This is my first post here and I hope someone can explain to me how to use my $401k that was rolled over to an IRA at my Credit Union for Real-Estate Investing.
I’m starting to do L/O and Subject 2’s and I know I can use my T/B’s money for comitment money after I get the home under contract but in case I don’t have the T/B’s money in hand i was thinking about using some of my IRA money for the comitment money but my question is? is this a good way to utilize my IRA because I know i’ll have to pay a penilty for using my IRA but I think I’ll only be peniltized if It’s not paid back in thirty days.
If anyone knows anything about using IRA’s and how I can use it in the begining to get me started I would be very greatful.
Tom Gibbons (AKA) MROPTIONS
Great question and I wish that I knew the answer. My understanding is that you can use your 401(k) money for real estate investing or hard money lending. Consult a tax attorney or CPA.
401K and IRA Can be used and you may borrow against for your “PRIMARY” residence, if you take it out for investment property i think it will most definetly be an ugly tax consequence, consult your accountant.
However 401 K and IRA can play a huge roll in obtaining conventional financing, because you need to show mortgage reserves and usually 6 months worth lenders will use these types of accounts and discount there value from 25 to 50% but its usually enough to get approved!!!
To invest your ira(401-k) in real estate, you need to roll it over to someone who acts as custodian. There are quite a few rules…you (or your relatives) can’t live in the property, you can’t buy the property from relatives, all proceeds must go back to the IRA…and on and on. There are quite a few companies who manage these types of accounts. The one I am most familiar is Equity Trust. Web site:
I think the fees are listed somewhere on the site. Seems like its $300/yr for a $100,000 ira.
Hope this helps.