening, I looked at it as a blessing.

[00:10:20] I’m grateful that god had my mom in my life. My mom was just like the best thing ever. She never talked crap about my dad, even though she didn’t get child support, she never played the role of a victim, she never complained about working all day. She never complained and I’m just grateful that I’m in a position where I actually became stronger. Adversity is a gift and all that adversity that we faced when I was younger, like it was a gift. Just because I didn’t have a dad to teach me how to tie a tie or change the oil in the car, or talk to a girl. There’s other things that came with it that were a big blessing. So once I shifted my mindset, then I was able to just like really be at peace with myself. Once I was at peace with myself, I was able to make wiser decisions and not base my decisions off of my emotions and how I feel.

[00:11:05] Mike Morawski: Yeah, good for you, boy that’s a heck of a journey. It’s a big piece cause I think that we really learn from that and and there has to be a lot there for your daughter today. Being sober, being sound, living that lifestyle, your daughter’s really got to have a lot of respect for you and for that today.

[00:11:22] Daniel Blue: Yeah, it’ll be interesting. I know I’ll have a conversation with her at some point. I wasn’t there for her birth, Mike. I didn’t see her for two weeks just because I was just too busy being strung out. It was harder to talk about this 9, 10, 11 years ago, but she’s 12 years old today. So you know it is what it is. It’s something I missed out on, but I forgave myself. You live and you learn.

[00:11:40] Mike Morawski: Yeah. Does she live with you?

[00:11:42] Daniel Blue: Yeah. Yeah. So I have her probably 80% of the time. Her mom and I separated when she was 1 years old. We did the nasty court battle for many years, we did the finger pointing, there was a lot of tension with her mom and I. I was a weekend dad, every other weekend dad for a long time. Plenty of times where I’d be driving one hour one way to pick her up and one hour to drive back. And I would only have her Friday to Sunday, every other weekend. That was just the way the courts had it set up despite me fighting for more. But a lot can happen in 3, 5, 7 years. I get along with her mom great now, it just works out now where I can be more involved. She lives with me, I take her to school.

[00:12:18] We’re doing this episode on a Wednesday, it’s August, it’s back to school night, so I get to take her to back to school. So, you know, little things like that, I cherish. Custody and divorces and separations a real life thing, however I’ve learned that it’s so important that the parents just have to co-exist. You’re going to parent differently, but I just learned that you want to avoid talking down about the other parent in front of the kid and just little things like that to set up your kids for success.

[00:12:43] Mike Morawski: Yeah. Good for you. Good for you. I’m honored that you would share that with me and with my listeners. Boy, that’s a heck of a big piece and a lot of times, people don’t want to share that stuff. So hats off to you and thank you for that. Why don’t we shift up a little bit though and talk about business if you’re good with that and why don’t you tell us a little bit about Quest and what you guys are doing.

[00:13:03] Daniel Blue: Yeah. So the company I own, Quest Education, we’ve got customers in all 50 states. The main problem that we solve in the marketplace is teaching people how they can access money in their retirement accounts, their 401ks or IRAs, penalty, and tax-free. So many people coming from corporate, people that have money in a retirement account, they’re conditioned to think that that money is only for the stock market and that money is locked up, tied up and they can’t access it unless they paid 30, 40% in penalties and taxes. A lot of times that’s true, so what we do is we teach people different financial strategies that are IRS approved, that are not talked about by financial advisors and CPA’s.

[00:13:44] A lot of that is just because these financial advisors, and I know Mike you’re really financially savvy so you get this and I’m sure a lot of your listeners get it, but it comes down to assets under management. The more money that these companies like Fidelity and Wall Street has under management, the more fees that they can generate. So they’re not going to teach you ways to use your own money in ways that benefit you, but don’t necessarily benefit them. I’ll give an example, we have a customer that wanted to start an online business, she needed about $20,000 in capital to get things going. She was still working her 9-5 job, but she wanted to quit that job and work full-time from home and be her own boss. She didn’t want to get a loan from the bank, she didn’t want to get a credit card or anything like that. She liked the idea of using her retirement account to fund her business. So she went to a financial advisor, asked to take $20,000 out, he talked her out of it said she’d have to pay a bunch of penalties and taxes.

