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In this episode, Dan Kryzanowski reflects on his path to becoming an active capital raiser, equity owner, and passive investor!
He unlocks his expertise in discussing how someone can invest in alternative assets using a Self Directed IRA or a Solo 401k.
Dan outlines the step-by-step process of how to invest using these funds that are typically only invested in mutual funds or stock indexes. He further points out that this is also about taking control of your financial future.
Stay tuned and listen to Kryzanowski’s closing statement giving us his one piece superpower advice.
Hey everyone, and welcome to the show today. We have a special guest joining us, Dan Krazanowski. Dan is an active capital raiser, equity owner, and passive investor generating double-digit yields and lower taxes via commercial real estate. Dan’s investment portfolio includes over 2,600 storage units, over 1,500 multi-family doors, and dozens of industrial, infrastructure, and residential properties. Dan has personally raised millions of dollars from accredited investors and family offices and empowered his partners to raise seven figures on multiple occasions.
Dan is the founding VP at Rocket Dollar, unlocking the $10 trillion pool of untapped retirement assets for the alternative investment community. He previously led commercial real estate initiatives for GE Capital in Mexico and South America. Dan’s superpowers include self-directed accounts, including solo 401k, self-directed IRA, storage, and also Scranton, Pennsylvania. Right on, Dan, welcome to the show.
Awesome, Dave, great to be here with y’all today.
Yeah, great to have you on the show. Gosh, I don’t know if we should start with self-directed IRAs or Scranton, Pennsylvania. Maybe we start with Scranton. You must have some fun stories about that.
Oh boy, do I ever. I like to say I grew up at the right place at the right time. Keeping the math simple, I was born in 1978. For folks of my genre, you had the whole beating the Russians, and then the 90s was a great time. I joke, being the one tall guy in an Irish-Italian neighborhood, playing basketball was a joy in grade school. I think it’s a great benefit of having the greatest generation and the broad extended family that many of us had growing up. That childhood was great, and I feel that I did the “right thing” per se—going to Wharton, heading to Wall Street, getting a master’s, maxing out my 401k, and working for top-rated companies such as General Electric. Everything was pretty down the fairway until I turned 30.
So, with that, I’m extremely grateful for the folks I met. I think there’s tremendous lifelong friends from Scranton, and a lot of them have spread out throughout the country. Some of us have been, like to say, big contrarians in a good way. This is my core group of buddies going forward.
Interesting. Isn’t that where “The Office” was based? Scranton, right?
I’d say fill in your favorite joke. Not to get political, but I would share that Biden and I played on the same little league field. His house is about two minutes away from mine. On the flip side, Trump Jr. and I roomed together first semester at UPenn. I won’t dive deep into politics, but outside of being one level of connection away from beating Kobe Bryant, I feel my other claim to fame is being on the Hanks Hoagies Wall of Fame 13 years before Joe Biden.
Perfect. We’ll be the prep schools for all my public school friends out there. Yes, we got the preppies.
Nice, nice. So, you’ve got quite an interesting background. Tell us, you started off your career on Wall Street. How did you transition into the world of alternative investments, private equity, and real estate? Did you have some type of transformational moment or insights that really led to that transition?
Great question. I think it’s a few things. I came out of the womb on Wall Street. I joke that if I did what I did on the debt side, we’d be on my island, but I would have caused the financial crisis—probably both true statements. My product became commoditized, and for me, trading ABC XYZ didn’t mean much. So, I went to the other end of the bell curve for General Electric in the mid-2000s and touched everything. It was very exciting.
As luck would have it, I was on a rotational program within GE and spent a year in Austin, old Austin, before any of the big buildings or top 10 lists. It just felt like the right place to be. I grew up in a small college town, and Austin had that feel with pockets of innovation and open conversation. It fit me like a glove.
That said, I went against my gut and went back to the mothership at GE for three years. I reached out to a few mentors in Texas, and they said, “You got to get down here.” So, I came down on a quick trip, got a job offer, gave my notice at GE, went to Peru for two weeks, and then hit my stride in my old career in the early 2010s.
Interesting. So, when was your first investment in the alternative space?
I laugh because it was actually in a comedy tour. Looking back, I remember sitting with my wife and saying, “Honey, I hope you like these, I hope you have a good laugh because these might be thousand-dollar write-offs.” Of course, it wasn’t the best investment ever. This was before crowdfunding. The spirit was, “Here’s a few guys, a bunch of us without kids at the time. What can we invest in? A bar, a restaurant, etc.”
