Zillow Advice: Investing - Is it a good idea to use your entire 401k to buy an investment home and rent it out? http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ Zillow Advice | Zillow Real Estate If you want to see investment ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ If you want to see investment properties in Apple Valley, Victorville and Hesperia visit&nbsp; [Hotlink removed by Zillow moderator. See our <a rel="nofollow" title="Good Neighbor Policy" href="http://www.zillow.com/howto/GoodNeighborPolicy.htm">Good Neighbor Policy</a>.]<br/>It would really depend upon all the elements in the equation...unfortunately licensed real estate agents as well as brokers are typically not in a position to provide investment advice. You may want to consider speaking with a financial planner, tax advisor, and do some more homework and number crunching before making any impactful financial decisions. Do not take 'money' advice from real estate agents.<br/><img height="200px" width="250px" src="http://photos2.zillowstatic.com/o_a/ISplh5lkhq2sav0000000000.jpg" imageid="X1-IA76xqjkhq2sav0000000000_j02ps" uploadtype="new" imagetype="8"/> Thu, 05 Mar 2015 21:06:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2015-03-05T21:06:00Z Yes, there are. When the ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ Yes, there are. When the market goes back up and it will , the $15000 houses will be worth a little more than that. The bottom line is there has never been a better time to buy real estate. Go back and pick any decade. When prices were low , you had high interest rates. When the rates lowered , prices were sky high. Now you have both , low interest rates and low prices. Retirement funds are secure? Look at Social Security, the Postal Service stopped contributing matching funds, Police and Fire pensions are in trouble all over. &nbsp;All based on a Ponzi scheme but legal. Everyday on the news , rising costs of retirement benefits. And wait jobs are outsourced so there are no new jobs , and the current ones are being held on by a string.&nbsp;<br/>There is no for sure thing in life. &nbsp;When the bottom dropped out, I lost half of my 401k and I'm not the only person in this country that this happened to. &nbsp; &nbsp;O but wait , I made up for it with a $4000 house , that paid $6000 a year for the past 3 years and it's still going. &nbsp;Paid out better than my 401k. &nbsp;&nbsp;<br/> Wed, 17 Aug 2011 01:12:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-17T01:12:00Z Dead chickens are unpleasant ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ Dead chickens are unpleasant and should be avoided. Using a self directed IRA is a way to avoid penalties, but begs the question whether putting a majority of retirement savings into real estate is a good idea. Many realtors would say yes, many lenders might say the same, a financial planner may think otherwise depending on your holdings.<br/><br/>Any good advisor would encourage you to split your risk and not put all your eggs in one financial basket. In many situations (and of course depending on when they bought/what they paid), many people already have some risk in real estate in their portfolio mid life just with their primary residence. Markets cycle so you have to think about spreading the risk across more than one category, not magnifying it. Wed, 17 Aug 2011 01:05:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-17T01:05:00Z The question is pretty old, ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ The question is pretty old, but there are so many answers going in so many directions I just have to comment. &nbsp;Congratulations of Suzette for giving the only fully correct answer in the thread. &nbsp;Self directed IRA's CAN be a solid solution for your question. &nbsp;I would recommend a two step process: &nbsp;Talk with a mortgage professional to determine a solid price point for at least even cash flow (rent = mortgage payment, taxes and insurance). &nbsp;Get a complete breakdown of your options. &nbsp;Then take that information to a financial planner or CPA and get their opinion on whether or not it makes sense for you. &nbsp;<br/><br/>Asking a mortgage consultant or a real estate agent if it is a good idea to buy will rarely conjur up many negative opinions, to be sure. &nbsp;Kind of like putting a fox in charge of the hen house...you run the risk of a few dead chickens. Wed, 17 Aug 2011 00:41:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-17T00:41:00Z Hi Celvis,There is a thing ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ Hi Celvis,<br/><br/>There is a thing called a "self-directed" IRA. It is a type of retirement account that allows an investor to invest in alternative assets like real estate. A qualified professional can provide you with more&nbsp;details about this.