[00:14:39] She probably would pay $6,000 in penalties and taxes to the IRS, so just leave that money there. We helped her understand that there was a plan called a solo 401k. What she was able to do is she was able to take her retirement account, move it over into a solo 401k penalty and tax free. Then she took $20,000 out, penalty and tax free and use that to fund her business. Now she’s working from home full time, running her online business full-time. She quit her job and a big reason why she was able to get to that point is by leveraging a retirement account with the solo 401k and accessing that money penalty and tax-free.

[00:15:15] Mike Morawski: Wow. That’s awesome. So my understanding about self-directed accounts in the past has been that you haven’t been able to do anything that benefits you. I couldn’t buy a second home or a home that I lived in because it would benefit me, but she’s able to do a business? Doesn’t that benefit her?

[00:15:37] Daniel Blue: That’s a great question. And that’s definitely something that I was going to bring up as we got further into it, what makes the solo 401ks so unique is it has a loan feature. Let’s take a step back. Most people are familiar, especially the real estate investors listening to this right now. They probably have heard of a self-directed IRA. That’s the most common self-directed plan out there. With that plan, there’s no loan feature. So the only option to use that money is to have the IRA directly own the asset and if the IRA owns the asset, that asset can not personally benefit them. Like you just said, they can’t use the IRA to buy a property and then rent it out to their brother or they can’t live in it. Or they can’t do the repairs themselves. They have to hire a third party, right? So there’s a lot of arms length distance.

[00:16:23] What makes a solo 401k unique is there’s a long feature on the plan. The way the loan future works is the IRS says you can take out up to 50% of the account value or 50,000, whichever number is less. And as long as you pay that money back to your retirement account within five years, there’s no penalties and taxes, no taxable event on the money taken out. There’s an interest rate on this loan, it’s prime plus two. So right now people are taking money from their solo 401k and paying an interest rate of about 5.25%, and that interest goes back to their retirement account. That’s where the solo 401k is really useful, you have that card in your back pocket, where if you do want to take some funds out, you can, and there’s no restriction on how you use that money.

[00:17:10] Maybe you want to use that money to pay off the 20% interest rate credit card debt, that’s keeping you up at night. Or maybe you want to use some of that money to help fund a flip or use that money to start a business. There’s no restriction. The caveat is you do have to replenish your retirement account back, you do have to pay it back. So you’re your own bank essentially.

[00:17:29] Mike Morawski: I just have to ask this question. Is that something that’s changed in the last few years or has it always been that way with a self-directed?

[00:17:38] Daniel Blue: Yeah, it’s always been that way. So the loan feature has been on 401k plans for a while now, if you’re an employee in the private sector, you might get offered a 401k through your job. Sometimes they do, sometimes they don’t. Let’s just say you do get offered a 401K, that 401k may or may not have a loan feature. If it does, what I just explained to you Mike, people could do already on their own. They could be their own bank, take a loan from the plan, access the money, penalty and tax free. But 1- not all companies offer a 401k. 2- the companies that do offer a 401k, not all of them have a loan feature. So the loan feature on the 401k plan has been around for years and years and years. It’s just a topic that the financial industry really discourages because they want people to leave the money there.

[00:18:25] There are times where it does make sense to not touch the money. At the end of the day, that money should be growing there for compound interest, that should be there for your retirement. So I don’t think it’s a good idea to take a loan from a 401k and, and use that money to come out here and party in Las Vegas. But if you’re going to use that money to create wealth, then you as the person that made the money, it should be your call, it should be your shot. You should have the freedom to choose and unfortunately, the way the financial system is set up, it’s just not set up that way, which is why you need to be educated and know what you can and can’t do.

[00:19:02] Mike Morawski: That’s interesting. So talk about real estate a little bit. I’m in the multi-family space, my listeners like to buy apartments. How can they use their money from their retirement account? First, let’s talk about passively investing, right? So if I’m a syndicator and I put a real estate offering together, and I go out to those passive investors, talk about how your typical investor that you work with can invest in that alternative asset.

[00:19:28] Daniel Blue: Well one the retirement account, whether it’s a self-directed IRA or a solo 401k, it needs to be held by a custodian that can administer alternative investments. So if you just Google a self-directed account custodian, there’s a bunch of them all over the country. So it’s gotta be held by a custodian that can allow alternative assets. We are the go-to customer service team education team. So we’re the buffer between the customer’s account and the custodian. The problem with custodians is most custodians they’re super in the background. They don’t offer education, they don’t really have a ton of hands-on service, a hands-on customer experience.

