LUR 91 | Self-Directed IRAs


When it comes to investing, it’s never too late to start early. In this episode, Lisa Hylton sits down with Josh Plave as he shares tips on how you can start investing easily and inexpensively with your retirement fund. Josh is the founder of Wall to Main and has been in the investing game as a multifamily syndicator specializing in helping people with passive investments using self-directed IRAs through his company. Gain some financial wisdom as he shares tips and tricks on how you can grow your capital.

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Josh Plave On How You Can Start Passive Investments Using Self-Directed IRAs

In this episode, I have Josh Plave. Josh is a multifamily syndicator who specializes in helping investors use their retirement funds to invest passively in real estate. Through his company, Wall to Main, Josh provides all the tips and tricks needed to invest quickly, safely, and inexpensively with an existing retirement account.

I’m excited to have you on the show. Thank you for coming on.

Thanks for having me. I’m excited.

My readers have heard from some retirement folks in the past but I like having folks on to talk about it to get a different perspective in terms of how this whole process works. To get started, my show is broken out into three parts. The first part is a little bit of background and then we’ll jump into the meat of the show with all of the real estate syndications, using retirement funds, and then we’ll close down with the level-up questions. To get things started, can you share with my readers where in the US do you live?

I am now in Charlotte, North Carolina. We moved here after living in Denver for six years.

Charlotte, North Carolina, is another great market for real estate and investing.

A lot of people understand that real estate is out there, but they don’t necessarily realize how accessible it is to them. Click To Tweet

Yes, if I can buy something here, I would love it.

What do you and your family like to do for fun?

We just had a baby, so that all went out the window. We used to hike, go skiing, being outdoors, and everything. We’re trying to reevaluate what we can do as we open up the world as well.

Luckily, the baby won’t stay a baby forever. Soon the baby will be able to be independent and you all will be back on those trails. Can you share with my readers a little bit of background in terms of how you got started with the real estate investing space and then, specifically the IRAs, using and tapping into retirement accounts to invest in real estate?

Those two actually blend into one another. I like to go all the way back to when I was sixteen years old. That’s when I opened up my first retirement account. I had worked a summer at a camp as a counselor. My mother and my grandfather, who were both CPAs, were trying to teach me investing and finance. They suggested I opened up a Roth IRA. I did that at sixteen. I invested in what I knew at that time. It was stocks and bonds and things like that. Unfortunately, both my mother and my grandfather had passed away. What that did for my sisters and me, they had left me with their retirement accounts. It wasn’t a life-changing amount of money but it was enough that I needed to make sure I was going to be a good steward of what they had worked for their entire lives and make sure I wasn’t putting it all on the first thing and calling it a day.

I knew, at that point in my life, I wanted to have way more control, not only over my own career but as well as these funds and my own personal funds that I had been working on since I was sixteen. I wanted to make sure I had more control over that. My biggest issue was when I put it in stocks. It was very susceptible to the decisions of a wild CEO. You invest in Tesla. You might have Elon Musk go on the Joe Rogan show and do something crazy, so you never know. I wanted more direct control, so I started looking at how I could jump into the real estate space. I’m still had a W-2 at that time, I was able to take a broad, self-talk curriculum, I like to call it, a way to figure out the space I wanted to jump in first before dabbling in things here and there. After a lot of time, I eventually settled directly on multifamily, and I’ve been in it ever since.

There are so many different places I could go with this, but I do want to come back to the multifamily, the tax implications, and all that good stuff. One of the things that I get is a lot of parents want to invest for their children’s education. In the case of your parents, you were sixteen years old and they encouraged you to open a Roth IRA for yourself, which you did, and you started investing. I’m sure because you did that, that helped you to build a nice nest egg for yourself because you have time. No one can replace time. Can you talk about perhaps the intersection of real estate syndications, IRA, the self-directed IRA accounts, and perhaps how these two can help parents when they’re thinking about investing for children’s education 15 to 20 years out?

LUR 91 | Self-Directed IRAs

Self-Directed IRAs: The compounding growth that you provide by investing early and being in more control and more aware of what you’re putting your money into is absolutely key.


It’s something I haven’t been asked before. The huge thing to me was it seems like it’s the obvious place to go to but it’s the cornerstone of essentially the topic we’re talking about. It’s that time that allows the dollar to compound. The compounding growth that you provide by investing early, being more in control and more aware of what you’re putting your money into, and on top of it, it’s absolutely key. Why I was successful when I started doing it, my parents gave me a lot of time and they made sure that I was continually contributing to that account, making sure that I was adding to it so that the compounding interest continued to build. Now it’s something that I can fall back on if I need it, something I can use in retirement, or because it’s a Roth IRA, something I can pass on if I ever pass away and it’ll be a great generational wealth tool because it’s been around for so long.

