What is Elder Fraud and How do you Notice It

Aging is inevitable. As you continue to get older every day, it’s important to understand how to protect yourself and your assets from those looking to take advantage of older, more vulnerable investors. The term that has been given to this practice is Elder Fraud. Many people don’t realize how common it can be for scammers to target elders, and this is something that continues to increase. In fact, the fastest-growing form of financial fraud is elder abuse.

What is Elder Fraud? 

Elder fraud occurs when someone abuses the position of trust or influence they have with an elderly person (usually 60+) in order to gain access to that older person’s assets and/or cash money. Due to weakening mental and physical health among the elderly, they have become easy targets for those looking to commit financial abuse. Typically, these scammers try to locate those that seem to be vulnerable, lonely, isolated, or mentally and/or physically disabled. Elders that are unfamiliar with handling their personal finances are also an easy target for financial abuse. 

Common Scams Used for Elder Abuse

Financial abuse can come from anyone, but it often occurs between an elder and someone they know.  In some cases, financial professionals – like portfolio managers and investment advisors – can use their authority and access to accounts to commit elder fraud. Below is a chart that lists some of the common ways scammers, both known and unknown, may try to take advantage of an elder.  Tactics include: intimidation, using a power of attorney, lottery/marketing/phishing, sweetheart schemes, home repair fraud, home loan fraud, and identity theft. 

How Can my SDIRA Custodian Help?

Your custodian is there to protect you as much possible, while still remaining compliant. As a self-directed IRA custodian, Quest and others will provide as much education, due diligence trainings, and awareness information as we can in order to equip elders and their family with financial abuse knowledge. At Quest, we make it a priority to give you as much education early on so that you don’t fall victim to elder fraud scams in the future. 

If elder abuse is suspected by a Self-Directed IRA custodian like Quest, we are required to report the suspected abuse, even if proof is unavailable, as this is not required. Certain indicators can lead a custodian to suspect elder abuse is occurring. Changes like customer behavior or appearance, the type or frequency of transactions (increased withdraws, unusual funding, excessive amounts, etc.), physical injuries, disorientation or confusion, and even changes in who performs the transaction or who is with the customer at the time of transaction can all be potential red flags. 

Elder abuse and fraud is a serious offense and shouldn’t be treated lightly. If you suspect that you or someone you know is falling victim to elder fraud, contact your custodian immediately. Although these accounts are self-directed and require client due diligence, we can provide helpful resources and information. To learn more about how to protect yourself or someone you love, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

How to Take a Distribution from your Self-Directed IRA

It may seem self-explanatory when it comes to the ways to put money INTO your IRA, but what about taking it OUT? You might need to take money out of your account for various personal reasons that are not related to your investments, so it’s important to know how to take a distribution from your SDIRA. In this article, we’ll walk you through the steps needed. 

Let’s first distinguish the difference between a personal distribution and simply moving money out of your IRA for an investment. A distribution is money that is taken from your IRA and given to you personally. These funds are yours to do with as you like. A distribution is not the same as directing a Quest representative to send money from your IRA to a new or updated investment. 

Once you are certain you’re ready to take a distribution, you will want to make sure you know what type of account you’re taking the funds from. Then, you will want to understand if this will be a normal distribution. Different accounts have different rules, and it’s imperative you understand the implications. Taking distributions early could have penalties, but it’s still doable. 

To take your distribution, you will need the Quest Distribution Form. This form will let our Quest representatives know a bit of information about the distribution (for example, who it is for, how much the request is for, and where to send those funds). It’s very important to fill out all of the information on this form to ensure nothing is missed. Once you have completed the form, you will then submit it to our office. Once reviewed and processed within 24-48 hours, we will then send the funds to the desired location. 


  • Account Holder Information (Name, Acct. #, Last four of SSN, DOB, Address)
  • Reason For Distribution
  • Contribution Details (complete or partial, is it recurring?, etc)
  • If it is an asset, the asset description and fair market value
  • Funding instructions whether that be check, wire, or ACH
  • Your understanding and selection on the notice of withholding
  • Signature giving Quest permission to make this distribution

Once you have completed this information, you will return the form to our office. You can email it, upload it via the Secure Upload option (on our website or in the Client Portal) or complete the electronic Adobe Sign that will allow it to be submitted online. 

After we have reviewed the document, we will send these funds within 24-48 hours, ensuring you have your distribution in a timely manner! It’s our goal to help make taking a distribution as easy as possible, so if you ever have questions, call our Accounts Payable team at 855-FUN-IRAs. To learn more about investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

How to Invest and Grow your Small-Dollar Self-Directed IRA

Many people think that they don’t have enough money to get started with self-​directed retirement accounts. It’s a common misconception that keeps people from investing, even though taking the plunge sounds nice. Investors with small accounts can’t possibly see how an account with only $10k can purchase real estate

We have always believed that as long as you have the education, you have all the money you need to get started and that it is never too late or too early to start taking control of your retirement. Strategies such as partnering, options, and other real estate techniques provide the opportunity for even the smallest accounts to participate and grow. Creating a financial network will also allow you to come together with ease when making partnerships. 

Sometimes, seeing is believing because these possibilities are hard to imagine. At Quest, we see these types of small-dollar deals every day! One Quest client, Nancy Wallace-Laabs, shares her personal case study here about how she was able to use her small dollar IRA to get a 114% return on her investment, and this is only one example. This case study is an opportunity to see what others have done and, hopefully, provide some ideas for yourself on how you can grow your retirement account, too!

How I Used My Small Dollar IRA To Get A 114% Return On My Investment

By Nancy Wallace-Laabs

I was earning a measly interest rate, and even with compound interest, I was not reaching my desired levels of retirement income, and there were limits to how much money I could put away each year. Quest Trust Company offered a series: “How to Invest with your SDIRA” through their lunch and learns.  I was completely hooked that this is the information I need to start taking control and growing my retirement account and having the funds tax deferred!

I opened a Self-Directed IRA and started to look for an investment property that my SDIRA would own and generate “income” for my retirement account. Marketing was the mainstay of any real estate business and investing. My methods of marketing included direct mail, networking, driving for dollars, and referrals.

From one of my postcard mailings, I had a seller call, got the property under contract, sight unseen! I knew that the purchase price was right for the area, I was familiar with the area and knew it was in transition, I had an escape clause in the contract – called an option period, and lastly, that I had more than one exit strategy (wholesale, owner finance, or rental).

I purchased the property for $10,000. I had a partner on this deal, and we owned 50% each of property. The partner paid cash, and I paid my half with my Self-Directed IRA.  We opened and closed at a title company, and only had a small amount of paperwork to file due to using my Self-Directed IRA.

The next step was marketing the property. My exit strategy was still unknown at the time of purchase, so I put a sign in the yard that was handwritten. One side was in English, and the other side Spanish. Within 3 days, we sold property for $50,000, owner finance. The terms? 20% down – financed for 15 yrs. @ 9.5% interest.

With the terms set up, we were able to recoup our purchase price. For the next 15 years, my IRA is receiving half of the buyer’s monthly payment. For those of you who might be wondering – yes, this is only the interest and principal payment, for this case study example, I did not include what the buyer is paying for taxes and insurance.

So, how does this look for my IRA when you chart it out? Check it out:*

Principal PaidInterest PaidEarnings on $5,000 Investment

There were NO tax ramifications of this deal for me. I do not have to worry about that until I take the funds my IRA is earning out as a distribution. So, my IRA is growing tax-free over the next 15 years! In the meantime, I can continue to grow this IRA via other real estate investments, which I have continued to do. 

The point is that I am taking control of my retirement account, and growing it tax deferred, until I am ready to take out the funds. If I had just “flipped” this property for $50,000, I would have taken a huge hit on the earnings/proceeds, and I would have only made $20,000. By owner financing, I was able to capitalize on my initial investment.

