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IRA or Real Estate, advice needed.

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Hey guys,

Ok, so I’m thinking about cashing my IRA in and dumping it back into my investment properties. I can easily make more money on my return in real estate than the money sitting in an IRA earning minimal returns. What are everyone’s thoughts on this?

 

Thanks,

Steve

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Steve, there are many factors when making a decision like this, and no one can say what is best for you. Have you sat and spoken with either a financial planner, or an accountant?

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Hey Michael,

I understand your point. I think I will mention it to my accountant today. I wonder what the penalty is for early withdraw?

 

Thanks,

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have you heard of a "self directed" IRA??

 

Pensco is one of the companies in the USA that allows you to transfer your IRA to them and then buy Real Estate via your IRA. If you use your IRA this way your IRA owns the property. you still reap the rewards via your IRA.

 

ck out their website for free educational webinars: www.pensco.com

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Ok, so I’m thinking about cashing my IRA in and dumping it back into my investment properties. I can easily make more money on my return in real estate than the money sitting in an IRA earning minimal returns.

 

I wonder what the penalty is for early withdraw?

 

There's a 10% penalty for making a non-qualified withdrawal from an IRA before age 59 1/2, on top of paying ordinary income rates if it's a traditional IRA. The IRS rules on useage of the property are pretty complicated (for instance you can't buy property inside of an IRA for your own personal use/use of dependents unless you're over 59 1/2. In that case you could take the property as a distribution. :huh: True investment activities are ok.) so you'll definately want to talk to your accountant/tax attorney.

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The self directed IRAs are a bitchin idea. Entrust and another one starting with E... what is that name! are some more companies that do it.

 

One thing they do say is that you cant "personally guarantee" the loan. That makes it pretty much impossible to get a mortgage. You may be very lucky to find a Hard Money lender that would do it (for a rehab) but likely you'd need cold hard cash to purchase properties.

 

LOTS of rules to all this but well worth it to just keep your money in your IRA instead of paying the 10% penalty.. OUCH. Also, be sure it is a "self directed ROTH IRA"

 

:mellow:

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Nice thing about a self-directed ROTH IRA (SDRI) is that you can earn endless amounts of money each year in them. However, you cannot contribute more than X amount of dollars each year (usually $5-$7k). Say you invest (key word) $5k of your SDRI into one of your RE investments, that investment returns $20k, which gets deposited into your SDRI. Since the extra $15k was ROI, its OK and perfectly legal to increase your SDRI by that amount. Pretty cool, huh? :glare:

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Hey guys,

Ok, so I’m thinking about cashing my IRA in and dumping it back into my investment properties. I can easily make more money on my return in real estate than the money sitting in an IRA earning minimal returns. What are everyone’s thoughts on this?

 

Thanks,

Steve

 

Steve:

 

Ask your accountant about converting your IRA to a self directed IRA. Its my understanding this is a common way to invest in real estate without being taxed as a withdrawal.

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There are a couple of ways to invest in real estate through your IRA. You can take a passive approach and become a hard money lender. You may want to work with a mortgage broker that knows how to do this in your area so you are protected through the transaction.

 

You can also invest in real estate actively as discussed in this thread. We do non-recourse IRA lending across the nation. You will need at least 10% of the loan amount in your IRA for reserves. You will also need a down payment between 30% and 40% depending on the property. Rates are around 8% on a 30 year fixed.

 

Kevin

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Hey guys,

Ok, so I’m thinking about cashing my IRA in and dumping it back into my investment properties. I can easily make more money on my return in real estate than the money sitting in an IRA earning minimal returns. What are everyone’s thoughts on this?

 

Thanks,

Steve

 

Steve, There is lots of information on self directed IRAs without tax penalities. The great thing about this is you can also use others peoples IRA to fund your deals to and give them a 10-15% percent return. Enclosed is a webpage Alan Cowgill that contains 3 articles linked at the bottom and a free audio which will open you eyes to another world of funding.

 

Michael, Hope this link doesn't violate anything if so I can remove it and they can email me for the link.

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