On a more serious note, I was co-best man at a wedding. For my Pete Davidson fans, it was in Staten Island on the shortest day of the year. The gentleman I met said he flipped houses, and the rate for hard money at the time was 15%. That really caught my attention. The lightbulb moment was when he said, “Do you know you can use your retirement money?” For me, that was the moment when the seas parted, the lights came in, whatever analogy you want. It was very exciting.
At GE, it didn’t feel right that I was limited to the Fidelity Year 2050 Target Date Fund. Growing up in Scranton, PA, with my dad being a high school principal, my mom a social worker, and me volunteering in various places, I saw early on how important capital was, not just donating but investing. Realizing I had a six-figure 401k to tap into, and fast forward a few years, realizing this opportunity was in the millions, billions, trillions, in the aggregate, I think that was my calling.
For sure. So, at that point, did you start getting heavily into self-directed IRAs and repositioning those assets into things like real estate?
Yeah, I think like many of us here, it’s a trigger event. You learn of it, and it triggers your mind, everything else. A sponsor, somebody you trust, somebody you’d like to invest in. Whether you have two pockets of money or based on a life situation, it’s the only pool of money you tap into, you learn of this. In the early 2010s, there were many legacy custodians, and you went through the paperwork, needed a scanner and fax machine at the time. Frankly, up until about five years ago, you still did across the board in the industry. But it was a lot better than the alternative. It was exciting that your retirement money could be invested in something tangible like a house in North Carolina or a self-storage deal, getting chunky quarterly dividend distributions. As deals flipped in a year or two, sometimes you could 1.5x or 2x your money in a year.
Nice. So, you’ve got quite an interesting background. Tell us, you started off your career on Wall Street. How did you transition into the world of alternative investments, private equity, and real estate? Did you have some type of transformational moment or insights that really led to that transition?
Great question. I think it’s a few things. I came out of the womb on Wall Street. I joke that if I did what I did on the debt side, we’d be on my island, but I would have caused the financial crisis—probably both true statements. My product became commoditized, and for me, trading ABC XYZ didn’t mean much. So, I went to the other end of the bell curve for General Electric in the mid-2000s and touched everything. It was very exciting. As luck would have it, I was on a rotational program within GE and spent a year in Austin, old Austin, before any of the big buildings or top 10 lists. It just felt like the right place to be. I grew up in a small college town, and Austin had that feel with pockets of innovation and open conversation. It fit me like a glove.
That said, I went against my gut and went back to the mothership at GE for three years. I reached out to a few mentors in Texas, and they said, “You got to get down here.” So, I came down on a quick trip, got a job offer, gave my notice at GE, went to Peru for two weeks, and then hit my stride in my old career in the early 2010s.
Interesting. So, when was your first investment in the alternative space?
I laugh because it was actually in a comedy tour. Looking back, I remember sitting with my wife and saying, “Honey, I hope you like these, I hope you have a good laugh because these might be thousand-dollar write-offs.” Of course, it wasn’t the best investment ever. This was before crowdfunding. The spirit was, “Here’s a few guys, a bunch of us without kids at the time. What can we invest in? A bar, a restaurant, etc.”
On a more serious note, I was co-best man at a wedding. For my Pete Davidson fans, it was in Staten Island on the shortest day of the year. The gentleman I met said he flipped houses, and the rate for hard money at the time was 15%. That really caught my attention. The lightbulb moment was when he said, “Do you know you can use your retirement money?” For me, that was the moment when the seas parted, the lights came in, whatever analogy you want. It was very exciting. At GE, it didn’t feel right that I was limited to the Fidelity Year 2050 Target Date Fund.
Growing up in Scranton, PA, with my dad being a high school principal, my mom a social worker, and me volunteering in various places, I saw early on how important capital was, not just donating but investing. Realizing I had a six-figure 401k to tap into, and fast forward a few years, realizing this opportunity was in the millions, billions, trillions, in the aggregate, I think that was my calling.
For sure. So, at that point, did you start getting heavily into self-directed IRAs and repositioning those assets into things like real estate?
