Home Buying in 33033>Question Details

Zafar Chaudh…, Real Estate Pro in Torrance, CA

I am 61 & have been laid off. I've money in 401K. I've a prime home & a rental. Can I take loan against 401K or IRA to buy?

Asked by Zafar Chaudhri, Torrance, CA Thu Apr 4, 2013

another property?

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3
Hi Ra,

I am currently working with a client who is using a portion of his IRA to invest in property. I am no expert but you might want to do some research. The terminology that you are looking for is a "Self directed IRA" I know there are quite a few restrictions with what you can and can't do so as Ann said, you might want to contact somebody that knows more about it. My client told me today that he can't personally manage rentals that he purchases with this money. He has also told me that a self directed IRA allows you to resell the property after a year or two without paying capital gains. I don't know whether that's the case or not but sounds like it could be a good deal and the properties that we are finding for him have a much higher return than he was getting on the money when it was in the IRA.

Wish I could be more help but I'm not up on where to get the money, only on where to spend it :-). Check that out - Self Directed IRA and let me know if you need any help once you've got it set up.

All my best,
Deborah Orr, broker
Unique Properties of Florida
UniquePropertiesOfFlorida.com
UnqieuPanhandleProperties.com
0 votes Thank Flag Link Thu Apr 4, 2013
Ra, before you take on additional debt, you really should discuss your finances with a financial advisor. Generally, it's just not smart to do it when you're a few years from retirement. Instead consider renting out the primary home, and renting out a cheaper property. This will allow you to build equity in the primary home, and help you to maintain your savings.

Best of luck!
0 votes Thank Flag Link Thu Apr 4, 2013
Thank you very much for your great suggestion. The rent in the area I live will be more than my current mortgage unless I move out of the area which at this time is not possible. The property I purchase will give me over $2000 which will cover my Ins + taxex+ loan repay + will leave me some for my use. I a also expecting a rise in the property value. What do you think?
Flag Thu Apr 4, 2013
You can take a loan against your 401k, but I sure would not do it. (You can't borrow against an IRA.) If you have been laid off from a job, you will not nor should you qualify to purchase a home. Sorry to be blunt, but the scenario you are describing is one of the multiple reasons we are in this housing mess right now. People buying what they cannot afford.
0 votes Thank Flag Link Thu Apr 4, 2013
Thank you for being blunt, Just to clarify that I have over 600K in 401K and I will invest around 350K which will give me a rental money around 2000 - 2500 per month.
Flag Thu Apr 4, 2013
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