Nancy’s story is just one of many. The creative strategies real estate investors have been utilizing for years can usually be done in SDIRAs too, and they make investing possible for those with small amounts. Quest offers classes about how to make big bucks in small accounts, and can always answer questions about how you can get started. To learn more about how to get started investing with a small dollar self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

To find out more about Nancy Wallace-Laabs, or to get a copy of Nancy’s E-Book, click this link:  https://bit.ly/30eEDR5 or email her at www.nancywallacelaabs.com. *Owner Finance Terms set up for 15 years (180 months) the numbers above only reflect my 50% stake in the property. Based on 180 months my monthly payment equals $208.84 per month.

DISCLAIMER: The purpose of this article is to provide education and is intended for this use only. Quest Trust Company does not in any way endorse or recommend individuals, products or services that may be discussed in this article and is not responsible for any communication between clients and guest speakers. As always, Quest Trust Company does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.

Adding Mineral Rights to Your Three-Legged Stool – Balancing your SDIRA Portfolio with Troy Eckard

Diversification. Almost every investor has heard the term, but how can you ensure your Self-Directed IRA is truly diversified? In the world of investing, there are constant changes and new opportunities, and finding new ways to diversify your portfolio can be difficult if you don’t know where to look. One asset, oil and mineral rights, have begun to take the stage in the world of alternative investing, yet many people are still unaware this asset is available, nor do they understand how it works. In this article, I have Troy Eckard of Eckard Enterprises with me, and he will be sharing how having oil and mineral rights as an investment can increase your future wealth and help diversify your portfolio beyond stocks, mutual funds, and even real estate. 

Sarah: Hey Troy. Thank you for joining me. Today, Troy Eckard from Eckard Enterprises is with me. We are going to be talking about how you can use self-directed IRAs to invest in oil and mineral rights. Troy, thanks for being here with me. I’m eager to learn about this topic more in-depth. I’ve always loved watching you on our weekly webinars, and I’m excited to dive a bit deeper into the details about this unique asset class. First, can you tell me a little bit about yourself?

Troy: I have been involved in the oil and gas industry since 1985. My background is in Economics and Finance. I started off with a small boutique firm representing high-net-worth investors who wanted to directly own oil and gas interests (primarily back in the eighties) to participate in drilling for tax write-offs. Over the last 35 years, that career has evolved. Now, I own my own companies. I own pipelines, mineral rights, oil and gas wells. I’ve spent three and a half decades working on behalf and alongside high-net-worth investors who see the energy space as a great alternative investment. So, that is pretty much my career. It has been a long time. I am excited about the things that are changing; it has been a lot of fun.

Sarah: What was it that really got you excited about mineral rights as an asset class?

Troy: Well, I had a partner tell me something back when I was a kid, back in my twenties. He said, “You know, I’m not going to invest with you, because you don’t have enough road scars.” And I said, “What does that mean?” And he goes, “Well, I need you to go lose someone else’s money, and try to figure things out before I invest with you. You’re too young to know what you don’t know.” And so, I would say that is pretty much what led me to mineral rights. I have drilled over a thousand oil and gas wells. Dry holes, good wells, bad wells. I’ve had about every kind of scenario you can think of. As I became a little older, I realized I have essentially become my client. I am now a high-net-worth investor who is 57 years old, and I’ve noticed my own investment profile has changed dramatically in the last four or five years where I’m less at risk. I’m more risk adverse. I’m more about accumulating assets that will grow over time. And I’m more about cash flow. I was not that way five years ago. When I look at the energy space, which I completely love and enjoy being in, there is only one asset class that fits my profile and that’s minerals rights, because it’s no expenses, no liability, no risk, and monthly cash flow. It grows based on commodity prices and reserves. So, it has evolved as I have evolved as an old timer now. It’s kind of worked hand in hand.

Sarah: You led me right into my next question. What is it about mineral rights that make them a good investment? You listed a couple of things, but go in to a bit more depth there. Can you tell us why they are so good?

Troy: First off, let me be very clear. Mineral rights are only good if you buy the right ones. So, every acre of land in the continental United States has a surface right and a mineral right. There is only about 10% of all the mineral rights in the U.S. that have oil and gas. So, what you have to understand is that not only do you like the oil and gas or the mineral rights sector, but you have to understand what it really brings. So, was it gold mines? Is it copper? Is it oil and gas? Is it water rights? They are all-natural resources that fall under minerals. But for me personally, what I like about mineral rights specifically tied to oil and gas… I like the fact that it is an asset that is held in perpetuity. So, it’s just like traditional real estate. It’s mine. It’s deeded. I own it. I like that fungible commodity part of it. The second thing I like about it is a mineral right essentially is the landlord. I can lease my mineral rights to large oil companies who take on 100% of the risk. The capital, plugging, drilling, and environmental liabilities all belong to my tenant, which is the oil company, and I get a free ride. Essentially, I get a percentage of all the gross revenue forever, for every drop of oil and gas produced without any exposure to liability or costs. What more can I do as a passive investor, looking for passive income to find? I can’t find any other asset that matches that kind of description.

Sarah: I agree. Now, you mentioned that there are potential risks that could come up. Let’s talk more about that. If you are a client interested in mineral rights, can you talk about some of the risks that can happen if the value for those rights goes down?

Troy: Let’s start off with the most common thread that goes in real estate or any type of other asset class. You make your money on the buy. So, when you buy something, the first thing is that you have to understand the credibility or the reliability of expertise for the person selling it. So, you must know who you are buying from and what their motivation is. That’s the number one thing. The second thing is, in oil and gas or any type of mineral ownership, there is only one way those minerals become more valuable and that’s called “activation”. Somebody’s got to mine the copper. They’ve got to dig a mine for the gold. They’ve got to go drill a well. You can own the most oil and gas saturated minerals, but if nobody is willing to go drill it, they’re not going to come to the surface to be sold. So, there’s two key things: not getting ripped off by an unscrupulous individual or an inept, incompetent person giving you bad advice. Secondly, you must be a mineral owner where you know that somebody or a company, a lessee, is willing to go put forth the capital to develop and extract the natural resources in the minerals you’re in. So, the two biggest risks are pure rip off and crooks, liars, cheats, and thieves. The second thing is, not having a mineral that somebody is willing to go put money and go drill a well and produce oil and gas from. So those are the two biggest risks.

Sarah: Let’s talk about the due diligence that really needs to go into making sure that, when getting a mineral right, the person is qualified. They are honest. They have a good track record. How would an investor determine that a person has the right expertise in that space?

Troy: Well, let’s go back to common sense. It’s amazing to me how wealthy investors literally take common sense and they’d set it on the shelf when it comes to investing. It just blows my mind, but it happens every day. And I’m talking to highly sophisticated investors. Here is the simple answer. Well, first off, who are you? What do you want? Why are you talking to me? What is your background? Who do you represent? I see investors right now that literally invest in mineral right programs and on the website, they don’t tell you who the management is. They give you no background. They give you no credentials, no antecedents. They literally buy because it’s a pretty website. And so, when they find out they made a bad investment, I’ll do due diligence for them. And I say, “Well, you didn’t even ask who the guy was.” They say, “What do you mean?” I say, “Do you walk through a shopping mall with your wallet out, leaving a hundred-dollar bill hanging out and do you just give it to strangers?” You don’t right. Common sense tells you to avoid or to, at least, run your due diligence. Let’s start with the premise. Who are you? What are you calling me for? Why do you want me to talk to you? I need to know that in black and white; the who part is the most crucial. That’s because 90% most of these people that are selling investments are felons. They’ve had securities violations. They have ceased and desist orders. They’re selling illegal securities. They’re paying commissions without an investment firm. I mean, it’s rampant. It’s 90% and it’s not just in mineral rights. I’m seeing that in apartment complex deals. I’m seeing that in real estate transactions. 

Sarah: Notes. All sorts of things.