[00:20:07] They’re just there in the background and collect the fees and you’re just a number. You’re pretty much left on your own to figure out the paperwork and the customer service side of things. When it comes down to someone that is putting together a deal and is looking to raise money and there’s a retirement account in the picture. That retirement account has to be held at a custodian, a self-directed custodian. What I have seen happen and it really, really stinks to hear about this happening, but it does happen. So we were talking to someone here recently and she lived down in the bay area and she wanted to put a $100,000 into a multifamily project.

[00:20:39] She had the money with like Edward Jones or Fidelity and she literally pulled out the $100,000 and had to pay the penalties and taxes, so she lost like $30,000. Her 100,000 turned into 70,000, then she gave that 70,000 to the deal. After we talked to her, we were like, “Hey, did you know, you could take that same 100,000, moved it over into a self-directed account with our help and then not pay the penalties and taxes and then use the a hundred thousand to invest directly into that project?” She’s like, “I didn’t know that. My financial advisor said he couldn’t help me. I told them I wanted to use this money on the syndication deal and he said that they don’t handle that.” Which is true, Wall Street does not handle promisary notes and deals like Grant Cardone Multi-family. They’ll put your money in a REIT, they’ll put your money into a stock, that’s maybe a home builder. But they don’t handle alternative assets like that.

[00:21:32] So that’s definitely something that shocked me. This lady was a real estate agent and there’s a lot of people that are real estate agents, brokers, and property management companies. They’re in the real estate game and when we tell them, “Hey, did you know that you could use your retirement account penalty and tax free to invest into passive real estate?” They’re like, “you mean REIT?” And we’re like, “no, no.” So there’s a lot of opportunity to educate people at at this time.

[00:21:57] Mike Morawski: How about on the active side? If they want to buy the apartment complex themselves, how about on the active side?

[00:22:04] Daniel Blue: Am I able to cuss, Mike?

[00:22:06] Mike Morawski: Sure go ahead.

[00:22:07] Daniel Blue: That’s a pain in the ass. I’m just going to put that out there. I only have seen a very small percentage of our customers do active and it’s because of the following. One- it can be done and there’s some benefits. Two- it’s a pain in the ass. When people buy a property and they’re doing active investing, one of the main benefits, one of the main selling points is the taxes, right? Like writing depreciation and things like that. If your retirement account owns the property, you can’t write off depreciation because you’re already getting a tax benefit by having your IRA or 401k own the real estate property. It’s either tax deferred or it’s tax-free. Maybe you have a Roth IRA that owns a single family home in Indiana.

[00:22:50] The IRS is not going to give you both tax benefits. You can’t get the benefit of the retirement account, owning the property and depreciation. So that’s one. Two, financing this bad boy can be a pain in the ass. So you’re either going to use your retirement account to buy the property outright. To keep the math simple, Mike, let’s just say someone has $100,000 in a self-directed retirement account, and they’re looking at buying a $50,000 property out in Ohio. Well that’s easy, there’s no debt, there’s no financing. They just buy the property outright, so now the retirement account owns the property.

[00:23:24] The rent checks go back to the retirement account. So the rent checks don’t go to your checking account, they have to flow back to the retirement account. Let’s say there’s a $5,000 heating and air conditioning bills, that expense has to come from the retirement account. You can’t take money from your savings account to pay that. Let’s just say the roof needs to get repaired, you cannot do it yourself, you have to hire a third party. If it’s a rental, you can’t rent it out to a lineal descendant or yourself, has to be a non lineal descendant. So you can rent it out to your cousin, but not your brother.

[00:23:58] If it’s going to be financing, let’s just say you have 500,000 in a retirement account and you want to buy a property for 1.5 million, now there’s financing involved. That’s where a non-recourse loan comes into the picture, where essentially you’re using your retirement account as a down payment and a special kind of loan from a bank, which is a non-recourse, comes into play. Typically this is going to be a more expensive loan because it’s non-recourse, the bank is just using your retirement account as a down payment. As you can see, there’s a lot of moving parts in this, so some people are okay with all of this going into it. They’re okay because they’re looking at the tax benefit like, this is awesome. Other people are like, man, this is way too complicated, I was hoping to use some of the rental income to pay some bills. I wanted to write off the depreciation. I kind of wanted to use my own cash for some of the expenses or I wanted to rent it out as a BRBO, this is way too restricted. So it just comes down to personal preferences.

[00:24:58] Mike Morawski: Yeah. Interesting. One of the things you said that I want to circle back on was the depreciation piece. As a passive investor and you’re investing in a syndication, are you allowed to take advantage of the depreciation? Because depreciation shows up on a K-1 income tax reporting. Is that okay?