Yeah, I think like many of us here, it’s a trigger event. You learn of it, and it triggers your mind, everything else. A sponsor, somebody you trust, somebody you’d like to invest in. Whether you have two pockets of money or based on a life situation, it’s the only pool of money you tap into, you learn of this. In the early 2010s, there were many legacy custodians, and you went through the paperwork, needed a scanner and fax machine at the time. Frankly, up until about five years ago, you still did across the board in the industry. But it was a lot better than the alternative. It was exciting that your retirement money could be invested in something tangible like a house in North Carolina or a self-storage deal, getting chunky quarterly dividend distributions. As deals flipped in a year or two, sometimes you could 1.5x or 2x your money in a year.
Excellent. How does that map up today for you in terms of your personal wealth strategy?
My view, and like I mentioned with the comedy tour, some things, the hypothesis was good, but it didn’t work out. Other things you do for experience. Part of my strategy in the 2010s was to be in a Roth. The seed versus tree analogy is a good one—you need the capital and the risk tolerance. I’m talking about a Roth conversion. Particularly in the past five-plus years, as things became cash, doing a Roth conversion. My view is that 20 years down the road, taxes will be higher, potentially significantly higher than now.
Being in this space and the benefit of getting to know sponsors, you have a good gut feeling about who you’d want to invest in. In my experience, the yield is kind of on par with the stock market, then you get a big bump on the back end. In the aggregate, my strategy is I’d rather pay now on these little chips and have a healthy post-tax balance to tap into in my 60s and 70s.
That said, if I was a true expert, I would have bought 100 residential houses in Austin, Texas. I didn’t do that, but I know some folks who did. I’m not saying the Roth strategy is the best or was the best right now. I think having hard assets in your liquid accounts is strong too. My strategy has been through an SDIRA and a solo 401k, getting these accounts in a post-tax mindset.
I totally agree with that. I think people don’t realize that when you defer taxes, you’re pushing them down the road. You might think, “Hey, I get a deduction this year, even with a match.” But the only thing I know that’s certain is in the future, taxes will be higher than they are today. There’s also a huge faulty assumption that Wall Street makes—that you’ll be in a lower tax bracket when you retire, which is why they defer taxes. That’s saying you’re going to retire with less income than you have today. I don’t know about you, but that’s not my goal. I’d rather pay taxes on the seed now than on the harvest later.
Exactly. Even folks with a six-figure career, when you’re 70 or 75 and take out 100k, it’s not 100k. It ups your AGI, and at different ages, it can mess with your Social Security. Right now, if I do a conversion on 100k, I’ll pay an extra 20k in taxes, but that’s it. It won’t bite me in my 70s when I thought I was getting my full 100k but only get 60k. Moving from Texas (no income tax) back to Pennsylvania can also affect it. It’s a spiraling effect. Certain pockets won’t cover inflation, and folks will say, “Why didn’t anybody tell me?” We’ll point to some old webpage saying it was there.
Exactly. People have faulty assumptions about their rate of return based on statements from their primary financial institution. They’re not factoring in fees, inflation, or taxes. It behooves you to look at those key items and where you want to be. Dan, this is a perfect segue. We have a lot of investors with money in 401ks, IRAs, and different things. That’s where we’re told to put our money. Can you tell us about the self-directed space? For someone new, what is a self-directed IRA or solo 401k? How are they different, and how can they be utilized?
Sure. First and foremost, it’s legal. I want people to know it’s perfectly legal. A lot of politicians have been using it since the 1970s. I like to joke that it’s a little nerdy, but when you get to know it, it can actually be a benefit. IRAs have been around since the ’70s, and the most common transaction in the last 50 years has been investing in things like a small multi-family property or a piece of farmland through a buddy’s deal. You can transfer a portion of your old 401k, IRA, or TSP if you’re military, and then invest passively just like you would with your piggy bank checking account.
Another common example is owning a rental house. It’s amazing how many folks with their liquid money have a second asset they don’t use personally but receive rent checks from. You can do that with your self-directed IRA. However, I want to caveat that you or your linear family cannot benefit directly. The IRS tells you what you cannot do: no life insurance, no collectibles, and you can’t benefit from your primary residence, a beach house your parents use, or your kid’s startup. But almost everything else is in play for passive, arms-length investments.