Troy: So, that’s the first part. The second part is once you find a credible person, then I need to know the why. Why are you calling me? Why do you need my money? What are you trying? What’s the plan? And most people don’t have a plan. You know, back in the day, when I traveled to San Francisco to walk out a hotel and the street corner guy would come up to me in a black trench coat and go, “Would you like to buy a watch?” And he would have five watches inside of his coat. Well, that’s not a watch store. That’s not a watch distributor. That’s a guy trying to flip a watch! So, there’s no warranty. There’s no guarantee, and there’s no assurance. Then, if I have a problem with the watch, he’s not around. Most people calling or soliciting are going on platforms to solicit a product. They don’t have a plan. They have a deal. I don’t want to be an investor that buys a deal, because each deal has inherent risks with it. If I can find a sponsor or somebody that’s in a sector, that’s in an industry that has a plan and that has an entry and exit, then you’re telling me you have a general business philosophy that has some substance to it. But if you come and say, “Hey, I have four mineral acres for sale,” I’m going to say, “Okay, what are you going to do next month?” They say that they’re going to look for some more minerals. I’m just thinking how this person doesn’t have a plan. To me, I’m thinking you’re like the guy with the trench coat on the street corner. Most investors don’t ask that question. If you asked me, “Hey, Troy, what is your company doing next month?” I can tell you what we’re doing, and where we’re going. I can tell you six months from now what I’m doing, because I run a viable business. I’m not a guy with a trench coat. 

Sarah: I like that analogy and those are good points. 

Troy: Yes. And the last thing I would tell you is to run the numbers. I did some due diligence this week for a couple of investors, looking at some oil and gas ventures for drilling. We don’t sell drilling deals. We’ve mainly focused on minerals. And I said, “Let me just run the numbers.” I’ve been doing it for 35 years, and by the time I ran the numbers, the first oil deal was being marked up 300%. For every $200,000 that was being written as a check to participate in the drilling deal, $140,000 was profit. One in the guy’s pocket. He could care less if you hit a well, and the investor was just blown away saying, “How did you do the math?” I thought, “Well, I have a calculator. I got past second grade.” This is the math. And he goes, “Why didn’t I see that?” I said, “I don’t know, but I’m here to help you if I can.” But that means that he’s one of a thousand people; the other 999 wrote a check or participated. It’s just common sense. It’s not getting excited by the sales pitch. It’s not getting excited by the euphoria. It’s taking basics one step at a time and looking at the who, what, where, when, why, how. That’s it.

Sarah: I love that. And you touched on this next question, but talk a little bit about some of the due diligence you should do on the actual investment. What are some questions people should be asking before really getting involved? If they’re considering this as an investment?

Troy: There’s always four questions. Whether you’re selling an ostrich farm, an oil deal, or real estate deal the four questions every investor has are basically the same. It’s how much money do you want me to invest? How much risk is involved? What’s my return? And what’s the timeframe? You can ask these if you want to be in a cannabis investment or note investment or apartment; it’s all the same thing. Well, let’s use an example. If I had two 10 story buildings that are a hundred feet apart and I put a 2 x 6 board across it, and I said, “Sarah, I’ll pay you $50 if you’ll walk from one building to the other, without a safety net.”

Sarah: No, thanks!

Troy: Right. You’d be like, “Are you out of your mind? If I fall, it’s a hundred feet, I’m going to die.” Okay well, you won’t do it for free. How about a thousand dollars? And you go, “No, not even close.” Okay, well, how about for $10,000? I might get one out of a hundred people go for 10 grand. And they say, “I’ll try it, because I need the money.” Right? But you might get 9 out of 10 people who would do it for a million dollars. So, it goes back to how much risk, reward, and time. Right? In this case, to go deeper into your question… on the asset itself, I need to know what’s the catch for me? What’s the “gotchas”? How can I lose my money? What’s the likelihood I can lose my money and what are the steps in which I can lose my money? Essentially, I don’t care about the upside. I don’t care about the arm waiting. That’s all gravy. My number one concern is if I give you a hundred thousand dollars, how do I know I’m going to get my hundred grand back? And if I don’t, what are the stumbling blocks that keep me from getting the money first and foremost in an investment? Your number one risk is if you invest in a structured venture, like a partnership, an LLC, a joint venture is that you don’t own the asset. You own a piece of the entity. Now you better look at the management agreement. You better look at the contract. You better look at the managers, because you virtually have no rights. Those contracts were written. It says, I’m in charge. I make the rules. You have no rights, and so therefore you don’t own anything. You own a piece of a company. That’s the number one risk.

Sarah: I definitely see the risk there. 

Troy: The second part of that comes once you get comfortable and certain that it’s a good manager and that the company agreements are good. Now my question is, “What is your plan?” Maybe I’m a five-year investor, but he wants to hold it for 10 years. In that case, I can’t get my money out. I can’t liquidate. What if I want to retire? What if I’ve got bad health? I may be stuck in a venture with no exit, because it’s different than the majority of the owner. So, it’s not just the structure of the deal. What are the terms of the structure? Is there a liquidity event? Is there some way for me to exit where I can get out if I have to? And that’s always important, because nobody thinks about the exit. You know, when you go to a brand new apartment or house, nobody goes, “Where’s the fire extinguisher? Where’s the ladder and how do I get the hell out of here?” They don’t think of that, but that really ought to be your first thought. Getting in is easy. Like a marriage, getting out is a nightmare, right?

Sarah: Oh my goodness. I love the correlation there.

Troy: I got a lot of clients over the years who have been divorced, and I’ve heard about their nightmares. I’m still married after 35 years, so I haven’t had that experience. But once you get past the structure of the deal and whether you own the asset or on an entity, and once you get past the terms, then the real question is, “Are your interests aligned? Is what you’re trying to do… match that?” Don’t put a square peg in a round hole. If it’s in an illiquid, long-term venture and it doesn’t match, don’t get enamored with the opportunity. Simply say, “This does not work.” If you can stick to the basic principles, you’re going to avoid 9 out of 10 mistakes. That’s really what it is. It’s not a mistake in the asset, per se. The mistake is that you should have never got involved in the first place, because the top three items did not match. In our business, we like to do direct ownership, whether it’s drilling a well, whether it’s minerals, et cetera. The only time we put them in structured entities is if it’s for protection from liability or because it facilitates the ability to make the investment. It requires, maybe, a single entity to own it. Other than that, we like direct ownership, because somebody may not like my voice or the way I comb my hair and they say, “I just want to get away from you, Troy.” And I say, “Okay, great. Here’s your interest and have a nice day.” You can do it on your own, but that’s something that’s real important to me as an investor.

Sarah: You mentioned how some investments can be long-term, making liquidity difficult. So, once mineral rights are acquired, whether they’re in the SDIRA or not, how does an investor liquidate those assets? How do they get out when they’re ready?

Troy: So first off, let’s make sure we all know that a mineral right is a real piece of property, like real estate. The IRS classifies that it’s allowed for a 1031 tax exchange. So, it’s like an asset exchange. It is also available in your self-directed IRA. It fits all the necessary boxes that you can check for the right type of asset as real property, which is why it’s a great alternative investment. With that being said, because it’s titled, you own it. It’s defined geographically, it has legal description, and it’s a transferable asset. There are buyers all over the country that are trying to buy mineral rights. As an example, yesterday, we went on to an online auction. There were different lots of interesting wells, property, and minerals that were for sale. We, as a mineral buyer, bought minerals on that auction site. And we think we got it for about half of what it’s worth, because the seller did not know what they had. They’re inexperienced. They put it to the market with a reserve value that was half of what it was worth. We didn’t figure it would sell for that, but we made an offer, and the gavel went down, so we bought it. 

Sarah: And that’s doable?