[00:25:20] Daniel Blue: Disclaimer, I’m not a CPA. So our team always tells our customers, ” we’re not financial advisors, we’re not CPAs.” However, understanding the IRS guidelines, my understanding is if you’re 401k or IRA is invested into a real estate deal or any kind of deal for that matter. I’ll use an example. If your retirement account owns $100,000 of Apple stock, and then Apple stock goes to zero, you don’t get to write that off. Because you already got the tax benefit by the retirement account owning Apple as the stock, where the dividends came in. You’re not claiming that as income, it’s growing tax free or tax deferred. So IRS isn’t going to give you the best of both worlds. They’re not going to give you the tax deferral tax free status and the appreciation. Is my understanding, but you know, maybe there’s some accountants out there that know some really cool loop holes.

[00:26:12] Mike Morawski: Yeah. I don’t know, that’s why I asked. Is it easier, do you think to attract private capital to deals today by being able to use this vehicle? I guess what I’m asking is do you raise private capital yourself or do you give direction to your clients of where to go? Is that type of capital good in these real estate offerings?

[00:26:36] Daniel Blue: Yeah. So by design, we’re a complete 100% education marketing company. So we don’t hold licenses, we don’t advise people, we don’t sell investments. However, we do have third party companies that we work with to solve problems, provide solutions for our customers. So once we help them set up the solo 401k then they need some tax help, we’ve got an affiliate that is a CPA, offers tax services. Maybe they need some help with an estate plan, wills, trust; we’ve got an affiliate in that space. Maybe they need help with a business line of credit, maybe business credit, we’ve got an affiliate in that space. Then we’ve got some third-party investment companies that we can refer our customers out to as well if they’re looking for some other options. In the years I’ve been in the business and have been in the financial space, there’s a lot of different ways to raise money and self-directed retirement accounts is a great way to do that. If people just google Mitt Romney self-directed retirement account, you’re going to see that he has reporting anywhere from like 50 to $100,000,000 in a self-directed retirement account. That’s because he put money into a company. So essentially this private equity company raised the money. Some of that money included the money that they raised from Mitt Romney’s retirement account and they just did so well that Mitt Romney’s money increased a lot. He did that with a self-directed retirement account, he couldn’t do that with an IRA at Fidelity or Charles Schwab, it had to be a self-directed account. I mean, I do know real estate, non real estate, all different types of firms have raised money from self-directed accounts for a long, long time.

[00:28:10] Mike Morawski: Very interesting, great conversation, I appreciate it today. So this show’s called Insider Secrets. I always like my guests to be able to share some secret that you might know with my listers. Give me a perspective on investing or something you’re seeing today that my listeners could take heed with.

[00:28:27] Daniel Blue: So I’ve mentioned solo 401k a few different times. If you are an entrepreneur who has no W2 employees, other than you or a spouse, then you qualify for a solo 401k. So a lot of real estate agents get 1099 commission, they qualify for a solo 401k. What a lot of people don’t know is solo 401k, you can contribute up to $58,000 per year into this account. That contribution can either be pre-tax or post-tax and I think that’s a great way to offset the increase in taxes that we’re going to see over the next 3, 5, 10 years. So let’s kind of go through this scenario, if you were to put in $50,000 a year into a Roth solo 401k for 5 years straight, now all of a sudden you’ve got $250,000 in a Roth solo 401k.

[00:29:20] Imagine if that $250,000 over 10, 15, 20 years was to grow to $2 million. That’s not completely unrealistic. Obviously you would need to hit some singles and some doubles and get some good returns, but taking $250,000 over 10, 20 years and getting that bad boy up to a million, $2 million, that would be 100% tax-free. So even if they raised the tax bracket, the tax rate of 60%, you already paid taxes on the contributions with the Roth account. That’s what makes a Roth account unique is you’re paying taxes on the seed, you’re paying taxes on the contribution, but the harvest, what comes from the seed, is 100% tax-free and it’s hard to beat tax-free money, right? I mean, who doesn’t want tax-free money?

[00:30:08] Mike Morawski: Absolutely, that’s very true. Tax-free money is a great way to go. Well, I appreciate all your insight today in everything that you brought. I can’t believe how much time has blown by already. What advice would you give a new investor?

