UBIT is a hefty tax that can penalize up to 37% of your investment account on business income! There must be two hurdles that your SDIRA investment must overcome to be exempt from paying UBIT. First hurdle: Is the income passive? I know that you may have heard a sponsor or GP claim that their investment is passive, that you, as an investor, do not have to “do anything,” i.e., passive. While that may be true of your personal time, energy, or effort, UBIT does not consider you; it considers the SDIRA. Is the invested capital “doing anything”? That’s the question.

For accredited investors seeking secure and consistent returns, private debt funds are an excellent option. They offer predictable cash flows with the added benefit of being backed by valuable assets. Private debt funds lend capital to borrowers in exchange for fixed interest rates. These loans are often secured by real estate or other tangible assets, providing an added layer of protection for investors. In return, investors receive regular interest payments, creating a steady income stream.

Investing in real estate investment loans work the same way, but the borrowers are investors, not homeowners, and you play the role of the banker. Your loan is secured by investment properties, providing a layer of protection while you earn interest without managing properties yourself.

The real estate investor is now the one who is responsible and liable to pay the taxes, insurance, and your monthly payments. The real estate investor has to deal with the three big “T’s” of RE Investing; Tenants, Termites, and Taxes!

I love the educational aspect of private lending. I could talk for hours on why, for those who are risk averse, investing in position loans, low loan to value, is an excellent way to preserve and grow your family's generational wealth. but it won't give you the double-digit, sexy returns, right? So, for those looking for equity, that's where that syndication component comes in. In syndications, on our website, you'll find my pitch deck

You should then determine which market you will be investing in. Now, most people will scratch their heads and say, “Edwin, are you talking about the Stock Market or the Real Estate Market?” In the world of sophisticated investors, we understand that there are THREE markets you can invest in. Yes THREE. While the general public understands the term “Market” refers to the Stock Market, I want to expand and deepen your understanding. Think of each of these Markets as an “umbrella” and under these umbrellas there will be different primary assets, sub-assets, and strategies to invest in these markets.

Unsurprisingly, finances are a top priority for people approaching retirement age. Knowing how much you need to retire comfortably and confidently is extremely important. Yet, it can be challenging, as inflation and the increase in the cost of living will quickly erode your ability to retire. So, how can you address your concerns effectively and efficiently?

In this podcast, Edwin Epperson, guest on the Abundant Journey, discusses his journey from Green Beret to customizable private debt fund manager. He discusses the hardship of military service and the event that made him take a second look at continuing in the service. He dives into the benefits of investing in debt and why it is a critical component for any sophisticated investor to add to their portfolio.

Debt is also very well known by every investor. Most investors see debt as a way to leverage their existing equity. For example, if an investor has $1,000,000 in equity, they could generally leverage that equity 4x. So, in this case, someone could get a loan for $4,000,000, put down their $1M, and buy a $5M property. Simplistic, but the point is made.

I believe that education is critical. Knowledge and awareness of these 5 categories will go a long way in helping you truly diversify your investments, stay ahead of the investing cycles, and be able to pivot when one strategy or market begins to turn. Over the next five blogs, I will deep-dive into each category (to the best of my ability) and lay some groundwork for you so that you can elevate your investing game, make wiser, more informed decisions, and truly become sophisticated with your investments.