Join Vince as he talks with Adam Doran about taking control of finances to avoid getting caught in the tax trap. Adam is a former police officer who eventually became a wealth advisor and real estate investor. Building tax-free assets and alternative financial strategies with real estate investors are what he specializes in. Today, Adam gives out his mindset towards helping real estate investors and building primary wealth through real estate. There’s a lot to unpack, so stay tuned and enjoy the episode!



Tax Trap

“The industry is broken,” Adam said. The claim is traced back to the financial advising sector because, generally, control goes into the adviser and not the client. First, it takes away liquidity and access to capital, then it goes into accounts untouchable until 59, unwittingly setting a tax trap. Yes, the account grows bigger as time goes by, but no taxes were paid for that. Eventually, taxes will take a fraction of that hard-earned money that took years to grow. Moreover, it is estimated that in 10 to 20 years, tax rates are more likely to be higher than they are to be lower. So, with people unaware of what happens with tax-deferred accounts, what could be the future with higher tax rates?

 

Good thing Adam has a long-term strategy. He explains that asset accumulation is important, yet the most common mistake people make is solely focusing on accumulation. It ties back to the tax trap problem – it does not matter what is accumulated when there is no plan for distribution. There is a better chance of growing the money if it is distributed in different accounts rather than putting it all in one account. Adam shares a financial convention around a four percent safe withdrawal rate. In retirement, the idea behind that is when assets are started to be drawn, four percent of the total balance can be safely taken annually without running out of money. That is just the accumulation part. If that money is distributed to other tax-free assets such as life insurance, the safe withdrawal rate can be boosted to six to eight percent. Doing this not only avoids the tax trap but also grows the money more efficiently.

 

About Adam Doran:

Adam Doran is a former police officer-turned wealth advisor who has been investing in real estate since 2011. He specializes in a creative capital strategy for real estate investors to build tax-free wealth alongside their growing portfolios.

 

As a real estate investor, Adam started with wholesaling and accumulating single-family rentals using the BRRRR method in his home market of Kansas City. He transitioned in 2019 to multifamily and now owns 52-units with his partners.

 

Outline of the episode: 

●    [02:05] The process to be a wealth advisor

●    [07:22] What kind of wealth advisor Adam is

●    [14:50] Accumulation and distribution strategy for efficient money growth

●    [28:34] Obstacles faced and mistakes made throughout Adam’s journey

●    [35:45] Be selective of the people to work with

 

Resources:

●    Website

 

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