One thing is the 529 plans are so restrictive in terms of only for education. If parents decide to open one of these types of accounts for their children, then say 15 or 20 years from now, their child decides that they don’t want to go to college, maybe they want to start a business. Investing in those real estate syndications can then enable them to generate that cashflow and if they did cash out, they’d have to deal with taxes but then that’s where you get your good tax planners.

It’s a great strategy. Because we have a newborn, we were looking into how we were going to plan. We took a look at the 529. It’s the first time I’ve dabbled into it and I felt the same thing you did. It was a bit restrictive. When it comes to IRAs, you need to have earned income. It doesn’t have to be anything too complex. You can’t open up one for like my daughter, a newborn. If your 9 or 10-year-old wants to help with the family business and you pay them a reasonable salary, it all goes to the retirement account. That’s perfectly viable.

Moving on from that, are there any tax implications when people decide to do self-directed IRAs to invest in real estate?

There really are and it’s something you need to be on the lookout for. There are two types of accounts that you can open up. One is a solo 401(k), and that’s if you’re self-employed and you can sponsor the plan. That one is exempt from being subject to any tax when investing in a leveraged asset. If you’re only eligible for a self-directed IRA, which is the case for most folks, you need to consider a concept called Unrelated Debt-Financed Income. The way that this works is if you’re investing in a leveraged asset.

Let’s say we’re buying a multifamily property for 75% leverage and 25% down payment equity. The 25% down payment, that’s all provided by your retirement account. It’s the IRA. It’s tax-deferred dollars. You’re earning tax-deferred. Any income that is earned on that 25% is fully tax-free as it would be with any other investment within an IRA.

When it comes to the 75%, that’s coming from an outside source. That’s going to be a bank, lender, or something like that. Those aren’t tax-deferred dollars. Anything that they earn, the 75%, that’s going to earn Unrelated Debt-Financed Income and then you’re going to be subject to paying unrelated business income tax or UBIT on that portion. The nice thing is because that 75% is not tax-deferred, that portion can use its share of losses like depreciation, operating, and interest expenses, and so you could probably use about 75% of any loss to offset the UDFI for the year and minimize your UBIT for the year.

I didn’t even realize that you could use losses to offset the tax. It’s so interesting.

It’s one of the main reasons I started doing what I’m doing. I wouldn’t say a lot of misinformation but there’s a lot of information that’s hard to find it. You don’t know what to ask if you don’t know what’s the problem. I’ve been trying to evangelize and tell people what is out there.

A lot of people will get scared because they hear that there are taxes, they’re like, “Let me completely avoid that route altogether.”

A lot of people in the space will scare people off from investing in leveraged assets because of this. They’ll say, “You’re going to get slammed with UBIT. You shouldn’t invest in anything leveraged.” I was getting annoyed because there was no definite answer to how impactful UBIT is, so I went out before I even was an active investor when I was figuring out where to place my funds passively. I built a UBIT calculator. It’s the industry’s first one and now I’m using it with my company and every time we have a deal, I’m able to evaluate how impactful the UBIT penalty will be. We typically see an annualized impact of maybe 3% to 4%. It’s nothing crazy. It’s nothing that’s going to completely harm your returns, but it’s something you should be aware of.

For people reading, who probably are entrepreneurs and they could qualify for the solo 401(k), I would assume that outside of the taxes, like everything else, you’re equal in terms of the performance of the vehicles, both of them.

Outside of the tax implication, they have the same rules and strategy. The only real difference beyond that is going to be contribution limits. A solo 401(k), you can contribute up to $57,000. If you’re over 50, there’s $6,000 of catch-up. It goes up to $63,000. If it’s IRA, it’s only $6,000. There’s a big difference between the contribution limits. If you have a million-dollar account, you can roll those into either of those two, so you can have a sizeable account. It’s just the annual contributions are a little different.

Be on the lookout for who you’re doing business with. Click To Tweet

Moving on from there, talking about multifamily real estate syndications as a whole, one more thing that stood out to me with these particular accounts is there are rules regarding how you can invest the money that is in your retirement account. For someone reading, can you explain some of the things that they would need to avoid? Could they go use their retirement account and go buy a short-term rental that they are going to go live in for maybe 1 to 2 weeks out of the year? Is that possible?

Absolutely not. I am sorry to be the messenger. This concept is called Disqualified People. You’re the first disqualified person towards your new retirement account. What they’re trying to do is avoid you from getting past those contribution limits that we’re talking about and funnel even more money into it or maybe gain a direct benefit from a huge portion of funds that are in your retirement account. Let’s say you buy a short-term rental. You can do that. That’s not a problem within your IRA or solo 401(k). If you are staying in it, you’re breaking that rule, where you can either give yourself a dollar-rent or lease or whatever and you can get in for cheap.

