Q&A: Land Contracts, Cashing Out Retirement for Bitcoin, & $500K in QQQI

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0:42That's why America's beverage companies are sharing more information about our ingredients at GoodToKnowFacts.org. No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit GoodToKnowFacts.org. Hey everyone and welcome back to the Rich Habits Podcast brought to you by public.com question and answer edition. These are episodes where we take your questions via Instagram DMs over at richhabitspodcast on Instagram or via email at richhabitspodcast at gmail.com and we answer them. We answer your questions as if we were in your shoes going through whatever you're going through right now.

1:22These are right off the dome. These aren't really prepared too much. It's Robert and I are having a casual conversation as to what we would be doing if we were faced with what you're facing. Yeah, I love these episodes. And it's just so much fun recording them because it challenges us every week. We get some of these crazy, crazy scenarios. And it really kind of illustrates what we always talk about. And that is personal finance is personal. Everyone has a different strategy, different issues, different hardships that they go through in their financial journey. So I really enjoy getting to dig into these questions and help people figure it out as best that we can.

2:01And we've got a ton of awesome questions coming to you today. And some of the questions that we're being asked right now that we'll be sharing, I don't think we've ever talked about on the show before. So we're excited to jump into this episode. But before we do that, quick shout out to our sponsor, Public.com. If you're looking for an online broker that was actually built during the century, you need to give Public.com a try. On Public, you can invest in almost anything. That includes stocks, bonds, crypto, options, and more. And if you're like us and you keep an emergency fund, you can take advantage of their 4.1 % APY offered by their high-yield cash account.

2:35Discover why NerdWallet gave Public five stars for its ease of use and investment selection. Fund your account in five minutes or less and earn up to$10 ,000 when you transfer your investments over to Public. And for a limited time, Public is offering a 1 % match on all IRA contributions. So if you're finally investing towards a Roth IRA this year, do it on public and earn 1 % match on all contributions. Paid for by public investing. Full disclosures in the podcast description. All right, Robert, let's jump into our first question coming from Vin. Vin says, Hi, Austin and Robert. I've had the great privilege to offer my tenants a rent-to-own lease to sell my investment condo in Austin, Texas.

3:17I'm hoping to offer seller financing to optimize my profits. How would you recommend I consider and evaluate structuring a rent-to-own lease and seller financing? My condo is currently renting for 1 % of the purchase price per month with a 10 cap rate. It also has a 2.75 % mortgage rate. It's a great investment property by the numbers, but I just really don't enjoy managing tenants. And although my current tenants are wonderful, I get too much anxiety at the thought of screening new tenants in the future. I concluded that the rent to own and seller financing would be worthwhile to take profits while also seeing a new family happily live in their new starter home.

3:56Another factor influencing my decision is with the economy and interest rates. It's very much a buyer's market right now. And structuring a purchase contract for a contingent sale three years later will hopefully provide enough time for real estate to recover. But I really just don't have any data, and so I'm just assuming three years will be enough time. Thank you so much for your thoughts. So, Robert, I don't know anything as it relates to seller financing, a rent to own lease investment condo, any of this stuff. So I want you to just like take it away here. Define what Vin's talking about. Break it down into the layman's terms and teach me how if I was in Vin's shoes, how to approach, you know, evaluating and constructing one of these seller financing rent to own lease contracts.

4:39Okay, then great question. And I'll do my best to break it down, not only for you and Austin, but everyone listening. First and foremost, you're going to need a real estate lawyer because you're going to need someone to draft a land contract for you to be able to do this owner financing. It's not difficult. Any good lawyer is going to be able to handle it very simply. And you're also going to need an amortization schedule so you can calculate what the payment is going to be. Basically what a land contract is, it's the document you're going to create as if you were the bank or the mortgage lender that spells out the terms of this purchase agreement.

5:16That's what it is. The amortization schedule is going to spell out what is the principle and interest that this person in the land contract is going to pay for that two, three, five years and then have the balloon at the end. Because remember, you don't want to carry this like a mortgage for 30 years or 15 years for someone. You want it to be short term to get yourself in a situation where you can make more money on this deal. That's why many times owner financing can be highly profitable for the seller like yourself. And on top of that, you're going to have to come to an understanding of what is the interest rate you're going to charge in this land contract.

