Most real estate entrepreneurs have no idea their retirement account could be funding their next deal. In this conversation, I sit down with Matt Moore and Courtney Ferrero from CamaPlan to break down exactly how a self-directed IRA or solo 401(k) works, the surprising range of assets you can actually hold in one (real estate, private notes, precious metals, even a dump truck), and the common mistakes new investors make when they get started. We also dig into how capital raisers and syndicators can use this tool to unlock a whole new source of investor capital. If you’ve ever wondered whether your retirement funds could be doing more for you, this episode will change how you think about that account for good.
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Hello everyone. I’m Adrienne Green, and today I have two amazing guests. I have Matt Moore and Courtney Ferrero, who are here with CamaPlan. Here we focus on how real estate entrepreneurs can break free of the grind and create the freedom they wanted at the start, and this is a way you can do that with your money rather than your time. So thank you, Matt and Courtney, for being here.
Matt, let’s kick it off with you. For entrepreneurs and investors who are like, “I don’t know what CamaPlan is,” can you give us a 60-second version of what you do and who your company is built for?
Definitely. Really appreciate that generous introduction, and Courtney and I both appreciate this opportunity, so thanks very much for being able to chat with you today. CamaPlan is a self-directed IRA administrator. We opened our doors in 2003. We have thousands of clients across all 50 states, as well as DC and Puerto Rico, and we have over a billion dollars of assets under administration, so I say all that just to provide some track record on the company.
But a lot of people have never even heard of what a self-directed IRA is. So if I say we’re a self-directed IRA administrator, that might as well be Greek to a lot of people. A self-directed IRA is a kind of retirement account that allows you to invest in private or alternative assets that you wouldn’t necessarily be able to invest in through your tax-advantaged retirement account at a provider like Schwab or Fidelity. So CamaPlan, to your question, Adrienne, really caters to folks who want to take more control of their retirement capital and who like hard assets a lot of times and want to have more diversification in their total portfolio.
Thank you, that was great, Matt. And for our listeners, to give a specific use case, I’ll say that like my family, we have self-directed IRAs. When my husband left his engineering W-2 job, he had a retirement plan with that company where people would roll it over. He rolled it over to a self-directed IRA. So we didn’t just roll it over to an IRA and put it in the stock market. We rolled it over to a self-directed IRA where, like Matt says, you can choose and put it in these other assets. For us, that allows us to do a lot of private money lending within our self-directed IRAs, because my husband has one and I have one. We’re lovers of this, so I’m excited to bring it to all the listeners who are less familiar. Now, for people listening, I mentioned that we do private money lending in it. What type of investments can a self-directed account actually fund, and where do most real estate entrepreneurs start when they first make the move into this?
Courtney, you want to take that one?
Sure. So we have all different types of self-directed IRAs that you can invest in. We have different types of IRAs as well: traditional, Roth, SEP, SIMPLE, and different types of investments. The investments all range. We’re heavy real estate here with CamaPlan, meaning physical property. We also do notes, like you do yourself with your husband, private lending, private equity, small businesses. We do precious metals. We have a client who has a dump truck in their IRA, so they rent out the dump truck. There are different types of investments. Our clients bring the asset to us and let us know what they want to invest in. We do have CamaPlan clients invested with you and your platform, Invest Ally. So there’s all sorts of different things we do with CamaPlan.
Right, that’s amazing.
And that’s one of the other things: we have JV investors with our lending, and people can JV invest through their self-directed IRAs. I love that you guys are on here because so many people just don’t know about the opportunities or the options. So what would you say are some of the common misconceptions you hear from people who assume their retirement funds cannot be used for real estate, private lending, and stuff like that?
The biggest misconception is that you can do it in the first place. I go to my parents’ house for Thanksgiving dinner, and there’s a bunch of extended family, and naturally we talk about what’s going on with work and what we do, and my family members don’t believe me. They don’t think it’s something you can really do, just because people aren’t aware that you can invest your retirement capital into alternative assets. When you say, “Yeah, you can be the bank by lending from your IRA,” or “you can hold precious metals as opposed to just being in a precious metals ETF, you can actually hold the asset,” people are really shocked because I think there’s just some sort of programming that’s happened from people signing up for their 401(k) and choosing some mutual funds or working with their advisors. There’s just a lack of knowledge. So really the biggest misconception, and Courtney can attest to this because she’s on client calls all day, is that people are truly not aware that this is something you can do. As they pull back the layers on all the things they can do after they’ve maybe done their first deal, they continue to be surprised about all the opportunities there are. Not only is there a lot of discovery on the kinds of assets you can invest in, but also, to Courtney’s point earlier, the kinds of accounts you can use. The most common accounts we have are traditional IRAs and Roth IRAs, but you can also self-direct from an HSA, you can self-direct from an ESA. So when people say, for example, “Is there another college savings avenue other than a 529?” they’re pretty surprised to learn that, and it adds a whole new strategy to that savings plan. So I think the biggest misconception is that you can do it in the first place.