[00:30:21] Daniel Blue: Know your exit strategy and time horizon. I mentioned it earlier, I bought a house at 18 years old, was making really good money, bought it right before the crash. I was 18 years old, I didn’t know what a recession was. I didn’t know that I was buying a house at the highest point in the market. When I bought this house, I didn’t think about how long I wanted to be in this house. So when the market took a crap and the housing market went down, I didn’t have a plan and I ended up short selling this property. But I know it would have changed if I went into it knowing I’m going to buy this asset and I’m going to be in it for 10 years, at least, so who cares if it takes a shit because it’s not going to impact me. I’m not looking to rent it out or sell it or refinance, I’m going to be in this bad boy for 10 years, I’m in it for the long run. If I would’ve had that strategy or that mindset, I would’ve made a different decision. Same goes when you’re buying a stock or crypto or really anything, like how long do you want to be in this asset? What’s your exit strategy?

[00:31:16] Mike Morawski: Yeah, awesome. Hey, let’s shift gears a little bit and I always like the bonus round. I know you’ve been on these podcasts before, my questions aren’t too difficult, so tell me what your favorite tourist attraction is.

[00:31:27] Daniel Blue: Ooh, definitely not Las Vegas strip, being here 12 years I hate the strip, man. If you can come in Vegas and then you want to hang out, hopefully we can hang out off the strip. So that’s my least favorite, I know that wasn’t your question. I would say national parks, I just got done with Yosemite saw some really cool waterfalls. I love nature, I love seeing different national parks, so that’d be my answer.

[00:31:49] Mike Morawski: Cool, here’s what I love in Vegas. Had a friend, he had a big boat out on Lake Mead. Just right after 9/11, I remember being out on Lake Mead and the cops that were out there wouldn’t let you get close to Hoover Dam because of what happened on 9/11. It was kind of an eerie kind of feel, but Lake Mead is probably one of the most beautiful places I’ve ever spent time on the water. So it’s pretty cool out there. Hey, favorite book?

[00:32:18] Daniel Blue: Mm. I mean, I would say the most influential for me was How to Win Friends and Influence People. One of my first books I read and I’ve read it a few times over the years, so that definitely that’d be the answer right there.

[00:32:32] Mike Morawski: Dale Carnegie, great guy. Nobody ever cares how much you know, until they know how much you care.

[00:32:37] Daniel Blue: 100%.

[00:32:39] Mike Morawski: So, favorite restaurant?

[00:32:41] Daniel Blue: Hmm, I’d say in any place where they serve seafood, I love seafood.

[00:32:47] Mike Morawski: Went to a place the other night had a parmesan crusted halibut.

[00:32:52] Daniel Blue: Ooh. That was delicious I bet.

[00:32:54] Mike Morawski: Listen, Daniel, I really appreciate you being here. Obviously you’re a wealth of knowledge, a lot of insight. How do people get ahold of you if they have an interest in hearing more about self-directed and how you can help them in that arena?

[00:33:08] Daniel Blue: Best place to be I just launched a book it’s called B.L.U.E Print to Your Best Retirement. The book will get more into the nitty gritty in terms of what we’ve discussed here today on the podcast. So people can find my book on Daniel Blue, that’s Daniel and then blue light Then also there is a link to my podcast. I have a podcast called How Winners Win, just talking about different financial strategies, entrepreneurial strategies, personal development strategies to help you win in your life, business and personal. Then I do have a course on the website it’s called The Quest Way, How to Make Money Tax-free.

[00:33:41] So if you’re into modules, it would get more in the nitty gritty on how to make money tax-free and some of these self-directed retirement account strategies. Then there’s a link to my website for my company, Quest Education. So if you have a 401k from an old job or an IRA, and you’re thinking, “well, shoot, I’d love to be able to tap into this bad boy penalty and tax-free, I’d like to learn more.” Then go ahead and click the link to Quest Education and you’d be able to fill out a basic form. Someone from my team could reach out and then give you some love over a few phone calls and, and see if it’s a good fit. But is going to be the hub for more information on how we can help.

[00:34:17] Mike Morawski: Nice, definitely worth the phone call to find out what people can do. If you have some type of a retirement account from an old job or an old position you’ve had and you want to roll that over, make sure you reach out and talk to Daniel about being able to do that because he can help you roll that over and then any more money you make in that you can make that tax-free. Daniel, thanks for being here today, appreciate all your insight and input. To my listeners, thanks for being here today. We will be here next Tuesday again, and look forward to talking to each one of you soon.