5:56Right now, I would think you could probably charge 8%, maybe 9%, because someone that needs or desires owner financing is willing to pay a little bit more interest, and that helps you create more profit in the deal for you. So we know what the land contract is, we know what the amortization schedule is, and we know that we can charge a reasonable interest rate, like I said, 6%, 7%, 8%, 9%. All of those are very favorable for you to be able to do this, but I strongly recommend you have a lawyer help you to get it all in order and make sure you understand the documents and the agreement for not only you in the land contract, but also for the person buying the property.

6:39What are you responsible for? What are they responsible for? And make sure that you understand all of the default mechanisms as well, because you want to make sure that they understand when buying this, they have to keep up the landscaping. They have to make sure to do reasonable improvements to make sure that they don't let the property degrade. All of these things, a good lawyer will help you calculate and put in this land contract to protect you in the long-term sale with you doing owner financing. Now, this might be a silly question, but despite it being a condo, it's still called a land contract?

7:12He mentions a rent-to-own lease. I don't do those. I don't know the difference of if that's actually real, where you could do a lease, but you're renting to own it. To me, it's just a land contract at its origin. So, yes, you can definitely do it with condos. And you just have to make sure that you understand when doing this is make sure there's no due-on-sale clause with your current mortgage. Because you need to check with your mortgage company first and say, this is what I'm going to do. Make sure there's no issues if there is an HOA with being able to do this in your community, in your condo community.

7:47So there are other things to look for. So that's a great question, Austin, to make sure that you qualify to be able to offer this before you get the cart ahead of the horse. This is a great breakdown. So now I'm curious, as it relates to, let's say we fast forward three years, you mentioned this balloon payment. Does that mean that three years later, the person who's purchasing the investment condo in Austin, Texas, goes out and gets a normal mortgage and then takes that money and buys the condo from VIN? Yes, yes. And where it becomes advantageous for them is, let's say interest rates do come down in two, three years, and there is a clause that they could buy out of the land contract early because interest rates plummet back down to three, four, five percent.

8:31then Vin would get his cash out at that time. It's just a great way to do business because many times you might have a really motivated buyer, but they may not qualify for a mortgage or they're trying to avoid the really high interest rates right now that they would get from a traditional mortgage. And that's where Vin has some leeway because if they say, hey, I can get a mortgage right now for 7.75 % over 30 years or 15 years, and Vin says, well, hey, I'll do it for less down payment and I'll do it for 6%, it gives you more negotiating tools to be able to get the deal done. Got it. Okay. That makes a lot of sense.

9:10Shout out Vin for being so smart to think about this. I don't really, as you can tell, have much understanding of it. I've never done anything like this. So shout out Robert for being able to explain it, walk everyone through it. Wishing you all the best, Vin. I think you're going to do just fine in this situation. So our next question comes from Leslie K. Leslie says, hi Austin and Robert. Thanks for being two nice guys on the internet that we can trust, helping us learn more about personal finance and investing. Leslie, we appreciate it. So Leslie says, before you, my investments were all in target date funds and now I'm doing so much better.

9:41I want to now start investing in real estate. In fact, someday I think I'll be able to buy my first multifamily once I have paid down my own mortgage. Here's my question. What do you guys think about using platforms like Arrive, Fundrise, and Yieldstreet to begin diversifying into real estate before I actually go out and buy a multifamily? Robert, I love this question here from Leslie. We talk about, you know, diversification after you build your$100 ,000 base all the time, which means, you know, call it 15 to 35 % of your money is diversified across different asset classes like real estate or cryptocurrency or precious metals or cash flowing businesses or startups and pre IPO companies, right?

10:21but you are well diversified across a bunch of different asset classes so that when we have, you know, volatility like we've experienced so far in 2025, you've got some money parked elsewhere, like in precious metals, gold and silver that are up 30 % this year compared to the stock markets, 2 % or real estate through different platforms and things like that that are up 3, 4, 5 % versus the stock markets, 2 or 3%. So being diversified is something we believe in. Now, Leslie, you asked about Arrived, Fundrise, and Yieldstreet. So we're going to break down all three of those platforms as to how we understand them.