That makes sense to me. It was something new to me when I first heard about it, and once you figure it out, it’s like, this is amazing. Now, Courtney, when a new client comes to you who’s never worked with a self-directed account before, what does that first conversation usually look like?
It can run anywhere from someone who has absolutely no knowledge of self-directed investing to someone who knows what they’re doing and is bringing the investment to CamaPlan. We can start the process at any stage. If it’s a client who has no idea how self-directed investing works, we run them through how to open an account, how to move your funds, and make sure they understand it’s a non-taxable event. It’s an IRA-to-IRA transfer. They may be doing a rollover, which is non-taxable but reportable with the IRS. Then we explain how they can take the funds. CamaPlan will make sure the asset they’re purchasing is in good standing, that they’re not making a prohibited transaction, and we’ll double-check that the paperwork is done correctly, that their IRA is making the investment, not them personally, and then send the funds out to the investment provider, like yourself.
That really outlines the process so well. And what I appreciate from what you shared, Courtney, is that so often people feel like they need to be an expert on something before they even have that initial conversation. They’re used to working with other kinds of investments, brokerages, or firms where it’s DIY, where they have to know and pick their investment all on their own. It sounds like with CamaPlan, you can just come and ask, “What does this look like? Is this a good fit for me or not?” and you guys help people figure that out and figure out what the best path is.
Right. We work with them, make them feel comfortable, make them feel confident in what they’re investing in. Now, again, we can’t tell them exactly what to invest in, but we’ll guide them along and make sure they understand the process. They’ll be part of the process from the very beginning. We work with a lot of investment providers, and sometimes clients don’t understand the process, so they count on CamaPlan to hold their hand, and that’s exactly where we come in. We make sure everything is moving along smoothly, that the paperwork is done correctly, and that the transfers from other fiduciaries are done in a timely manner. If there are any hiccups along the way, we deal with things like medallion stamps, wet signatures, all sorts of different requirements from different fiduciaries where we’re transferring funds. So we’re there to make sure the process runs very smoothly, that it’s easy for the client and easy for the asset providers.
Right, and I’ll say from the investment provider standpoint, why did I invite CamaPlan to be on? Because it was easy to work with them. And I think it would be great for people to have their self-directed accounts with CamaPlan. So that’s why we’re here. Now, Matt, there are so many different types of accounts, as you’ve mentioned, and somebody might be listening thinking, “Well, I have a 401(k) versus an IRA.” How does a self-directed IRA differ from a self-directed 401(k), and does that distinction typically matter?
Yeah, good question. There’s a pretty extensive list if you want to go into all the nitty-gritty details of the differences between each, but I’d say there are three primary differences that really resonate with people about why they might want to use one versus the other. First would be contribution limits. A vanilla self-directed IRA, or just an IRA in general, is capped at the IRS’s contribution limits at the time, so right now it’s $7,500 for the year. In a solo 401(k), between the employee’s contributions and the contributions made by the business, you can contribute upwards of $70,000 annually. So the contribution opportunity to really grow your retirement account is much greater in the solo 401(k).
The second thing, and I probably should have made this number one, is just the fit: who can have a self-directed IRA versus who can have a solo 401(k). If you have some kind of income, you could potentially have a self-directed IRA, so it’s very broad in terms of who can have one. If you have a solo 401(k), you need to have your own business with no employees, so unless you’re a business owner, a solo 401(k) isn’t going to apply to you.
Well, I was going to say, for our listeners, all of our real estate entrepreneurs who have their own business where they’re their own employee and are trying to save for retirement, think about that: they can have a self-directed 401(k). That’s awesome, very cool.
Absolutely. And I was going to say that especially for entrepreneurs, there’s a natural predisposition to having a solo 401(k) versus the standard IRA, because the solo 401(k) does take more work. There are more documents that need to be managed on the part of the participant, the account owner. But if you’re an entrepreneur and you’re used to doing things yourself, that probably isn’t a new thing to you. So there is more work, but people who are entrepreneurs already kind of have that bone in them to manage things very diligently, so it doesn’t necessarily feel like such a burden to them.
