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Buying small home with cash

I am divorcing and I am wondering if buying a small home, outright with cash, now from retirement savings is wise. I will be a single mother, at college and working part-time for the next three years. I can purchase the home and still have left, in a Roth IRA, the same amount that three years ago, would have been my share of the savings anyway after the market crashed. The reitrement fund was depleted but has recovered somewhat. The home is a small town home with great rental potential, in a community that has a lot of these homes rented on a regular basis.
  • April 27 2011 - US
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Answers (7)

Since you are in the process of divorcing. Better consult with an attorney or the counsler/judge handling your divorce,  before you take any money out of your IRA.

Even if you are done divorcing, might still want to check to see if it is safe to take the funds out.
  • April 27 2011
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I would wait if I were you. Especially a town-home. I think condos and town-homes are going to take another hit. Leave your retirement right now in my opinion I wouldn't touch it. If you are going to be a single Mom only working part time I would just sit tight right now and keep that money in a low risk getting a small return. I am not accountant, stock broker, or attorney but that is my opinion on what you should do as a Realtor, mother, and woman. Good Luck!
  • April 27 2011
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Thanks for your question Brenda.  The answer is, "it depends" on where, what market, most importantly the house....what kind of condition is it in, will it have items that fail in the next couple of years, etc...  This is why it is SO IMPORTANT you work with a full time, professional Realtor in your area.  I always recommend buyers look for a Realtor in there area on Zillow and read the agent's past client reviews of them.  If you can not find one satisfactory, I would be willing to assist you in finding one.  This is critical.

Good luck, hope this helps!
  • April 27 2011
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Real estate is high risk, time consuming, and stressful. I know as I own a dozen single unit properties. Have you owned rental properties before?

You might want to avoid adding another stress to your life until things settle out. Also, talk to a financial advisor about putting too much retirement money in real estate.
  • April 27 2011
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Profile picture for wetdawgs
Buying before the divorce is finalized is not wise, IMHO.    Up until the day the papers are signed and you are celebrating the final signatures, financial transactions carry a degree of risk.

If you need to move out, move to a small apartment and put your stuff in storage (or minimize it with a garage sale and freecycle).   Then, when everything is signed and you know exactly where you stand financially - then consider a purchase.
  • April 27 2011
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I don't feel I have the expertise to give anyone  advice as far as taking from their IRA but I will say this, I would not for myself.  The market in many area's is still declining in price.  I do understand exactly what you are considering this for and admire it.  I was a single mom and know that the upkeep, taxes, insurance and everything else that comes with home ownership is a big responsibility.  My suggestion to anyone wanting to buy even for investment purposes is to make sure you can carry that property on your own if necessary.  Even renters can come across a hardship and stop paying rent.  I personally believe you will still get a great deal on a home in a few short years, good luck!
  • April 27 2011
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I would not do it myself. However this is something that you must ask yourself. "Do I need this home right now for my family? And am I going to be okay witht he fact that in a few years the value of the home may be drastically less than what I paid?"
  • April 27 2011
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