Troy: Yes, we can go to public auctions. There are private auctions. There are also private buyers with a group called Energy Net that has 22,000 registered buyers. You can list your minerals on there, and you’ll have 200 people bidding on it every 15 minutes… bidding on your minerals. The way we do it – because we believe in protecting the appraisal or asset value – if a client invests with our firm, we like to help them facilitate a maximum price or value so that it doesn’t underpin or lower the value of our minerals that are in the same property. So, either we’ll buy them back or we’ll have existing high net worth clients that will buy them back. Or, we have direct professional mineral buyers around the country that are looking for minerals that we will go to and say, “We’ve got an asset for sale.” Within my group, we go to specific known buyers. If it’s a blind group, let’s say somebody bought multiple minerals, and they come and say, “How do you help me?” then we say, “Alright let’s talk about what you have. Let’s define where they’re located. Let’s get the legal description. And now let’s go to the best auction that’s going to have the highest number of bidders and let’s put it to the market.”

Sarah: Okay let’s say, everyone’s read through this. They love it. They want to go out and do it. Can anyone just go out and acquire them? You mention “blind investors”. I would assume that means this mineral rights are available to anyone, regardless of experience?

Troy: Anybody breathing air can buy a mineral right. You can take a homeless guy with a hundred dollars and he can walk over and find a mineral acre for sale for a hundred dollars in virtually any state in the country. All he has to do is give the hundred dollars, pay a fifty or a hundred dollar filing fee to file with the courthouse. Now, he’s a legal mineral owner. Every acre in the U.S. has a mineral right. So, literally people in the city who bought a house in a subdivision, if that developer did not extract or exclude the mineral rights with those homes, the homeowners look at their deed and title and they realize they own the minerals underneath their house. Problem is, it’s not sitting in an open field where somebody can go drill oil and gas. So, the nice part is anybody can own mineral rights, but when you move it into a security and are looking to sell a mineral right/invest in a mineral right through a third party, you now have a much more limited access to mineral rights. They could sell you junk if they wanted to. But I’m saying: it’s more transparent, it’s got disclosure, it’s got SEC requirements and, now, it becomes a much more tradable, public investment from that standpoint.

Sarah: Makes sense. Get the experts.

Troy: Now, we sell mineral rights that we own every day. We sell our own inventory, but we still provide the deeds, the title, cash flow, and the statements. At the end of the day, when you buy those mineral rights, again, it has to do with where it’s located and if it will ever see activation. It’s really important to understand that mineral rights can be bought by anybody, but who really qualifies in our case, are accredited investors. We don’t deal with anybody with less than a million-dollar net worth.

Sarah: Oh wow, got it. Okay. That’s important to know. And I’m sure everyone is different. 

Troy: Right.

Sarah: Now, we talked about how you can do this in a self-directed IRA. We determined that this is, in fact, an asset that can be held. Additionally, it’s similar to real estate in terms of the titling and deeds… let’s flip it. How is it unique? How does it differ from a real estate investment, which is a very common SDIRA asset that we see at Quest? And then we’ll talk a bit further on what’s required for it.

Troy: In real estate terms, most real estate pros understand “triple net”. Triple net means I don’t pay any expenses. I get a net check every month, which is my rent. The tenant is going to pay the cost of insurance, maintenance, et cetera. In the mineral rights business, it’s the exact opposite. We actually have what’s called “a 100% net”, which means that when we lease our mineral rights to a particular oil company, under that lease agreement the oil company is our tenant, and we’re the landlord. They agree to pay 100% of all the costs for drilling the wells, completing the wells, producing wells, and ongoing maintenance. We never get asked for a single dime of any part of any expenses ever. In the state of Oklahoma, there’s no property tax. But Texas has high property tax.

Sarah: Interesting! I did not know that.

Troy: So, you have holding costs with real estate. Well, there are no holding costs with mineral rights. There’s no cash calls and no capital calls. There’s also no tenant improvement. There’s no landscaper and there’s no insurance. It is a 100% net income asset, but it’s even better. Where you might have a triple net, or maybe have a gross profit lease (where you’re taking part of the profits from your tenant). In our case, as a mineral owner, in the original lease agreement with the oil company, we get paid a lease payment upfront in cash. They lease it; they don’t pay month to month. They pay 3-year leases up front in cash. So, there is no risk of not getting paid. That’s really cool. 

Sarah: Big time.

Troy: Then, on top of that, you negotiate a royalty percentage. The royalty percentage is a percentage of all future cash flow from the oil and gas extracted forever, not just for three or five years.  If they have wells that produce for 20, 30, or 50 years then, every single month [at] the top of the revenue distribution, the first out the door is the royalty payment to a mineral owner. So, I get a 100% net cash flow every single month for every drop of oil, every molecule of gas forever, no matter how many wells they drill. I could care less about the price of the commodities. No other investment exists like this, period.

Sarah: Yeah, I’m shocked. I don’t know what to say, because it sounds like a really good investment. Especially if you know that you’ve got that security upfront as well. How come more SDIRA investors don’t know about this?

Troy: The reality is Sarah, it hasn’t been around. This all evolved as a marketable asset for private investors within the last five years. The reason being is, when you used to see wells drilled, they were drilled, vertically with one straight hole in the ground. The size of the hole was a size of a seven-inch paper plate, like you’d go to a picnic. But, if the oil company drilled the well and it was dry, whoever’s minerals were tied to that well were basically condemned. It’s like having a three-legged horse. Who’s going to buy minerals from a well that was drilled dry on your property when there’s another zone deeper? And I say, “I don’t care.” Most likely it could be dry, as well. Then they moved to this new horizontal shale drilling. Now, it’s about a 99% success rate. This means that now I know I’m going to have a well, and now – because of technology, and because of how highly saturated these reservoirs that are in these shell basins are – I know I’m not going to have one well. I might have four, eight, or even 36 wells on my property, which means I no longer have to take the risk. But, this really wasn’t a tradable commodity five or six years ago. It opened in 2010, but private equity groups came in with billions of dollars and they bought $50, $60, and $70 billion of minerals across the U.S. The problem? That wasn’t even like a sand granule. This is about a half a trillion-dollar market today. They threw $70 billion at it. They bought all they can handle. They’ve left the buffet. Now, there’s more than enough for small groups of investors like us to go buy $50, $60 million a year for the next 30 years. It is a wide-open market. It’ll be here forever; it’s got plenty of inventory. You just need the right captain of the ship to navigate. That’s the basics.

Sarah: Yeah. I appreciate you answering how long it’s been around. However, I want to just jump back really quickly. We were talking about know how this type of investment would be unique as opposed to a real estate investment. Let’s talk about maintenance. Inside the IRA, obviously the IRS requires evaluations and status reporting. How does that work when you’re dealing with mineral rights? Who does it?  Is it as simple and reliable as reporting for more traditional assets?

Troy: Yeah, I definitely think it is. We have two ways of doing it. Generally speaking, we have a lot of clients with SDIRAs who have their money in energy investments with us. We will run it through our accounting department. We have an outside CPA, and we’ll provide those year-end reports. The other thing we do is, we have our own internal acquisition and management team that does a portfolio analysis every single month. We’re able to tell cash flow results and capital base from where you started to what we think it’s at. For the most part, mineral rights don’t go down in value. They go up in value, because you’re taking minerals and titling them… similar to titling real estate. We’ve also hired one of the #1 engineering firms in Oklahoma, and what we’ve hired them to do is do a reservoir and cash analysis on our minerals. So, by the end of the year, we’ll be able to have an assumptive engineering report, because this company does a lot of the year-end reports for publicly traded companies. Because of all the work this engineering firm does, we have firsthand reports, documentation, and standardized reserve and cash flow analysis that we can then apply to our mineral portfolio, which then allows us to be able to push that down to our private individual high net worth investors’ portfolios. We have our own in-house engineer who does that. We also have our own software that we subscribe to that does the same thing on analysis and reserves. We’re able to do – just like real estate with appraisals and discounts and fair market value – the same thing with minerals. We’re able to give those reports in a timely manner every year, just like normal, traditional real estate.