Right, that’s a really good point. I know for us, we’re used to renewing the LLC every year and doing all these other paperwork things. We use Monday.com as a project management system. Whenever we have to do something quarterly, monthly, annually, whatever it is, that’s a task in there with an SOP, and honestly nine times out of ten our VA is the one doing it. So not a huge deal to add something else to that list.
Now, my next question is: we have an investor who’s evaluating whether to deploy retirement capital into a specific deal or lending opportunity. What should they be asking before they commit? What’s important for somebody to know when they’re evaluating a deal to use in their self-directed account?
Good question. Something that’s attractive about a self-directed IRA is the liquidity needs of the investor versus the timing of the investment. We work with a lot of real estate investment sponsors, and if you think about a run-of-the-mill real estate equity deal, it might have a five to seven year hold on it, and maybe the investment minimum is fifty to a hundred thousand dollars. If you’re the investor and let’s say you’re fifty years old, you have college to pay for, a wedding coming up, something like that, being out that money might feel a little daunting. But if you have that money in your IRA or an old 401(k) and you can’t touch it anyway without penalty, then investing from that source doesn’t affect your walking-around money, so to speak. It’s a nice way to participate in the deal without feeling the pressure of a liquidity crunch.
Now, the flip side of that, going back to the timing idea, has to do with required minimum distributions. RMDs are what you have to take when you’re about 73. The IRS forces you to take a distribution out of your retirement accounts. They look at all the balances you have and have you take those distributions. A lot of times, investments made through a self-directed IRA are into illiquid deals or hard assets, so you want to make sure as the investor that you’re not going to be overly saturated into a bunch of real estate or something like that, where you suddenly have to liquidate prematurely because you need to satisfy an RMD requirement. So I think those would be the considerations I’d make. Anything to add, Courtney?
I was just going to say, if you’re looking at doing a note or something along those lines, you can ask questions like: is it a secured note or an unsecured note? Like Matt said, how long are the terms? Am I getting interest returns on a monthly basis, a quarterly basis? Those are some of the questions to ask when you’re getting into a contract with someone.
Awesome. And I know you mentioned prohibited investments earlier, Courtney. Are there certain things people cannot invest in with their self-directed accounts?
Yes. So if you wanted to purchase a home, say your child is in college and you want to purchase a rental property for them to live in while they’re in school at Penn State for four years, they cannot live there, but their friends could. That’s one example of a prohibited transaction. Lending to yourself, if you have your own company and wanted to fund it with your 401(k), that’s a prohibited transaction. Anything that’s not at arm’s length, anything where you’re a decision maker, there are restrictions with that. Some transactions could be under 50% decision maker. We do look at the investment docs to make sure you’re not getting yourself into hot water with the IRS. There’s what we call direct lineage: parents, grandparents, children are all considered prohibited. So you can’t lend to your child’s business that they’re starting, but you could lend to a cousin. There are different types of people involved that you can lend to, but direct lineage is considered prohibited.
That makes it very clear, thank you. Now, Courtney, what is a common operational mistake you see from clients who are new to these self-directed accounts, and how does your team help them course correct?
We’ll see people trying to use non-qualified funds. They have investment brokerage accounts and think they can bring those over to CamaPlan and use those to self-direct invest. So we require additional information from clients when they set up their account, or ahead of time. We’ll ask them what type of funds they’re bringing, where their funds are, and they’ll send us a statement, but there’s no wording on there indicating if it’s an IRA or a 401(k). So we check, and we catch that. We don’t want anyone making a mistake with non-qualified funds. Sometimes when we’ve sent paperwork over to other fiduciaries, they may not pick up on those types of mistakes, so we’re extremely careful.
Awesome, and it’s just nice to know, because if somebody is new to this, they could inadvertently make a mistake, and you don’t want to do that with all of these tax-law-related issues. It’s nice to have somebody who’s an expert on it having your back.
Yeah, can I speak to that point? I think part of the reason people are apprehensive about doing a self-directed IRA is because of what you just said. It can seem overwhelming or intimidating because you don’t want to do anything to mess up your IRA. The nice thing about CamaPlan is that although we have the track record, we’re only a company of about twenty-nine people. So when a client calls and talks to Courtney and they’re just getting things started, and a week later they have another question and call back, they’re usually going to get Courtney again, or Courtney will be available. So it’s not like they have to restart the story. Courtney remembers them and remembers what they’re doing. That familiarity with the situation, and the natural checks and balances that come into play from a compliance standpoint, from an IRA compliance perspective, is very crucial in making people comfortable with this new kind of investing they’re doing with their retirement capital.
