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John of Indianapolis has built a large portfolio of multi-family housing, much of it held in his Roth IRA. In the last 10 years, he has been housing homeless veterans in Indianapolis in properties he owns in his Equity Trust Roth IRA.
One of his most recent investments was a two-bedroom house that he acquired through a bank-owned auction. It was a two-bedroom, one-bath property on a quarter acre.
John’s IRA bought the house for around $60,000 and spent about $17,000 in repairs, including a new furnace, flooring, paint, roof repair, and fence repair.
“We went back to our partner, HVAF (Helping Veterans and Families) and said, ‘We’ve got this great house in a great neighborhood. Who do you have? Who are you looking to house?’ And we were able to find a father and a son, the son had severe autism and they needed a safe environment. This had a fenced in backyard that we were able to get this veteran in. He did have a Section 8 voucher. And so actually we passed a Section 8 inspection, no problem. And they’ve lived there for quite a while now.”
Widening his outreach
In October 2021, after the collapse of Afghanistan and the Taliban taking over, there were approximately 100,000 refugees looking for housing, in the United States.
“Some of the same partners we had worked with (in veterans groups) had transitioned over to the refugee community and they called and said, ‘Hey John, what apartment units you have? What houses? We have a lot of individuals, one and twosies, that need housing.’
“And so we started working with them and to date, we’re probably at about 30, 35 individuals in house, from Afghanistan,” John says. “Beyond that, we’ve connected these agencies with primarily 30 or 40 houses for other refugees to live in.”
“To date, we're probably at about 30, 35 individuals (placed in housing), from Afghanistan,” John says. “Beyond that, we've connected agencies with primarily 30 or 40 houses for other refugees to live in.”
Starting small
While John’s large portfolio of housing and network may seem intimidating to some, he says it wasn’t always like this.
“I started like a lot of people, with a very small Roth IRA and I had to build it,” he explains. “We found inexpensive opportunities, single family houses, some land, that we could quickly turn. You take $20,000, you invest it, you rehab a house.
“With another 30, you profit 15 and you just keep growing it. And so we did that, I did that for quite a while. And then eventually we started finding apartment deals that we could tackle. Sometimes we tackled them by paying cash. Other times we would do a seller carryback. Occasionally we brought in a third party, non-recourse lender. And so now, that’s pretty much all we buy are apartment buildings.”
How he discovered the power of the self-directed IRA
John learned “the hard way” about the benefits of investing through a Roth IRA.
“It started with a $6,000 loan. A friend did $3,000, I did $3,000, and at the end of the loan, and we made about 15 percent on the $3,000. At the end of the loan, he said, ‘Enjoy paying tax on your proceeds.’ I said, ‘What? How do you not pay tax?’
“And what he had done? He had used his Equity Trust self-directed IRA to contribute his $3,000 as part of this deal. And I used cash because I didn’t know any better. And it opened my eyes pretty quick. And this individual does larger real estate deals as well. At the time I had no clue that he used a self-directed IRA to do it. I’m very grateful I learned that.”
Solid foundation
John already has a solid start toward a worry-free financial future.
“I’ve got a long way to go until I plan to retire, until I can use this money,” says John, who recently turned 40. “But because of what I’ve been able to do within the Roth, I don’t have to worry about any of that either. As long as we keep doing what we’re doing, which I plan to, someday I’ll be on that sailboat right there (points to a photograph behind him of a sailboat).”
John’s advice to those who are hesitant to get started with a self-directed IRA: just take that first step.
“Whether it’s through Equity Trust or not, I see so many people do analysis paralysis,” he says. “They just analyze and they’re afraid to jump in. Even in today’s market, if you acquire you’ll build equity… just gets started.”
He adds, “If you’ve never done real estate, I know it’s a tough hurdle to jump in. The sooner you do, the happier you’ll be, and Equity Trust is a great place to start.”
Watch the entire interview with John to get more details about how he has ballooned the number of housing units in his Roth IRA in the past 10 years.
