How to Flip Properties Using Other people’s 401k or IRA Funds

Posted on: September 15, 2009

Categories: Investors, Reviews

Author: buyfixandprofit

Did you know that you do not have to invest your retirement funds in the stock market?  Real estate prices are at historical lows and there may never be another buying opportunity like this one again.  Lifelong, conservative investor friends of mine that have always believed real estate investing was too risky are now purchasing and rehabbing properties using the money in their 401k’s and IRA’s.

The concept of investing in real estate or other assets in retirement plans has been around for more than 30 years.  These kind of retirement accounts are called self directed IRA’s/401k’s and are governed by the IRS.  There are strict rules that the investor must abide by in order to receive the tax benefits associated with these retirement savings accounts, but they are fairly straight forward.  ALL expenses associated with the purchase, rehab, and management of a property must be funded from the self directed IRA account and ALL income received whether it be rental income or the profit from selling the property must be returned to the account.

The process of transferring your money from your 401k or IRA to a self directed account is fairly simple and the custodian you chose should be able to guide you step by step through the process.  Many real estate investors have used Equity Trust Company, www.trustetc.com, for many years to set-up other people’s self directed accounts for them to allow them to lend money from their retirement funds to finance the investor’s deals.  Their website and account managers have excellent knowledge of their products and make the paperwork involved easy to fill out.  There are other companies out there that may be just as good, but make sure to compare costs carefully for the kind of transactions you will be making.

Using a self directed IRA allows one to purchase foreclosures, tax liens, notes, partial interest in properties, and even lend other people money for their real estate investments and earn interest on their money as if they were the bank.  Purchasing a foreclosure outright and then pulling additional funds from your self directed account for the rehab work is a simple transaction.  It is also possible to purchase a property with partial financing from a bank but the loan must be a non-recourse loan and unrelated business income tax (UBIT) will be due.  There are only a few banks out there that will do this kind of transaction.

Unlimited Flipping Financing

A thorough understanding of self directed real estate IRA’s can open up the flood gates of private money for real estate investors and rehabbers.  There is a huge population of people out there are unsatisfied with the return the stock market has provided for them over the years.  Many real estate investors work with these people to teach them how self directed IRA’s work and how they can earn 10 – 18% on their money by borrowing funds to finance the investor’s real estate deals.   This topic is so popular and lucrative that there are rehab seminars that cost in excess of $8,000 for a weekend that focuses solely on how to obtain others people’s retirement money to finance their real estate deals.

Don’t overlook this option.  It can open up many doors to boat loads of money that many were not aware was even an option.

 How to Flip Properties Using Other people’s 401k or IRA Funds
pixel How to Flip Properties Using Other people’s 401k or IRA Funds

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