Yes, that speaks to me and I’m sure it speaks to our listeners, because you think of big banks or other financial institutions, you call and get a call center, some random person who doesn’t know your history, and it’s really frustrating. It’s not a good experience. But it could be like, “Hey Courtney, I talked to you last week, you know what’s going on, and this is the new question I have as I’m trying to figure this out.” It’s a very different experience.
It’s like one of my favorite things: I speak to a lot of investment sponsors, and naturally they ask, “Well, what makes you great?” I love flexing Courtney, dropping her name, and that familiarity, because Courtney is going to be the person they talk to, and when they’re ready to make the investment and go talk to our operations team, they’ll talk to Sarah from our operations team, and Sarah sits five feet away from Courtney. So it’s all very nice and cohesive. That really affects the client, the investor, quite a bit, because they know they’re not just a number. They know that Courtney and Sarah, or whoever they’re working with, really know who they are, know what they’re trying to do, and are looking out to make sure the whole transaction goes smoothly.
Love it. Now, Matt, as we’ve talked about a little bit, private lending is one of my favorites, and I know it’s a big use case for self-directed accounts. How would you recommend somebody think about structuring notes or private lending within their self-directed retirement account? What’s important for them to understand going in?
Yeah, a little bit about me: I used to work on the capital-raising side prior to CamaPlan, and I worked for a real estate debt fund. We also sold fractional participations in notes, so I’m kind of partial to notes too. In terms of how someone should think about doing private lending inside of their IRA: number one, when an investment is made from the IRA, whether it’s a note or anything else, that investment is going to be titled to their IRA. Your IRA is its own entity. Whether it’s your IRA at Schwab or your IRA at CamaPlan, they’re all their own entities, not you personally. So the titling of that investment is going to be to your CamaPlan account, for example, “CamaPlan FBO, for the benefit of Matt Moore IRA.” Having that knowledge, both mechanically, that you have the titling correct, but also understanding that relationship, is very important, understanding that your IRA is going to be the one that holds this loan. CamaPlan will administer that account for you, so you’re not going to be involved in the management of that investment; it’s going to be your IRA.
As it relates to how you structure the note, CamaPlan can’t give you any advice on how you should do things, because we’re not allowed to give investment advice. But what seems to be the best practice for a lot of investors doing this is either working with a real estate attorney or someone like that to help them, or a lender to help them originate and structure the note and make sure all the pieces are in place that they need for a real estate note, assuming it’s secured. That’s definitely number one. And then, or they’re buying notes that have already been originated, so they’re taking themselves out of the structuring part. They know what their buy box, their credit box, looks like, and they’re going and buying existing notes to make it a little easier to participate that way.
That makes a lot of sense, and I’ll say, we’ve been doing private lending for over four years now, and we see so many people who get into it without using a real estate attorney to structure that original note or think through all the little nuances that go into it. Like, what if the borrower needs to extend at the end of the original term? Does your original note include what that extension is going to look like, so you don’t have to revisit it? Things like that. There are a lot of people who get into it who haven’t thought of all those what-ifs yet, and it’s better to think of them up front.
Yeah, absolutely. ChatGPT is great for a lot of things, but go with the professionals who can help you with this, learn from them, and be able to do it yourself one day, sure. But work with companies who are selling notes and providing notes so you can learn from them, or there are schools that teach it, or work with a lender or someone who will walk you through exactly how things need to be structured so you’re not getting caught in a situation you didn’t intend to be in, because now the borrower is expecting a 12-month extension on a 12-month note.
Right, that makes sense. So Courtney, let’s say we’ve got a listener here who’s like, “Sign me up, I’m ready to go.” How long does the onboarding process usually take, and what can investors do to make sure it moves forward without delays? Because every real estate investor I know, once they decide to do something, they want it done yesterday. So how long will they need to get this set up, Courtney?
That’s always the question. I ask them, “Are you going to miss the deal? How much of a rush is this?” Most of the time they’re just starting out. CamaPlan can get the account open relatively quickly, within the day. It takes about 15 minutes online with your driver’s license. Like I was saying earlier, when you do the funding, we have a section in the application where you fill in where the funds are coming from, so we know exactly where you’re moving your funds from. You’ll upload a statement. It all depends on where they’re moving the funds from. If it requires a medallion stamp, there are some things that would slow it down. However, we really try to do our due diligence on the different types of Vanguard, Schwab, Fidelity fiduciaries that are holding the other funds and what their requirements are. We’ll actually get on the phone with the client and, say, Fidelity, and ask their requirements so we can get this expedited as quickly as possible. So to answer your question, all things moving relatively smoothly, within three weeks the account is open, the funds are brought over, the investment paperwork is sent to CamaPlan, we review everything, we make sure it’s titled correctly, and then we get the funds out the door to the investment within 48 hours.