Sarah: It sounds like those systems make it pretty accurate. Is there anything else that you would want our audience to know if they’re interested about getting involved in this type of asset class? Anything I haven’t asked that you think is important to mention?

Troy: Well, probably today, Sarah, one of the most relevant things is the media. The media has jumped on the bandwagon these last 12 to 24 months. They’re saying the fossil industry is dead. They’re saying that oil and gas is gone and now it’s the green deal. Now, it’s going to be alternative energy with windmills, solar, hydro, and everything else. But, the reality of it is, the investors out there need to understand that everything you have in your room and everything I have in my room is made from, transported by, developed from, or a by-product of a barrel of oil. So, when you have this green deal, the main thing they need to understand is that the entire world is burning a hundred million barrels of oil a day. The reality is, when you burn it, it’s gone.  So, we have a diminishing resource with an increasing demand and no substitute for the byproducts. Every Tesla electric car is literally made a 100% from oil and gas. The tires, the metal, the machine shop, the electricity, and even the highway it rides on. So, I don’t have a problem with alternative energy, and I don’t have a problem with these additional components that will help lighten the pressure on oil and gas from the standpoint of being energy of choice. But in reality, oil and gas demand is going to continue to rise. Oil and gas supply is going to continue to shrink. In today’s environment – with the current administration – they’re implementing things, such as federal lands being restricted and restricting capital for the oil and gas energy. All that’s happening is, this diminishing supply is now being absent of capital. As an investor, I’m always looking for that economics 1-on-1, supply and demand. I have rising demand with a low supply. How do I participate in that? Well, you can buy public stocks. The problem is now you’re subject to the public market. If the market goes down, so does my energy stock. But, with direct ownership, I’m truly at the market-to-market value of commodity prices today for oil and for gas. So, what I would like to just mention, whether it’s in your self-directed IRA, a 1031 exchange, or your normal investment account, if you don’t own energy in your portfolio, you have a three-legged stool. The three-legged stool means I am missing the one component that allows me to balance my portfolio. 

Sarah: You said it. Diversification is so important.

Troy: Right. So, if I have a stock market portfolio that starts to drop, it’s usually because we have inflation with rising energy costs. The reason why the stock market has done so well the last six years is because we’ve had cheap energy, right? Cheap interest rates.  But… if I own mineral rights and the stock market goes down, my oil and gas rights are going up. The stock market’s looking like it’s at its top. And it’s coming down a little bit, right? The value of the dollar is sinking. What’s happening to oil? We’re over $65 a day. Oil is going to be over $100 dollars a barrel in the next 12 months. And if you don’t own it, your portfolio is out of balance. So, it is a great portfolio tool and a great asset to have in some small percentage of your overall investment. Every other investment, like your real estate portfolio is going to be affected negatively by rising crude oil prices. How are you going to get the electricity for your tenants? How are you going to pay more for that sheet rock and those boards and that transportation and that lawnmower out there mowing your grass when prices go up? All you have to do is look back to 2008 when oil went to $145 a barrel. The economy was horrible, and the dollar sunk down into the $70s. The inflation rate was sort of minimalized, but at the end of the day, because we had such high oil prices, it killed the economy. But not for me. I drove a Hummer and I liked eight miles a gallon. I was filling up at $6 a gallon, smiling from ear to ear because why? I was balanced. So, I would just leave your audience with the fact that, whether you ever make an investment directly in minerals, or you look at buying a public mineral fund, or you’re looking at some other type of mineral asset, you must be – and I’m going to say this bluntly – you must be in the market. This is not the type of investment to get your toe wet. You’re have to truly be a believer that energy is a great asset to balance your portfolio through a self-directed IRA, like with Quest. I’d say 95-98% of most investors have zero direct oil and gas in their portfolio. I don’t know why, but they don’t. But I’ll be blunt and tell you what you should do and what you shouldn’t do. I’ve told probably eight out of 10 people, direct oil and gas is not for you.

Sarah: I think that’s good!

Troy: I’ll say, “Go buy a stock. Be in the space, but not directly.” But, I also have had a lot of partners that have joined us because they finally understand that it’s an important asset to hold. We’ve been strategically working our tail off with very sophisticated investors, because this evolving mineral market is so new. Many people are like you going, “How is that possible? You can own something with cash flow and no risk? Why wasn’t I hearing about this five years ago?” Because it really wasn’t around, you know.

Sarah: This has been so helpful and eye opening. If someone wants to get in contact with you, how can they do that?

Troy: [chuckles] You can call my probation officer. He’ll tell you where I’m at.

Sarah: You’re so funny Troy! 

Troy: It’s Info@EckardEnterprises.com or they can call 800-527-8895

Sarah: Awesome. Well, thank you so much for joining me today. I know I learned somethings I didn’t know and I’m sure our readers did, too. 

Oil and mineral rights are just one of the many great options available for you with a self-directed retirement account. If you would like more information about how to invest in oil and mineral rights or other alternative assets in a Self-Directed IRA, reach out to a Quest Trust Specialists for a free conversation. Start diversifying your portfolio today! To learn more about how to invest in mineral rights with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Quest Trust Fees Explained

At Quest Trust Company our Would Famous Customer Service begins and ends with our clients. So when it comes to our fee structure we want to keep it simple and transparent. Also, every dollar you spend on a Quest Trust fee goes back into making sure your self-directed IRA experience with us is the best it can be.

While other IRA custodians may boast cheaper fees, you may find that their services do not meet all of your needs. Although our fee structure might not be the cheapest, our fees remain average with industry standards. You will find that the customer service and education we provide will easily pay for itself, and you’ll receive a much higher value for only a slightly more expensive fee. 

What Fees Can I Expect To See?

With a Self-Directed IRA at Quest, you will never experience a hidden charge. Our outlined Fee Schedule allows you to accurately plan for any fees you would expect to see during an investment, ensuring you never have to be shocked by an unplanned charge. Additionally, with 3 different Annual Fee Plans, you have the option to choose the best structure that works for you rather than being locked into an all-inclusive plan that may not fit your needs. 

Getting started is easy and won’t cost you an arm and a leg. For just $100, we can establish and generate an account number for a new self-directed IRA. Then, when you’re ready to fund your first transaction, there’s only a few charges you’ll incur. Any other fee you’d see at Quest would surround yearly investment and account maintenance, such as end of year reporting or additional investment processing. 

Fee Break Down Example

Here is an example of the fees you may see when you open your Self-Directed IRA and do your first transaction:

John attends a Quest Lunch & Learn and decides he is ready to start a Roth IRA. When John opens his account, he will pay $100. Luckily, he heard of a limited promotion that Quest was running, and was able to start his account at no cost at all! After only a few days his account is open, and John is ready to roll over his old 401(k). John doesn’t incur any expense for this process, nor will he ever have to worry about paying fees for any incoming funds. When money is coming in to your Quest account, we do not charge a fee.

A week or two goes by, John’s funds have arrived in his IRA, and now he is ready to invest his IRA into a perfect rental property he has found! He calls a Quest transaction representative to get help with his transaction. He fills out a Direction of Investment form and provides a few supporting documents. While his Quest representative works with the title company to complete all funding documents, John is charged a $125 transaction fee (and his choice of either a $30 wire or $5 check fee) for this purchase of his new investment. 

The last fee John can expect to see will be his Administrative Fee, which is the costs for us to hold and maintain his new SDIRA asset. Depending on what option he has selected when he filled out his account opening paperwork, he can expect to see an annual fee every year on the anniversary of his purchase or he will see a quarterly fee based on his account value at the time the fee is assessed (different based on his Fee Option he previously selected). John doesn’t have to worry about paying fees when monthly rental income from the property comes back to his SDIRA.  If John were to have an expense that needed to be paid, he would only need to be aware of the cost to send his check ($5) or wire ($30). 