Why don’t more people know about this? It’s not as easy to sell as a target-date fund or an ETF from Vanguard, for example. It also wasn’t “country club cool.” As of a few years ago, you needed a scanner and a fax machine, and even after a good investment, you got charged more annually or per transaction. This didn’t sync with the spirit of having a true self-directed account. That’s why only roughly 100 billion of the 10 trillion in retirement assets are in self-directed accounts.
Got it. So essentially, you can invest in alternative assets with your self-directed IRA or solo 401k. You can invest in a crypto fund, self-storage, real estate, or any of those types of assets, correct?
Absolutely.
How do you guys do that at Rocket Dollar? What is your differentiation, and what is the process if someone is interested in doing this?
Rocket Dollar is a conduit to offer individuals checkbook control self-directed accounts. Whether you have the solo 401k or the self-directed IRA, with both accounts, you as an investor have checkbook control, much like your piggy bank checking account with liquid funds. If you want to invest in crowdfunding at 2 in the morning, you can because you have full access to your money 24/7. In the custodial world, even if I invested in your deals and put 25k in every quarter, it would be ridiculous for you and me to be on the phone with a third party to fill out their documents. Rocket Dollar eliminates that.
In the sales process, support team, and FAQ (which is more like an award-winning knowledge base), Rocket Dollar provides guidance on what’s legal and what’s not. Of the thousands of Rocket Dollar investors, everyone has followed that guidance.
For sure. Can you tell us a little about UBIT? I think if folks are new to the SDIRA world, there’s something called UBIT, which is a tax on the levered portion within your IRA. Can you clarify that for us?
At a high level, UBIT (Unrelated Business Income Tax) and UDFI (Unrelated Debt-Financed Income) are considerations. As an investor, the potential of UBIT has never held me back from investing in a deal. You have to look at your separate buckets of money. UBIT and UDFI involve leveraging debt financing. There are exceptions, and it’s like anything—look at the deal holistically. My passive investor experience shows it hasn’t been a material difference, and in most deals, it wasn’t even a consideration.
This isn’t financial advice, and we aren’t financial advisors, but in my estimation, comparing a traditional IRA in a Vanguard fund making 7% over the long haul to an alternative investment potentially 2-3x higher, even with some tax dilution, you’d still come out way further ahead.
Dan, something great about self-directed accounts is taking control of your finances. The financial services industry taught us to believe we weren’t smart enough to handle our own finances. But that’s the lifeblood for building wealth and creating prosperity for your family and yourself. We have a lot of sharp people capable of managing that. It’s about getting smarter, being open to new ideas, and learning. Control is key.
Absolutely. To be clear, self-directed (capital S, capital D) is truly night and day compared to traditional accounts. The benefits of pre-tax and Roth accounts are significant.
So many of us have heard about Peter Thiel. He’s been in the news for turning $50,000 into billions through savvy investments. The IRS would rather take your money sooner than later, so if you want to give it to them through a Roth conversion, you can do that. For all of our realtor friends, if you’re one of the 1.3 million realtors in the country who are 1099, or if you’re self-employed, even if you do gig economy work, you’re eligible for the solo 401k, also known as the individual 401k.
What I like about the solo 401k are the benefits. One, you can have a pre-tax and Roth checking account under the same umbrella. In terms of fees, you’re only paying for one account. In the IRA world, you’re limited to $6,000 or $7,000 contributions, but with the solo 401k, you can do the $19,500 like your W-2 friends, plus 20% of your net earnings. This can add up to $56,000 or $57,000, more if it’s a husband and wife team without W-2s, and even more if you’re over 50 years old.
For my entrepreneur friends, if you need $25,000 to start a business, you can borrow up to $50,000 or half the value of your plan, as long as you pay it back over five years. The solo 401k is tremendously powerful, and I know many folks, even in their 20s, who are taking advantage of this instead of pursuing a traditional W-2 job. They see the benefit of making $100,000 and being able to put away $40,000 or do a Roth conversion the same year. At age 25, this is awesome.
Yeah, it’s super powerful. It’s not about what you make; it’s about what you keep, right?
Exactly.
Can you walk through an example? Let’s say someone wanted to invest in a real estate syndication. How would the process look like in terms of setting this up and how the money flow would work?