10:54So let's start with Arrived. Arrived is backed by Forerunner, Jeff Bezos, the CEO of Uber, right? They're very legit. They've got all the normal institutions and very smart investors. So they're not over here like a fly-by-night company by any stretch of the imagination. But what makes Arrived different than these other platforms is they very much focus on single deals. So when you go to Arrive's website, you'll see a bunch of different offerings. If it's a single family, if it's a, you know, something else of that nature, but you're going to see all these very specific deals with addresses and towns, and it's very specific on a deal by deal basis.

11:29And so what you are doing as an investor, as you're investing in a specific deal, you are saying, I think that this single family home in Kingsport, Tennessee, which is actually offered on their website in my hometown, is going to be a good investment. Therefore, I'm going to put money into it, right? You're investing on a deal by deal basis. Now let's move on to Fundrise. Fundrise is the platform I've been using since 2016, 2017. Robert's been using it since probably 2022, 2023, something like that. And it's very similar to Arrived in the sense that you are investing into real estate and deals and things like that.

12:03But Fundrise can be thought of more as a robo-advisor, not so much a self-directed advisor. And by that, I mean you give Fundrise some money and they're over here deploying it as strategically as possible for you across the country in different types of real estate. Think multi-families, think apartments, think last mile distribution centers, single family homes, build to rent things, like a ton of different types of real estate. And Fundrise does all that for you automatically, which is why I like it because I don't have to scrutinize different deals and be an expert in specific regions of the country.

12:36And then finally, Yieldstreet. Yieldstreet is a platform that offers yield across a bunch of different asset classes, including real estate. And you very much then get to choose the type of real estate exposure you want to get the yield you want. They also have private credit and hard money loans and things of that nature. They've got art and crypto and whatever else. It's just a platform that you get to earn some yield on your money and they put you and different types of assets and asset classes to generate that yield. Let me piggyback that a little bit and break it down really simply, in my opinion.

13:08And that's a great way to explain it, Austin, is I look at it this way. Arrived is individual deals if you're just getting started and you want to have fractional ownership. Number two, Fundrise, Austin and I love it. It's more of a REIT. Like he said, you're giving them your money and they're deploying it across multiple deals. And then Yieldstreet to me is for the more sophisticated person that's looking to get into these private deals. And that's a little further down the road. So I think it's kind of beginner, middle, and more expert. And all three of them are good platforms. We obviously love Fundrise.

13:44But Arrived has had good, good reviews. And it's just so you understand you're investing in an individual property that you can choose. So that's pretty cool as well. And I want to just reiterate here, I've never used Arrived. I've never used Yieldstreet. I've heard of them. I've heard great things about them, but I've not used them personally. Whereas I have used and am an investor with Fundrise. And Fundrise, I've been an investor for a very long time. And so has Robert. And we've had a great experience with the platform. So our next question comes from Edwin K. Edwin says, Hi, Austin and Robert.

14:16How are you guys doing? I've been listening to your podcast since 2022, and I've learned so much. Here's my question. I have$11 ,000 invested in a Roth IRA using Merrill-guided investments, and I wanted to roll over that money to either Public.com or Vanguard. Which one should I roll over into? I'm skeptical about Public.com's longevity compared to Vanguard because Vanguard's been around for such a long time. I also have$11 ,000 already in public, but it's in a bridge account invested into the index funds and ETFs you talk about. Robert, you want to take this question? Yeah, I love this question, and everyone that follows this podcast knows Austin and I really, really love public.com.

14:56We both use it. We've used it for years. Let me spell out a couple things. There is a term called SIPC insurance and public has that on all brokerage money. It just means that anything that you have under their custody is backed and financially insured to make sure whatever happens with the platform, your money is protected. And also one way to look at it in this instance, Edwin, is that if you were to roll this over, there is$150 bonus you could receive for rolling it in. So I have no concerns over public. I know Austin doesn't. They're a great company. We've worked with them for a long time, invested using their platform for a long time, and we love it.