If you want to funnel way more money into your retirement account and you want to pay $10,000 a month and funnel more away, they’re trying to avoid those kinds of situations. You want to avoid any direct connection to an investment that your IRA or 401(k) makes. When it comes to multifamily, it scales up to any investment, whether it’s real estate or anything else. When it comes to multifamily, I can’t use my retirement funds to invest in any asset that I am putting together and offering other investors, so I need to place it into other people’s funds.

It’s so key to know that because it’s super important. When assets sell, one of the big things that’s going on right now is the capital gains tax that were finalizing and to see the impacts it’s going to have on real estate. Because of that, you have a lot of people who the 1031 exchange looks even better these days than ever before. The sweet spot is using retirement money to invest because when the asset sells and it’s in your retirement account, you’re not going to be experiencing paying any taxes from a capital gains perspective. Is that right?

It’s close. It depends on the type of account you’re looking at with the solo 401(k) because they’re exempt from those. It’s entirely tax-free. That’s why I consider not the traditional, but really the Roth Solo 401(k) to be the holy grail, because as you said, you can go from $100,000 valuation to $100 million dollars, and you would never have to pay any capital gains. When it comes to self-directed IRAs, when I’ve taken a look through the UBIT calculator that I’ve built of how the tax structure is built, you’re not going to be paying any taxes at all in the cash flow. The majority of it is going to be coming on the capital gains at the end, and they get taxed. As long as you’re earning over $1,200, you’re going to be paying at a 37% rate. You’ll probably have some depreciation and other things leftover that you can apply, so that helps. With an IRA that the larger portion of taxes that you’ll see are going to be on the capital gains.

You also mentioned the Roth Solo 401(k). Is there an IRA Solo 401(k) or is it all of the solo 401(k)s are Roth?

Any retirement account can be structured as traditional or Roth. It doesn’t matter if it’s a 401(k), 403(b), personal plan, IRA, all of them. They have the traditional format where it’s pre-taxed. It’s coming out of your paycheck, it’s going straight into a retirement account, and then you’re earning it. You have tax-deferred and then when you pull it out, you make withdrawals, then you’re going to be paying tax at an income tax rate. With the Roth, you’re paying the income tax upfront, then you’re putting it in, then it’s tax-deferred, and you have access to it afterward. It doesn’t matter what account you’re looking at. you’re going to have the traditional or the Roth function available to you. It’s a question of, A) Do you think taxes are going to go up or down from here? B) Do you think your tax bracket will go up or down from here?

Have you seen investors choosing to have both accounts having a bucket that is Roth and then a bucket that is traditional?

The only time I’ve seen people with both, and you see plenty of people with both. It’s a question of when they were eligible or not. With a Roth IRA, there’s an income limit. It starts phasing out around $125,000 and it starts to slowly phase out. There are certain people who aren’t qualified to make Roth contributions to an IRA. With a solo 401(k), you can. It’s typically when you’re contributing, it’s only one or the other, but the rollovers that end up in those accounts may come from employers that aren’t offering a Roth format or you weren’t eligible for a Roth, or whatever so you might see some traditional, some Roth.

I have a couple more questions here. You created your business, Wall to Main. Can you talk about why you to call it Wall to Main?

LUR 91 | Self-Directed IRAs

Self-Directed IRAs: There’s an opportunity for people to get started in real estate that they didn’t recognize they had because they have this account sitting there and think it’s just restricted to stocks and bonds, but they can invest in virtually anything they want.


It came to me because I presented on it once. The first time I ever presented, I quickly put it in a presentation. I said, “Take your retirement from Wall Street to Main Street,” and Wall to Main was available. It sums up the concept of what I’m trying to do. I’m trying to get people aware. A lot of people out there understand that real estate is out there, but they don’t necessarily realize how accessible it is to them. They might think I don’t have a lot of money available to invest. The second most-funded type of account or the second largest portion of wealth and equity for an American beyond their house is in the retirement account. There’s an opportunity for a lot of people to get started in real estate that they didn’t recognize they had the potential to because they have this account sitting there. They think it’s restricted to stocks and bonds, but they can invest in virtually anything they want.

Is there anything else that I didn’t ask you that would be beneficial to share with my readers?

The only other concept is beyond the first person for disqualified people. There are other ones that you can’t do business with. It depends on what level of real estate you’re doing. If you’re buying single-family homes and things of that nature, you can’t invest with your father, grandfather, children, and grandchildren, linear ascendance and descendants, as well as your spouse. Be careful if you want to rent out your beach house to your grandparents. You couldn’t do that because, as well, they could benefit your retirement account. Be on the lookout for who you’re doing business with. That’s when it’s close family.

One last item is the types of investments. By them moving their assets into self-directed or solo 401(k) accounts, it not only enables them, they can still invest in the stock market, FYI, but they now have the ability to invest in real estate but also in other things.