Self-directing shouldn’t come with aggressive fees every way you turn, which is why we believe in only charging a few main fees for the more difficult services we provide. As you shop around, you’ll see our fees are remain average with other custodians in the industry. We are confident that our service will show any potential or current client the value of Quest Trust Company. If you have questions about our services or fees, give us a call at 281.492.3434. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Analyzing Different Real Estate Strategies for Self-Directed IRAs with Guest Speaker: Shenoah Grove

Self-Directed IRAs are perfect vehicles for creating tax-advantaged buckets of wealth for the future, and they also let investors save for their retirement by investing into assets that they are familiar with and enjoy. Today, Shenoah Grove of the Texas Real Estate Investor Association joins me to share some strategies that have worked for her and her team as she has grown up in the investing world. 

Sarah: Thank you for joining me today. We’re going to talk a little bit about Self-Directed IRA real estate strategies. We’ll also discuss some of the strategies that you are personally using and teaching in your practices. Before we jump in, can you tell me a little bit about yourself?

Shenoah: Yeah, so Shenoah Grove here, founder, owner and operator of Texas REIAs, Texas’ largest association of real estate investor groups with over 87,000 members. I’ve been investing since 2003, but I’m a fourth generation Texas real estate investor. My great-grandparents owned a rental property. They owned about 18. And my grandparents own rental property. My parents still own about 12 doors to this day. So, it’s a little bit in my blood. I love what I get to do every day, both as an investor, as well as the owner and founder of Texas REIAs. I also coach many clients who are looking to either get started in real estate and/or tweak what they’ve already been doing in order to scale their business. So, that’s a little bit about me.

Sarah: It’s really neat that real estate investing has been in your blood for so long. It sounds like it’s something you’ve been passionate about for quite a while. What really got you started? What kick-started your time investing?

Shenoah: Well, I think we have all been socialized, probably over the last 50 years, just to go to college and we’re told that will be how we excel. That’s how we succeed. And even with real estate investing and with generations of real estate investors in my blood, I was also socialized that way. So, I got my undergraduate degree at University of Texas. Then, I got my MBA at Rice and I thought, “This is how I’m going to make it in the world, and how I’m going to make it in corporate America”. As I was doing that, I was working my butt off and I was watching my income grow, but I was also watching my parent’s income. It was double. Their wealth would double just from real estate investing. It became obvious at some point that I needed to reevaluate what I was doing and look at real estate investing in more detail.

Sarah: I love that background. Any specifics that stick out to you?

Shenoah: The first investment deal that I did was actually when I was in college. Now, don’t think that I’m bragging here, but at the time I was making $4.75 an hour. Okay, yeah. How does a college kid with hardly any income buy a house, right? So, the way that we did it at the time – this loan product is not available anymore – but at the time we used something called a “non-qualifying assumable loan”, which is essentially like buying subject-to today. Although they don’t make non-qualifying assumable loans anymore, you can still purchase the property subject-to the existing mortgage today, which is how I got my first house when I was in college. Actually, one of the members of our real estate investors association built a house right next door to this property and sold it for over $2 million. So, that’s how you build wealth as a real estate investor. You buy in the right places and you hold in the right places. And I love what I do now as an investor.

Sarah: Oh yes, I can always see how passionate you are about it every time I’m at one of the Texas REIA events. I always see a smile on your face and it always seems like people really love being a part of the program. Now, there were a couple of terms that you threw out when you were talking. You mentioned subject-to and buy and hold. Those are obviously a couple of real estate strategies that people can utilize whenever they want to invest in real estate. What are some real estate strategies that you’re using right now as you invest?

Shenoah: For me, I want to make money every time the phone rings and we are what we call ourselves, “strategy agnostic”. I don’t care what strategy it is. If there’s an opportunity to make money, then I’m going to employ that strategy. I want to make money whenever the phone rings. I see a lot of investors get caught in the trap of, “I want to do fix and flips”, or “I want to do buy and holds”, or “I want to do wholesaling.” Well, that may work, but it may not work on the next call you’re about to get. So, I don’t care if it’s commercial, single family, a duplex, three-plex, four-plex, or raw land. If there’s an opportunity, I’m going to do my due diligence and try and figure it out.

Sarah: That’s such an important point. There are so many opportunities. 

Shenoah: Right. And you spend a lot of money as a real estate investor on marketing, right? So, if you’re trying to fit every single lead that you get into one specific square, if you will, that’s not going to always work. You’re not going to be able to scale your business and/or reach the amount of income and wealth knowledge that you want as a real estate investor. For me, I love all the strategies. We love to buy, fix and flip. We love to build new. We love to buy and hold. We joke that we have the Blue Bell Ice Cream investing philosophy, being from Texas. Most people know Blue Bell slogans, which is “We eat all we can and we sell the rest.” So, for me, I want to keep all that I can, and I want to sell the rest, meaning sell enough just to fund my lifestyle.

Sarah: And one strategy I know you utilize is the power of the Self-Directed IRA.

Shenoah: Of course, you know, being able to do that in a self-directed IRA, being able to do that in our Roth IRA really increases and even doubles the power of your investing. So, and there’s so many different strategies you can use. In our self-directed IRAs, we loan money to other investors. We also buy properties that we keep as rental properties. We have shares in apartment complexes, multifamily, and other commercial investments. We even buy subject-to the existing loans in our self-directed IRA. And when you think about buying subject-to in your self-directed IRA, for example, that really compounds it. Einstein says the most powerful force in the universe is compound interest or appreciation, right? Combine that with some of the tax-free savings that you can get using a self-directed IRA, specifically a Roth IRA, and there you go.  The self-directed IRA knowledge [is] critical in order to build that tax-free wealth.

Sarah: That’s great. Everyone is a little different. I like to use my Roth to be passive and do private lending, and I always love hearing about the creative ways other’s use their IRAs. 

Shenoah: We also partner with homeowners to do equity partnering. We like auctions and options, wraps, and all sorts of different things. And again, when I see a deal, I don’t look at the deal and say, “I want to fit in my strategy on that deal,” But instead I say, “What does this deal tell me?” It will tell me the strategy that I need to use. That’s a little bit about some of the different strategies that we use, at least in our self-directed IRA. 

Sarah: Absolutely. You talked about a lot of great strategies there and using a self-directed IRA to do so. Before we move on, for those that may not know, can you briefly define what a sub-to is/what a wrap is?

Shenoah: Yes, this is the strategy that will allow your “dollar to holler”, as I like to say. The average price in Texas right now is around $350,000. Not everybody has that money just laying around to be able to do investments with, but they might have $50,000 or $100,000. Well, with $50k or $100k, you could easily reinstate a property and/or do repairs. Even though you couldn’t acquire that property on your own with your own cash or with your own credit, or even on time for example, buying subject-to allows you to cut that timeframe down to nothing versus waiting on a traditional lender that might take 30 to 45 days to give a loan. Sometimes the properties we’re investing in, you don’t have 30 t0 45 days to close it. You might have two or three, and that’s where the excitement and the opportunity comes in. So, you could easily just reinstate a homeowner’s or seller’s loan and take over their payments, right? There’s three instruments that are typically filed on a sale. There’s the general warranty deed (who owns the property), there’s the promissory note (what’s owed on the property), and then there’s the deed of trust, which helps enforce that promissory note and allows for nonjudicial foreclosure, for example, here in the state of Texas. When you’re buying a property subject-to, that original promissory note and that original deed of trust that’s held by the lender stay in place. The general warranty deed transfers to you, the investor. You are the new owner. That’s buying straight subject-to. Now, the best way to do it to make sure you not only protect yourself as an investor, but also the underlying seller, is to create a new promissory note and a new deed of trust. It kind of sits on top of, or “wraps” around, the original note and deed of trust. Then, the original note and deed of trust, (the person you’re making payments to – the person who can foreclose) is the Wells Fargo chase bank of America, et cetera. And the new note is going to be the original seller. So, if you default as an investor on that loan, then the seller can go back and foreclose on you. It gives the seller additional protections that gives the seller a sigh of relief.

Sarah: That was a great explanation. Thank you!