15:38Are they as big as Vanguard? Not yet, but they're definitely getting bigger year over year, and I don't think there's anything to worry about. Yeah, let me just reiterate, nothing to be skeptical as it relates to really any online brokerage platform, no matter how long they've been around or not, assuming they are SIPC insured. SIPC protects against the loss of cash and equities up to$250 ,000 of cash and$500 ,000 of stocks held by a customer of a potentially financially troubled SIPC member brokerage firm. So it doesn't matter if it's public or Robinhood or Vanguard or Schwab or Fidelity, any of those, right?

16:21They could all go bankrupt tomorrow. And assuming that you have less than$500 ,000 of stocks and less than$250 ,000 of cash, which you have 11 ,000, so you definitely are under that threshold, your money is backed and insured and you're going to be just fine. You'll get it all back. You do not have to worry about the longevity of a specific brokerage platform, assuming they are SIPC insured. And to Robert's point, yeah, Public gives you a bonus for rolling over funds off of old platforms onto their platform. So$11 ,000 from your Roth Merrill guided investment account into a public.com Roth IRA will give you$150 bonus.

16:59So heck yeah, that's awesome. So our next question comes from James K. James says, Hello, Austin and Robert. I want to start out by saying how much I love the show and that you guys have truly changed my life. I wish your podcast was around 20 years ago. When I was Introduced to your podcast, I binged like I've never binged before. That's so funny to hear. Thank you so much, James. My name is Jim. Oh, James goes by Jim. Thank you, Jim. We appreciate you listening to the show. So Jim says, I'm 44 years old and I'm married. I have a question though. I don't think I've heard it yet on your show. So here it goes.

17:29I started my career as a pharmacist at 26 years old. I've always contributed to my company's 401k plans. I've moved employers three times in my career and I've transferred my 401k balances from each employer into a traditional IRA account. It has done very well for me over the years, and I'm now sitting on$1.1 million in this traditional IRA. I also max out my Roth IRA every single year because I understand the benefits of a Roth. Last year, however, for the very first time, I ran into the situation of my income being over the limit and had to pull contributions out of my Roth and instead move them into a traditional IRA.

18:06I hated doing this. I hear you guys talk about a backdoor Roth IRA, but having a traditional IRA with this much money in it, to my understanding, prohibits me from doing this because of the pro rata rule. I believe my income will be above the limit going forward. So what can I do and what do you guys recommend I do with my traditional IRA so I can still contribute to the beautiful thing that is a Roth IRA? Thank you guys so much for what you are doing. You are truly changing lives. Jim, first off, what a nice guy. I feel so warm and fuzzy inside. Thank you so much, Jim. And man, 44 years old with over a million dollars in your retirement accounts, like that is amazing.

18:43And I just want to like reiterate here too. I had my friend JC Rodriguez. He's doing this series where he's interviewing people on Broadway that are like in their 50s and 60s that are on vacation. And he just asks them, hey, like one, are you frugal? You're building wealth. How much wealth do you have? And like, have you done it? And a lot of the people he's interviewed that are in their 40s, 50s, and 60s that are millionaires, they're just like, yeah, man, index funds. I've been doing it for 20, 30 years. Nothing crazy. just investing and staying consistent. So it seems like Jim has done exactly that.

19:11And kudos to you, my friend, for being able to achieve such a big nest egg at such a young age. So I'll jump into this question first, Robert. You are absolutely correct, Jim. It is going to be very hard for you to do a backdoor Roth IRA with$1.1 million in a traditional IRA. You'll have to either, one, convert all that to a Roth IRA, which means you're going to be paying a ton in taxes. Do not do that. totally not worth it. And two, and this is something Robert and I found online, if you're able to move your traditional IRA money into your current 401k or a solo 401k, that will make sure you now don't have any money in your traditional IRA, which now allows you to put$7 ,000 into a traditional IRA, convert it into a Roth IRA, and then invest the money, right?

19:59That will be the only 7 ,000 you have in a traditional IRA. This is what I do. So I've had a SEP IRA in the past. I moved it into a solo 401k and that's how I'm able to do my backdoor Roth IRA every year. But if you're able to somehow take this 1.1 million in your traditional IRA and put it into a current 401k or a current solo 401k, it gets it not categorized right anymore as a traditional IRA, which now allows you to do this backdoor without the pro router rule messing everything up for you. It's a great breakdown. And the only thing I would add is if you're looking to open and get going on a solo 401k, carry.com is where Austin and I do it.

