Purchasing Real Estate with Cash

If you currently have a 401(k) plan, you should know that you can easily invest in real estate. As long as you have a clear plan in mind and know what goals you wish to accomplish by making the investment, this can be a worthwhile venture for you and for anybody. If you do it right, you could even quit your job, start your own business, or just live the life you’ve always dreamed of.
The first thing you should do, long before you ever make any sort of investment, is to contact a tax accountant and a lawyer. A certified financial planner can also be extremely helpful. These professionals can discuss your goals with you and then show you how to reach them. Let them know how much you make each year and explain that you would like to use a self directed Roth IRA to buy and sell real estate. They will show you how to turn your 401(k) into a self directed IRA and then a Roth IRA with your financial group. The only thing you will be directly responsible for is paying the taxes for the final transferred amount.
This venture is a great way to maximize your investment portfolio and to give you real world experience. Keep in mind, too, that you can always use money from the Roth IRA without having to pay taxes on that money. This can be especially helpful when you’re first starting out.
Using your Roth IRA, you simply find a property and make an offer for it. This offer will be made in the name of the Roth IRA. All you have to do is to read and then approve the offer. This will be sent to your financial group, and the proper professionals there will sign the offer, naming the company as the technical buyer.
You then write a Buy Direction Letter to your financial group. This letter, which includes a purchase contract, allows you to purchase the real estate. Your financial group will wire money to the title company as a deposit. You get to read and approve all documents and contracts ahead of time, which keeps you always informed and in the loop about what’s going on.
If the property you have purchased is in need of maintenance or special repairs, this can easily be paid from your IRA. You will usually need to be named as “manager” of the repair project. This simply means that you do not get paid for your work and that you do not involve any person who counts as “disqualified” in the work.
Once the property is in good condition, you can sell it. Be careful to sell only when the market is looking good for you. You will want to make sure to get back all of your costs. You will be left with a strong IRA, a great investment portfolio, and a very nice profit.

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