using a 401K or IRA to fund real estate?

They can purchase real estate in a self directed IRA.

Savvy buyers use self-directed IRA to buy homes

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/31/BUQI19FAVM.D...

We used private money from a self-directed IRA on our first no-money down deal and it was fairly easy. No penalties for the owner of IRA, and her bank whom her IRA was through, did all the paperwork for her. We pay 8% and pay the bank directly. As soon as we had our contract in hand, it was as simple as a regular finance through the bank. They took care of it all. However, I don't believe all IRA's qualify. I've heard, for instance, that Vanguard does not allow.

No experience with an 401K, but I think the process would be similar IF the company allows it. Otherwise, you might be able to roll 401K into a SD IRA and go that route. From my understanding, it is actually easier to use someone else's IRA/401K than your OWN to fund real estate deals. That way there is no issue of whether or not it is a contribution. There are laws that apply when you fund your own real estate purchase, such as working on the property yourself.

I will have to do some research on self-directed IRA's. Just looking for ways I can give opportunities to friends and family members. We are dropping 25 offers on MLS listings tomorrow and we have a list of 11 investors, so I feel pretty confident that we will be able to match a deal up once one (or two) gets accepted. It's always nice to have a back up plan too. -Susan

Can set up self directed IRA to purshase real estate and other commodities. If interested, please PM me and will provide her contact info for free consultation.

can you tell me how 1st you found your investers.
2nd. what did you say to the investers to committ to you.
and how are your deals going...

p.s im from michigan and im a realtor and would like to say for your help i could help you in the michigan area...thanks.... i will be like the realtor every one wants making all those great fun 25 offers. jimmy.

Depending on how much they need, a 401k or a solo 401k can provide up to $50k for a real estate deal which is taken out as a regular loan from their 401k. They pay that back to the 401k on a 5 year amortization and pay the interest back to themselves. They can use this money for personal use as in a home for themselves or family members. It can definitely be used as a bridge for other financing later down the road ( as when a property value appreciates )

Self Directed IRA's can be used for buying property but there are many conditions that must be met to keep the transaction from being classified as an improper transaction that would be taxed and penalized by the IRS. Some of the conditions are the IRA owner or any of their direct lineage can not get beneficial use of the property which means if it's for them or their children or parents to live in, or even if it's a weekend a year, they can't directly fund from their personal IRA or they'd face penalties and taxes on the transaction as I understand it. If it is just for an investment property, as long as they don't personally benefit or their direct lineage, it's fine and the IRA gets the benefit of profit and loss from the deal. Best to get with a good tax attorney before moving forward just to be sure it's all good

Hi Jimmy, we have not done our first deal. We have a list of 11 investors right now, they didn't have to commit to anything yet because I have not found them a deal yet. We dropped 25 offers today, so we are hoping to have our first deal locked up by mid next week. We got our investors on our list by posting ghost ads on craigslist and by taking calls from our bandit signs we put up. Our bandit signs just said "We buy houses, any condition" with our phone number and website. Our website is not fancy, you can check it out at www.lobdock.com

When I got contact with the investors, I would tell them what we do. Our plan is to buy some of these properties ourselves and others to pass off to people like them. I asked what their criteria was and asked their strategy. Do they buy with cash, or credit? Do the fix to rent or fix to sell? What area of town are they looking? What price range?

During speaking to my investors, I learned that many of them are having trouble getting financing, so my to do for next week is to call all the local owned banks and find out if they do portfolio lending, what their seasoning requirement is, and what their loan to equity ration is. I will also ask what documentation they require for approving a loan. That way I can pass this info on to my investors in case they are needing more cash. My 401K question was more for getting friends and family in a situation where they can invest in some of the incredible deals we are running into.

I also plan on networkign with these investors to help find handymen or contractors, painter, ect. for when I need them. I already have one contractor on my power team, but I always like to see what others are doing too in case I need to shop around.

I need to perfect our system here in Oklahoma first and then I will surely take you up in Michigan. I am also willing to help with anything I can, but understand that I am also new here too. I feel like I understand everything quite well so far though.

-Susan

Hi Susan,

Have you had any respones that you sent out letters to. I'm having such a hard time with my buyers list. No responses yet. HELP!!!!!!!

Thanks,

Sharon

tell me how do u make 25 offers, do u have enough money to cover the offers, i made 3 offers 2 weeks ago & did not get any of them my realtor ask me if all 3 went through did u have enough cash to cover them, i did not i have enough for 1 deal at a time, she told me to protect me we need to do 1 deal at a time, tell me about others and there deals, thanks