Amazing, that is nice. The word that comes to mind, Courtney, as you describe that, is that you work like an advocate for your clients to help make this all happen.
Absolutely. We like it to run simple for them as well as for ourselves. The fewer hiccups we have on our end, the easier it is for everyone involved. Some clients need a little more hand-holding and instructions, some clients know exactly what they’re doing and listen to the instructions. A lot of times we can’t call a Vanguard or a Fidelity ourselves without the client on the line, so we do need them to take some ownership to some degree, but we’re also there to help them along the way as much as possible.
Love that. Now, Matt, I also want to address, we’ve talked a lot from the investor standpoint, but this podcast is for all real estate entrepreneurs, including people who are running syndications and doing capital raising. Can we talk about what that self-directed account conversation can look like for them and their investors?
For sure. As I mentioned, this is the sandbox I play in primarily, and from that previous job I mentioned earlier, I was working with investors, a lot of whom were investing from their self-directed IRAs. That’s really how I got my introduction to self-directed IRAs in the first place. So if you’re an investment sponsor, if you’re raising money, self-directed IRAs are a great tool for you, because they help your investors find a new source of capital to put into your deals. And as I’ve said before, and I’ll continue to shout it from the rooftops, people are not aware of this option. So the way capital raisers can really benefit themselves is just by talking about it with their investors. You don’t have to be an expert. It’s not a financial advice conversation, it’s just planting the seed: “Have you heard of this? Did you know you can do this? Do you have an old 401(k)? Do you have an IRA? Because if you do, you can use it in this deal.” Is it going to be a fit for everyone? No, of course not. But a lot of the time, from my own experience and the experience of working with investment sponsors having these conversations, most investors don’t know they can do it and are interested to learn more. From there, that’s where you can leverage a custodial partnership like CamaPlan to come in and do the heavy lifting part of the conversation, to figure out whether they truly have these qualified monies the way they think they do and whether they can access them. These conversations can be a little tedious, and real estate entrepreneurs have plenty of things to do already, so we’ll do that part. We’ll figure out what’s actually available. Then, if we figure out that this person really does have that money available to put into the deal and they understand how it works and they like this, we do that stewardship piece, that advocacy piece you described. We’ll get them through the finish line to get their account set up and ultimately deployed into the deal. So it’s not about throwing a name over to CamaPlan and just crossing your fingers and hoping for the best; it’s about having a value-add conversation with your investor, and if it makes sense, bringing CamaPlan into the conversation and us working together to complete that strategy for the investor into your deal.
That was a great overview of what it can look like and how it could help them. Thank you so much, Matt. Now, as we wrap up, is there anything else, a thing that most real estate entrepreneurs do not know about self-directed accounts that we haven’t hit on yet, that you wish every person in the audience understood before they did their next deal?
I think probably the best information to give them is that they don’t have to buy a piece of physical real estate. They can go in the direction of notes. As long as, if they’re just starting out and they don’t have a lot of qualified funds to get started with, there are some other investments they could do. We don’t tell them what to do, but maybe a tax lien or something. They’re in that real estate space, right? A lot of them, when we go to different local meetup groups, network very well, so they could find somebody in their network who’s interested in investing with them or borrowing money from them. So there are all sorts of different ways you can really get started.
Love that, very good. Matt, did you have anything you wanted to add?
Maybe just to add on to that: the thing real estate entrepreneurs should know is that there’s way more you can do inside of a self-directed IRA than you can’t do. So if there’s some sort of nuanced or complex real estate transaction, or just a different kind of real estate transaction you want to participate in, but you don’t have the capital available right now, or you want to find other ways to do it, a self-directed IRA could help you execute that transaction, or at least support you in executing that transaction, either from the one you hold yourself or from your network’s IRA capital that could help with your deal. So talk to us, let’s have a conversation about what you’re trying to do, and we can brainstorm ways it might work for you, and we’ll start from there.
Perfect, well said. And if somebody’s interested in connecting with you guys or learning more about CamaPlan, what’s the best place for them to reach out?
Go ahead, Courtney.
I’d say probably our main number, 215-283-2868, extension 3. You’ll get me directly. Or our website, camaplan.com. You can click on our website and schedule an appointment at any time.
Perfect, thank you guys. Thank you again, Matt and Courtney, for coming and sharing all about self-directed accounts, so we can get more people in the know and leveraging those funds. And for our listeners, if you got value from this conversation, maybe shoot it over to a friend of yours who needs to listen as well.