20:42We love the platform. They do a really nice job. That's all I would add to this question. But great job, Jim, and better job of breaking it down, Austin, because I know that was a lot. Yeah, shout out, Jim. Congrats, man. And we're rooting for you. So this next question comes from Roger F. Roger says, Hi Austin and Robert. I'm 53 years old with$760 ,000 in my 403B. I'll have my house paid off in about three years and I currently have no other debt. I plan to retire between 62 and 65. My wife and I make a total of$200 ,000 per year. I'm thinking about withdrawing enough from my 403B to buy one Bitcoin, even if it means paying the early withdrawal penalty and taxes.

21:22Two questions. Number one, do you think this is a smart move, even with a conservative Bitcoin return? And two, could that long-term upside outweigh the penalties and risks, or is this very much just short-term thinking? I appreciate all the value you bring. I love the show so much. Robert, you want to kick this one off? I think it's a great question, but I wouldn't do it. What I would first do is I would go to the admin for your 403B and say, hey, what kind of autonomy do I have here? Is there a world where I can migrate some of these funds into one of the Bitcoin ETFs like IBIT? That's where I would start because I would hate to see you sell money, pay the 10 % penalty, pay the taxes on it to speculate on Bitcoin.

22:07Although I think everyone here that follows along should own Bitcoin. I don't know that it makes sense to pay the penalties and interest to do so. It could weigh out correctly for you. I mean, Bitcoin has returned 944 % in the last five years, which would far outweigh any penalties and taxes you would pay. But it just seems a little wrong to do it. So I would first start by checking with your admin, seeing if there's a world you can move some money into one of these ETFs that already exist. So you get the Bitcoin exposure without paying the penalties and the taxes. Yeah, I'm right there with you.

22:46So if I was in Roger's shoes, I would, one, check out my 403B and see if I can get some exposure into Bitcoin, which could also maybe mean Coinbase stock. I mean, I don't know. It really depends on what's offered here by your 403B provider. But just getting some crypto exposure, I would try that first. The second thing I would do is if Roger here had a Roth IRA or a traditional IRA, I would maybe, you know, that should be self-directed. Therefore, I would try and, you know, use some of those funds to buy some Bitcoin. And then if none of those happened, dude, you make$200 ,000 a year, like just dollar cost average into Bitcoin at its current price with your extra funds at the end of every month that you have.

23:26And till you have a Bitcoin after maybe 12, 18, 24 months and congrats, you're now 55 with the whole Bitcoin or whatever, right? I wouldn't overthink it. This is how people like get desperate. And when people get desperate, they get silly. And this is a very silly move. Because think about it like this, Roger, if you're someone who has an effective tax rate of let's call it, I don't know, 20%. I think the average American has an effective tax rate of like 23 % or something. So let's say you have an effective tax rate of 20 % and you also pay a 10 % penalty from your early withdrawal. You are now essentially paying a 30 % premium for your Bitcoin.

24:01So if it's at$110 ,000 right now, you would essentially be buying it at$143 ,000 per Bitcoin, which over long term could still just be like great. But just use your after tax money that hits your bank account. Go open a crypto account on public and just start the auto invest into Bitcoin that way. Yeah, I just really wouldn't do this. And this goes for anyone that has money in a retirement account. How to think about when you take it out, right? You take it out, not only are you paying taxes on it, but you're also paying a penalty, which means you're essentially taking this money out at a 30 % interest rate.

24:35Like that is bonkers. Just keep it invested, grow it over a long period of time, and find money elsewhere in your budget. If that means cutting back, maybe you get a side hustle. Maybe you do something differently here to get some exposure to crypto. But with a$200 ,000 annual household income, just use that money. You're going to be just fine. 100%. And the other thing to look at here, Roger, is do you have things that are sitting that you could sell? Do you have assets, motorcycles, anything that you're not using? Maybe there's an old boat sitting in the yard that you barely used or a camper that you could sell for$10 ,000,$15 ,000,$20 ,000 to jumpstart your Bitcoin purchases without paying this 30 % premium.