I’ll use my real scenario. I worked for GE (General Electric) and had a 401k with Voya. When I left, it got pushed into Fidelity and became a rollover IRA. I opened a solo 401k with Rocket Dollar. Let’s keep numbers simple and say I had $250,000 in Fidelity. I could choose to move as much or as little of this $250,000 into my Rocket Dollar account. This is still pre-tax, so I’m not paying the government, doing an early withdrawal, or getting hit with penalties. It’s just another stop on the train. If I moved $100,000 into Rocket Dollar, the other $150,000 stays at Fidelity.
Once the Rocket Dollar account is funded, much like my piggy bank checking account, I sign the subscription docs and wire money. It’s that simple—no third-party custodian involved. Rocket Dollar’s premise, thanks to Henry Yoshida, is to eliminate as much friction as possible. You can sign up in five minutes, e-sign a few things over the next few days, fill out a one-pager, all e-signed. From Fidelity to the checkbook portion (an FDIC insured account), the money is rolled over and funded.
Just like a health savings account, once your account is funded, you can’t invest in your own deal or your kid’s startup, but you can invest passively in, for example, a self-storage deal. It’s relatively simple and a nice 21st-century fintech experience.
Yeah, absolutely. I remember when I first got into it, my first self-directed deal was in oil. It was actually an oil-producing well that was cash flowing quite well, so I had a pretty good experience. It was very seamless. We have many investors who are investing this way, and it’s definitely a good move. Dan, if you had just one piece of advice that you could give to our listeners about your wealth trajectory and investing, what would it be?
I would say just do it. What I mean by that is even if it’s with your liquid funds, even if it’s a small amount, legitimately invest in something that you care about or have a deep interest in. You know me as a self-storage guy. So yes, if you have 25k and you can get into a buddy’s deal, and you don’t even want to think about self-directed IRAs yet, that’s fine. Take 25k of your liquid funds and see how this plays out.
It’s always nice to donate a few hundred to an organization, but I feel when you invest with an entrepreneur, which could mean a private loan (I have a fair number of private loans to female entrepreneurs), you see that money multiplying in the community. That’s a huge value-add. Even if it’s a few thousand, that can be the difference between someone getting their business off the ground or not developing their initial MVP. This is one of my passions, and I’m at the point in my career where I can do this with my retirement funds.
I like to sum it up by saying there’s a big difference between like and trust. We can have a million likes on Facebook, but trust is when the money moves. Internally, it doesn’t hurt that much to write a small check, especially when you’re earning about 0.01% in your checking account. Don’t be afraid to make a little alternative investment somewhere.
100%, I totally agree. Taking action is key. We talk about that in our wealth strategies. You can have all the knowledge or the right intentions, but if you don’t take action, you’ll never move the needle. Once you take action and see the results firsthand, you’ll have good results and think, “Why didn’t I start this earlier?” So, the key is to take action and get into the game. If you can do this with some of your existing IRA money, it’s just repositioning capital.
Would you comment on that as well? A lot of people are taught that IRA money is like the sacred lamb that we should never touch until 65. My view is that it’s really just repositioning and optimizing. What would you say to that?
Yeah, and it amazes me, especially as I crossed 40. We only live one life. This is our book of assets per se. We’ve been taught, especially Gen Xers and Boomers, that this money is sacred. A buddy of mine, one of the top VCs in the Austin-DC community, has been investing in companies for decades. I told him to use his retirement funds, and he was hesitant. But you have access to that money now to use it.
Don’t blindly follow the 60/40 stock bond allocation, especially when bonds are close to zero and inflation is at 7%. The delta is enough to say if you want to keep up, you need something else. It’s not that scary. Many folks have an inkling to start buying their own multi-family properties. My suggestion is to come in first as an LP passive investor. Based on your current life situation, your only pool of money may be your retirement, so please take advantage of it.
Awesome. Dan, it’s been great having you on the show today. Do you have a link or anything you can share with the audience in terms of how they can connect with you or Rocket Dollar?
Absolutely. First, LinkedIn is great. Please mention that you heard Dave and me talking today, and I’ll reach out. I’m on LinkedIn pretty religiously. Secondly, just as a courtesy and thanks, I joke if you can spell it, you can get it: dkrizanowski. We’ll put it in the show notes. This will get you the maximum discount off a Rocket Dollar account. Finally, rocketdollar.com/learn is truly an award-winning knowledge base that covers everything we’ve discussed today.
Awesome. We’ll definitely link those in the show notes for folks. Dan, thanks again for coming on the show today.
Awesome, Dave, such a pleasure.