Shenoah: Yeah, so, buying subject-to is really just taking over payments. Creating that wrap around mortgage is where you give that seller those extra protections by creating that additional note and deed of trust. Very powerful strategy again. Then add a self-directed IRA in the mix, and the possibilities of what you can do are endless when you are strategy stacking. It just feels like you’re a Jedi!

Sarah: Oh, I love what you just said there: strategy stacking. That’s a cool term, and self-directed IRAs are obviously just one more layer that you can have as a partner or, you know, a tool in your tool belt. Let’s talk a little bit more about self-directed IRAs specifically. When did you start using self-directed IRAs as a part of your strategies?

Shenoah: When we started investing in 2003, we were in corporate America. We had a 401k and it’s like you had four options: low risk, medium risk, high risk, and international, which means we don’t even know what’s going to happen here. That was about it. So, we started investing, but we kept thinking how we wanted to be diversified. We were going to keep our 401k money in the stock market, and then we we’re going to keep our real estate money over separate. That worked for a while, but at one point we realized we weren’t watching the stock market. We weren’t being good caretakers of that. We also realized that we were probably not going to outsmart the average person who is on Wall Street. But as we started investing for a while, I started to think, “Okay, well, I can outsmart the average real estate investor. So, when we realized that we live, breathe, eat… and sleep real estate, we moved our money over into a self-directed IRA. It’s nice to be able to touch, look, see, and evaluate the investment. You don’t have to worry about some crazy worldwide disruption changing the whole value of the portfolio. 

Sarah: That is so true. 

Shenoah: The only hockey quote that I know is by Wayne Gretzky. And he says, “I don’t skate to where the puck is. I skate to where the puck is going to be.” You need to know where the values are growing and you need to invest in those locations, especially for the buy-and-hold strategy. The fix-and-flips are not going to change value in the short amount of time that you have to raise the value of that property. If you know where the value is going and growing over the course of the next several years and you’re investing there, then you’re going to win. Never is that hockey statement so true then about real estate and real estate investing, specifically when it comes to buying and holding. So, yes, this is something that we’ve loved to do and something that has benefited us, and it has really been the basis for our wealth as investors. And then double that with some of the tax-free benefits that you get, and yeah, it’s called winning!

Sarah: That’s actually exactly what I was going to say, too. Tax fee, and then also being able to invest in what you know. If you’re investing in what love, you’re probably going to get higher returns. Now, on the flip side, are there any strategies that you all try to avoid? Strategies that make you think, “We are going to avoid these at all costs. They don’t work for us.”?

Shenoah: Yeah, every area is different. So, Texas has different laws than California, than Florida, then other places. We factor that into our strategy. And also, as an entrepreneur, you always have to remember that it’s your job to be looking for disruptions, right. What’s the disruption, what is the solution, what is the workaround, and do we need to change our business and look for different strategies. 

Sarah: I love that you mentioned workarounds. I mean, one of the biggest workarounds we have is obviously the backdoor Roth IRA which we talk about in other articles, but some of those work arounds can sometimes even make a strategy you didn’t think you had possible. Those work arounds – when you understand them and do them correctly – they’re so important.

Shenoah: Yes, you have to be careful. I don’t like pushing the envelope when it comes to self-directed IRA specifically from the standpoint of when what I’m doing might create a taxable event for me. I see a lot of people out there who are possibly creating taxable events, just because they don’t know or just because they got educated on what I call “YouTube University”. They’re listening to the wrong people. That’s why I love you guys.

Sarah: Thank you, and you are so right. It really is important to surround yourself with the right people when it comes to proper education, whether it’s Self-Directed IRAs or real estate investing or anything really! Well, Shenoah, I really appreciate you being here with me today and sharing some of your strategies and insights with me today. If people want to get in contact with you where can they go?

Shenoah: Our website for the TEXAS Real Estate Investor Association is https://texasreias.com/ . Thank you!

As you can see, not one strategy is better than the other, but they can all benefit you in some way. Being able to understand and utilize all sorts of different strategies will expand your investing knowledge and could be what takes your Self-Directed IRA to the next level. If you ever have questions about how to utilize certain real estate strategies in your IRA or want more information about how to get started, we encourage you to talk to an IRA Specialist! To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

How To Use the New QTC Investment Hub in Your Client Portal

Modern investing requires modern resources! Being able to conduct your business and manage your self-directed retirement accounts virtually is almost a necessity. Quest is always striving to add value to your customer experience by providing the latest and most innovative resources to you through the Client Portal. 

Our newest feature is our QTC Investment Hub, a 100% online investment hub where you can upload new investments and check on current ones faster than ever before. In this article, we’ll help you explore all the new ways you can use the QTC Investment Hub. 


The biggest announcement for the QTC Investment Hub is the ability to submit new investments online! The days of going back and forth through emails and missing calls are long gone. In five simple steps you can now upload your new investment through the Client Portal. Once you have confirmed the investment information and submitted your supporting documents your investment is ready to be reviewed and funded with your “read and approved” signature.

Don’t worry if your investment requires a bit more work. Do you plan on doing a split or additional investment? Not a problem with the QTC Investment Hub. We’ve thought of everything when it comes to making your experience investing in notes, real estate and other private assets simple and possible!


The QTC Investment Hub also gives you the ability to track the status of an investment with the Live Investment Tracker. Track your investment right there in your Client Portal after you hit submit by clicking on “Investments” then “Pending Investments-Client Portal Submissions”. Your investment tracker can give you real-time updates on where your deal is in the process! Even if you notice that you have inputted incorrect documents, you can replace them in your Client Portal with the QTC Investment Hub.

You will also be able to go back and retrieve these online document uploads for your records. Simply go into the portal, click on “Pending Investments” and then to the Client Portal submission area. Here, not only can you check the status, but you can also view and download documents you’ve previously submitted. 

Access Transaction Specialists in Live Time with Questions

We want to make sure you don’t feel lost navigating these new features, so we now offer the ability to chat with live Transactions Specialists through the Client Portal. The direct message feature in the QTC Investment Hub will allow you to send your specialist a message and they can respond back to you in real time. To get to the chat feature, you simply need to click on the box in the lower right hand corner of your client portal and start typing! 

It can be frustrating learning new technology, but we want to continue to offer our clients the best features to make self-directing your retirement as efficient as possible. You can rest assured knowing that these new online features are safe and secure through security pin, confirmation checkpoints, and security verification. If you have questions about how to use the new online QTC Investment Hub and the ways it can add value to your investing experience, be sure to give a Quest Trust representative a call today at 855-FUN-IRAs (386.4727)! To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Updated Tax Filing Deadline Could Mean Even More Time For You to Contribute!

Recently, the IRS announced tax relief for Americans by extending the Tax Filing Deadline. The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. 

 An additional extension is also available for those affected by the Texas winter storms. The Internal Revenue Service shared in February that victims of the winter storms that began February 11, 2021 now have until June 15, 2021, to file various individual and business tax returns and make tax payments. 

 How Does This Affect My IRA?

With these extensions, more investors will have time to make their 2020 IRA contributions. If you haven’t made your 2020 contribution, you now have until May 17th to make any previous year contributions, and those affected by the Texas winter storm will have additional time – up to June 15th – to contribute. Your IRA is one of the most important tools you have when planning for the future, and one of the best ways to help your IRA grow is by making yearly contributions. 

Where Can I Get More Information?

The IRS will be providing formal guidance as we move closer to these deadlines, but the most up-to-date information can always be found on the IRS website HERE. If you have Self-Directed IRA questions, you can always contact a Quest Certified IRA Specialist by giving us a call at 281-492-3434 or emailing us at IRASpecialists@QuestTrust.com. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

New Year, New Roth IRA – Starting your Roth IRA in 2021

It’s never too late to start thinking about retirement. For some, retirement might be right around the corner and for others, it could be a long way off. Either way, the same principle applies to both situations. The sooner you begin thinking about your future financial goals, the faster you can start working to achieve them. 

