The MILLIONAIRE-MAKER Business Structure, Straight From Uncle Sam | Episode 108

Why did the Federal Government specify THIS ONE SPECIAL TYPE of business structure as a way to build millions in your IRA?  I’m Bryan Ellis.  I’ll tell you right now in Episode #108.

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So many of you have given me feedback that says something like this:  I’m learning things from you that nobody else is talking about!  I suspected these things could be done… but before Self Directed Investor Radio, nobody told me how!

My friends, get ready… what you’re going to hear today fits squarely into that “HOLY COW” category!

A quick note – the strategy I’m teaching you today is easy to understand but a bit complex.  I’m going to do a great job of explaining this to you in the 7-minute confines of this show today.  But I STRONGLY recommend… VERY STRONGLY… that you make a point to watch the more complete training video that I’m posting to the Self Directed Investor Radio 5-Star Listeners Group this week.  The training is called “The Profit Partition Partnership:  Uncle Sam’s Way To Millions” and will expose additional ways to use and benefit from this strategy – at least one of which will absolutely blow your mind with potential, particularly for those of you with very large Traditional IRA’s.  It’s free to get this training:  Just join my 5-Star Listeners Group right now by texting the word SDIGroup to 33444.  Again, that’s SDIGROUP, spelled s-d-i-g-r-o-u-p with no spaces or periods.  Text SDIGroup to 33444 right now.

So, you’ll recall from yesterday’s episode that the Government Accountability Office published a report that provides data that is supposed to convince Congress to change the rules on IRA’s so that nobody can amass a very large IRA balance.

And in that report, they – very curiously – outlined 2 strategies used to actually build very large IRA’s.

One of those – to buy into a corporation with your Roth IRA before it goes public – well… that CAN happen for anyone, and will work.  But the odds aren’t in your favor for that to happen.

But the other one is HUGE for you and me, even though it doesn’t seem like it to start.

The example they gave was that of the formation of an investment fund, where the fund raises $1Billion and the partners are compensated by payment of a “performance fee”… and that performance fee lands inside of the partner’s Roth IRA.  I believe in the example GAO gave us, one of the partners ended up with $20million in her Roth IRA.

So… are you expecting to raise a $1Billion investment fund anytime soon?  Me either?  But there’s still some REAL GOLD here for you and me.  I’ll stick with the investment fund example for a moment before I broaden it out to you and me.

Now before I go any farther, I’d like to point out 2 things:  First, get confirmation of all of this from your own attorney, because I’m not one.  Second, for those of you who are attorneys or who have a high degree of legal acumen, please don’t write to me explaining all of the details I’m not exposing here.  Really, I know what I’m talking about you probably do too, but my listeners are busy people who want to know the CONCEPT to determine if it’s right for them, not every arcane detail.

So, the partner whose Roth IRA made $20Million owned what’s called a “Profits Interest” in the investment fund.  What that means is that the investment fund was organized in such a way that there are 2 different “classes” of owners – one class for the clients and one class for the partners.  These different classes of owners are entitled to different distributions of profits and different authority in the fund.

Specifically, the clients get their share of the profits before the partners do.  That’s only fair!  And similarly, the partners have authority to manage and invest the capital of the fund, but the clients have no such authority.

So let’s give some names to these roles.

Let’s call the class of ownership given to the CLIENTS of the investment fund the “PRIORITY” class, because they always get their profits before anybody else.

And let’s call the class of ownership given to the partners – in other words, the owners – let’s call that the “REMAINDER” class, because they get what’s left after the clients are taken care of.

So maybe this investment fund is structured like so many, whereby the rule is that 80% of the profits will be distributed to the PRIORITY class of owners – those are the clients – and the other 20% of profits will be distributed to the REMAINDER class of owners – those are the partners.

So it’s pretty simple… having multiple classes of ownership allows us to divide up things like profit distributions as well as management authority and control of the company.

So how is that relevant to self-directed investors?

Oh, let me count the ways!

The answer to this, in a word, is LEVERAGE.  Think back to the partners who created the investment fund.  Usually the way those deals work is that the partners who start the business contribute 1% of the value of the company, and the rest – 99% of it – is funded by clients.  But those partners get to keep 20% of the profit.  20% … even though their investment is only 1%!

And that leverage can be a beautiful thing.

Imagine this, my friends:  You find a great real estate deal.  You can buy it for only $100,000, which is FAR below it’s real value, and the cash-on-cash yield will be 20% - that’s $20,000 per year.

Great deal!  You should jump for joy!

But how could you make that better?

What if you could invest only $10,000 instead of $100,000 without taking on any debt whatsoever?

Here’s how it could work:

You find a partner who likes this deal.  They put up $90grand.  You put up the other $10grand.

Your partner, because he put up more money, gets priority.  So every dollar of net income that comes in belongs to your partner, up to the point that he makes $7,000 per year, or 7% on his money.

But remember – the total net return on this deal is 20% per year, or $20grand.  Your partner automatically gets the first $7grand.  That leaves $13… and you know what?

The two of you SPLIT that money.  Down the middle.

So you get $6,500 per year… and your investment was only $10,000.  65% ROI.  THAT, my friends, is a beautiful thing.

You get a higher yield… you invest less money… and you accept ZERO debt.

By using the power of the Profit Partition Partnership, you’ve taken what is a solid deal, and you’ve turned it into an AWESOME deal… and it’s awesome for both you and your partner!

If you’re wondering why you’d be entitled to half of the profits above the first $7k since you only funded 10% of the deal…well… remember this important factoid:  YOU found the deal.  There is no deal without you.  That has great value.

This description is modeled after deals I’ve actually done, my friends.  This isn’t theory.  It’s powerful, powerful stuff.

Now, the amazing thing is this:  The example I just gave you only scratches the surface of what’s possible using the Profit Partition Partnership.  I take that back… as awesome as this example is, it does NOT scratch the surface of what’s possible with the Profit Partition Partnership.

And I’d love to give you the rest of the story.  But we’re out of time today.  If you’d like the rest of the story on this powerful tool, I’ll give it to you for FREE… this week, I’m posting an AWESOME free video training on this very strategy - the Profit Partition Partnership in the SDI 5-Star Listener’s Group training vault.  To get it, just join the SDI Radio 5-Star Listener’s Group for free by texting the word SDIGroup to 33444.  Again, text the word SDIGroup – with no spaces or periods, spelled s-d-i-g-r-o-u-p – text SDIGroup to 33444 and that will get you access to the 5-star group, and to the special video training.

My friends… invest wisely today, and live well forever!

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