The IRS only put restrictions on what you can’t invest in. They never said what you can invest in. The only restrictions are going to be collectibles, art, jewelry, cars, alcohol, and things like that. You can’t buy life insurance policies and you can’t own shares of an S Corporation because of taxation reasons. Outside of that, if you think it’s a good investment. You can do whatever you want. I’ve heard of people investing in racehorses and doing studding operations, all kinds of crazy stuff. If you think it’s going to contribute and provide value to your retirement account, go for it.

Including crypto.

That’s a huge one because crypto is not leveraged, so it doesn’t incur any UBIT taxes. There are no capital gains in that event. It’s a hot item right now.

Thank you so much for coming on the show. This was so helpful with a lot of good information. This then brings me to my level-up questions that I ask all my guests. The first one is, what are you grateful for in your life right now?

Right now, what I’m grateful for is a healthy baby as well as my wife because we’re both working from home and it would have been so difficult if we were trying to do this and she wasn’t able to help take over. She’s on maternity leave right now. I want to be with my daughter every moment of the day, but allowing me to come up and work on our next project that we’re putting out while she takes care of our child is an unbelievable opportunity I have right now.

What has attributed to your success and continuous growth?

I’m going to give a shoutout to the same group we’re a part of, The Real Estate Accelerator with Julie Lam and Annie Dickerson because when I started building out my brand and getting in touch with other investors, I didn’t have a plan. COVID had started so I thought that I was going to seminars, making speeches, and meeting people in person. It was good timing. This is a group that educates folks on how to build out your brand, build your website, your backend systems, active campaign, and all these things that help us stay in touch with our investors. It’s been absolutely monumental. I gained three investors the day my daughter was born. I didn’t even touch anything. The systems were working in the background and it’s exactly the reason that I got into this. It’s the ability to create a business that works without me having to touch it every single moment of the day.

What do you now know that you wish you knew at the beginning of your journey?

This is tricky because I feel like I got in at the right angle because I joined multifamily right away. I’m so happy that I did. I’d say I wish I knew was a form of communication. Get an expectation of communication before you get started with someone. While I was starting up multifamily, I knew that would take a while to find the first deal. I started doing private money loans through my retirement account.

Get an expectation of communication before you get started with someone. Click To Tweet

I lent out the money and it all ended up working out fine, but some of the projects that laid there, they ended up taking 1 to 2 years longer than I thought they would and the communication was poor. I didn’t establish that level of constant communication of what I would have expected from the person who was borrowing my money. That applies to anything you’re doing. Establish a level of when your check-ins, what are we doing in the check-ins, and what are we talking about? Something like that will be key for any investor.

That brings me to two bonus questions. The first one is, can you talk about why you chose to focus on multifamily?

The main reason I wanted to focus on multifamily is because as I was doing that self-taught curriculum I mentioned, I listened to every show, attended all the webinars, and I did everything I could. It felt like everybody who was speaking on real estate, in general, was talking about how they want to go from 2 units to 4 8, 16, or 32 units, and they kept saying someday I’d like to start syndicating, someday I want to do the larger commercial properties, and there were a lot of echoes with that same sentiment. I started looking into that direction and realized, “If you’re going past five doors, it’s the same lending and signing process. You have to raise some more capital.” It’s a slightly more complex field but there are a lot more eyes on it and there are a lot more people that can make sure that it’s a good investment that you’re not necessarily penciling in properly on a single-family home level. It’s been pretty beneficial to jump straight in.

On top of that, passive tips for passive investors who want to invest one, in multifamily and two, they want to use their self-directed accounts or solo 401(k)s in order to make it happen.

The main tip I would say, the one thing we weren’t able to cover, is to take a look at what type of account you want. There are custodian accounts and there are checkbook control accounts. I would very much look into both of them. One is better than the other. I personally use checkbook control. It gives you a lot of ability to wheel and deal in the manner that you see fit. Know what you’re getting involved with. It sounds pretty lame but educate yourself as much as you can. I don’t want to necessarily toot my own horn but I provide a lot of education for my investors for a reason because once you have those training wheels on and they need to come off, it’s simple to operate with, especially if you’re doing retirement accounts. It’s no different than cash. It’s a slightly different set of rules you need to follow. Once you understand what it all means, you’re golden.

Thank you so much for coming on the show. I appreciate it. There’s a lot of good information. If my readers want to learn more about you, where’s the best place they can go?

They can find me at I’m also offering a free PDF called Top 10 Tips & Tricks When Investing in Multifamily With Your Retirement Account. I try to help people understand how to maximize their accounts when investing.

That sounds good. Thank you so much.

Thank you, Lisa.

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About Josh Plave

LUR 91 | Self-Directed IRAsJosh is a multifamily syndicator who specializes in helping investors use their retirement funds to passively invest. Through his company Wall to Main, Josh provides all the tips and tricks needed to invest quickly, safely, and inexpensively with an existing retirement account.




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