IRAs have proven time and time again to be great retirement accounts that offers some unique advantages over their competition. Starting early will ensure you receive the full reward of all that these accounts have to offer. One of the most beneficial accounts is the Roth IRA. 

How is a Roth IRA Different from a Traditional IRA?

A Roth IRA is closely related to the Traditional IRA. They are similar in that they offer tax-free growth for investments within them. The key difference between a Traditional IRA and a Roth IRA is when you get your tax break. With a traditional IRA, you pay taxes when you withdraw from it, while a Roth IRA has you pay taxes upfront. Additionally, Roth IRA contributions aren’t deductible like Traditional IRA contributions can be. 

Roth IRAs do not have age restrictions but do have annual income-eligibility restrictions. Certain penalties could apply if you pull from your earnings before 59 1/2, similar to traditional IRAs, but luckily Roth IRAs offer exceptions, making them great accounts for those who get started early!

Why Choose a Roth IRA Over a Traditional IRA?

A traditional IRA can have advantages, like upfront tax deductions when you make your IRA, whereas your Roth IRA has you pay the bill upfront. Your contributions are still taxed as income and don’t lower your AGI. However, any withdrawals you make in retirement are generally tax-free.

One of the great things about the Roth IRA, is that you can draw from your Roth IRA contributions at any time without penalty. Additionally, you can use your Roth IRA funds to buy your first home. If you tap your Roth for a first-home purchase, in addition to using your contributions for the down payment, you could also withdraw up to $10,000 of earnings and penalty-free if the account has been open for at least five years. Qualified higher education distributions are allowed in a Roth IRA, too!

If you’re maximizing your yearly contribution for a Roth IRA, the compounded interest can greatly outweigh the costs upfront. Paying the taxes today while being in a lower bracket may allow you to reap the tax-free rewards later in your life when you retire.

Why I Should Start a Roth Soon?

Roth IRAs follow a very special rule, unlike other retirement accounts. There is a “5-year-rule” that applies when you take distributions from the Roth account. Generally, as long as you have had the account open for 5 tax years and you are over the age of 59 1/2

The 5-year holding period for Roth IRAs starts on the earlier of  the date you first contributed directly to the IRA,  the date you rolled over a Roth 401(k) or Roth 403(b) to the Roth IRA, or the date you converted a traditional IRA to the Roth IRA. The younger you are when you start and contribute to your Roth IRA, the more you can save for retirement, because you get that tax-free compounding clock for longer.

How Do I Start My Roth IRA?

Retirement accounts, especially the Roth IRA, are great for building future wealth and are best maximized when starting early! Contact an IRA specialist at Quest Trust Company for more on how you can start a Roth IRA or other retirement account and start building equity today. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Your Top 10 Most Common Self-Directed IRA Questions Answered!

Understanding how self-directed IRAs work can be some of the most lucrative and useful knowledge to have. When you know even just the SDIRA basics, you’ll find that there are many ways this information can help not only yourself and others around you as you continue to invest. So, what are some of the most common questions people ask about self directed IRAs? Below are the top 10 most common questions surrounding SDIRAs:

  1. What is the difference between a Self-directed IRA and a regular IRA? This is a great question and probably the most common question asked. The answer is actually simpler than it may seem. There is no legal distinction between a self-directed IRA and any other IRA. The difference is that with a truly self-directed IRA, the account agreement allows the broadest spectrum of investments. Legally, there is no difference between the two; self-directed is simply a term used to help describe that the account allows for the investor to have full control over their investment choices and the type of alternative assets than can be held. 
  2. What is the benefit of having a self-directed IRA? There are many benefits of using self-directed IRAs. Not only can you diversify your portfolio, moving beyond stocks, CDs, and mutual funds, but you can also have more control on the investments you choose. Unlike having a financial advisor that will trade and sell your stocks for you, when you have a self-directed IRA, you are truly getting to find the investment of your choosing. Everything is on your terms when you self-direct your account at a non-traditional custodian, because you choose the investment. This allows you to invest in the things you know and understand, as opposed to things you may not be as familiar with. Not everyone understands the stock market – or is comfortable with its current state, anyway – so, having the opportunity to invest in private assets like real estate, is a much better option.
  3. What type of accounts can be self-directed? There are many different accounts that can be self-directed. At Quest, we offer seven different types of accounts, all which can be self-directed. Because each account works a little bit different, it is beneficial to speak with someone like an IRA Specialist who can provide education about specific accounts.
  4. Can I have multiple IRA accounts? One of the great features of self-directed IRAs is that they don’t have to be used only on their own. Self-directed IRAs can work together by using a beneficial strategy called “partnering”. This term is used when one entity (or more) and an IRA come together to put up the funds for an investment. In this strategy, all parties have a vested percentage of ownership in the deal. When doing this, the percentage of ownership is decided at the beginning of the investment and must remain the same throughout the life of the investment. This means that any profit the investment receives is returned based on this percentage of ownership. Additionally, the IRA would be responsible for its percentage of any expense associated with the investment, too.
  5. Can I move a 401(k) to a self-directed IRA if I am currently still employed with my company? Typically, you cannot move your IRA until you have left your company or have some separation from the company that could allow you to move a portion of those 401(k) funds. This is not to say that you cannot have both an IRA and a company 401(k) at the same time. Many people have an IRA and make personal contributions to the account, you just may not be able to receive a deduction for your IRA contributions. In some cases, companies will allow for an “in service” rollover, meaning that some of the funds may be eligible to move to an IRA while still employed. 
  6. Is it possible to have a Roth IRA if I make too much money? One of the most common questions surrounds a certain type of IRA account – the Roth IRA. Many people believe that if you make too much money that you cannot have a Roth IRA, but this would be incorrect. Although it is true that if your modified adjusted gross income is over a certain limit you still cannot directly contribute, it would be false to assume this means you cannot have one at all. Check out our other articles about Roth conversions to learn more. 
  7. Is it possible to own real estate in an IRA? This is a very common question, and it is true that one can purchase and own real estate in an IRA. Due to the potential predictability and security of the asset, many people are making the decision to diversify their retirement accounts into tangible assets like real estate. With self-directed IRAs, you are able to invest in all types of real estate such as land, single family, multifamily properties, commercial properties, mobile homes and much more. When using an IRA to purchase real estate, your IRA is the purchaser and you make all the decisions about your investment and the profits grow in your IRA!
  8. What happens if I don’t have enough money in my IRA to purchase my investment? If you don’t have enough money in your IRA, don’t worry! There are other options available to you that can allow you to still use your self-directed IRA for the investment. You can:
  • Make your annual contribution if you haven’t made one for the year already.
  • Partner your IRA with another IRA or personal funds to make up the total cost of the investment
  • Utilize getting a loan from a private lender to help make up the remainder of the funds
  • Get a non-recourse loan from a qualified lender
  1. Can I live in or work on a house that my IRA owns? This is one of the most important common questions that involves IRAs. When you are using a self-directed IRA to invest, there are certain people that your IRA cannot participate in deal with. Certain disqualified people (you, your spouse, your lineal ascendants and descendants and any companies owned or controlled by those people) cannot do business with your IRA or else it will be seen as a prohibited transaction. If you are using your IRA to do business with a 3rd party, this can be done all day long! But this mean, you would not be able to work on or live in a house that your IRA owns. More about that here!
  2. Do I need an LLC to purchase investments in a self-directed IRA? No! You actually do not need to create any LLC when using an IRA to invest. When using your IRA to purchase alternative investments, you simply let your custodian know what you would like to invest in, and then your custodian will purchase the investment in the name of the IRA. 

Self-directed IRAs aren’t the easiest thing to understand, but once you’ve taken the time to ask yourself some of the most common questions, you’ll be able to understand them a little better. It’s important to have a knowledgeable investment professional or a certified IRA custodian/specialist that can help answer questions when needed! To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.