&nbsp;<br/><br/>Here are a couple of things I have learned about these types of retirement accounts:<br/><br/>1. People can use their Self-Directed IRA to invest in real estate for rental income, or make real estate loans&nbsp;to earn&nbsp;interest income. All income earned from rentals and mortgage payments made&nbsp;must flow back into the self-directed IRA. <br/><br/>2. People are not penalized for using the money as long as it conforms to the strict guidlines that govern self-directed IRA's and how they must be structured. <br/><br/>Here is an interesting article from an article&nbsp;I found&nbsp;that explains self-directed Real Estate IRA's a little more:<br/><br/><a rel="nofollow" href="http://www.selfdirectedira.org/real-estate-ira" title=" (Full address: http://www.selfdirectedira.org/real-estate-ira)">http://www.selfdirectedir ... state-ira</a><br/><br/>Great question! Tue, 16 Aug 2011 07:52:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-16T07:52:00Z "There are decent properties ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ "<em>There are decent properties in my area going for 15k or less"<br/><br/>One thing is for sure, the people managing your 401k will need somewhere to stay after daytrading and happy hour<br/><br/></em>I am pretty sure most of the people managing my 401k or&nbsp; IRA are not living in a 15k house.&nbsp; <br/><br/><br/>Now lets break this down.&nbsp;&nbsp; If someone withdraws money from their 401k for an investment property they will automatically get a 10% penalty and in the original, very old post, they would also have to pay an additional 2.5% penalty to the State of California.&nbsp;&nbsp; They would then have to pay anywhere from about 20% to 35% in income taxes to the feds and state.&nbsp;Most likely 35% because they have to throw that money right on top. &nbsp;&nbsp; They would be very close to losing 48% or more&nbsp;of their investment before they even started.&nbsp;&nbsp;They would then have to pay a couple of percent to actually buy the house and probably another 8% to sell it in real estate fees and other expenses.&nbsp; <br/><br/>Now I do not know about you but if I know I am going to lose 58% of my investment, right out of the gate, I might have to give that one a pass.&nbsp; I would also have to question anyones motives or intelligence&nbsp;if they told me it was a good idea.&nbsp; Sun, 14 Aug 2011 04:46:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-14T04:46:00Z If you can find a good low ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ If you can find a good low priced cash deal, a partial pull may work. I wouldn't go full monty.&nbsp;Property prices in &nbsp;different areas may benefit some more than others. There are decent properties in my area going for 15k and less. Long distance property can and will be a headache.&nbsp;Management company or not.&nbsp;<br/>401k is an investment based on buying low and trying to get the best return.<br/>The same&nbsp;formula works in real estate. Buy low&nbsp;, get a decent return , ride the wave and then sell for profit.<br/>One thing is for sure, the people managing your 401k will need somewhere to stay after daytrading and happy hour.<br/>&nbsp; Sun, 14 Aug 2011 03:28:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-14T03:28:00Z No, it is not unless you ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ No, it is not unless you are very experienced in real estate with a track record of success, have a rich relative that plans to die and leave you a comfortable retirement so you don't need your 401K for retirement or you plan to buy a cash flow positive 4-plex and live in one unit letting the other tenants pay your rent and maintenance.<br/><br/>Please rethink this plan. It is dangerous and there is no way to put the money back into growth once you pull it out. Penalties for your 401K withdrawal is also something to think about. Sun, 14 Aug 2011 02:59:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-14T02:59:00Z This question is coming up ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ This question is coming up all too often in this market. Speak with a qualified CPA and/or financial professional regarding the investment you want to make into Apple Valley California real estate. Sat, 13 Aug 2011 22:49:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-08-13T22:49:00Z There are companies that ... http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ There are companies that let you hold real estate in a 401K. Here is a link to one of them <a href="http://www.trustetc.com/" rel="nofollow">http://www.trustetc.com/</a>. All the money for repairs, taxes, insurance and everything must come from the 401K. All rent money must go directly into the 401K. If you go that route you will not have the tax penalites of withdrawing the 401K. I suggest the rental property be where you can keep a eye on it. Wed, 26 Jan 2011 02:06:00 GMT http://www.zillow.com/advice-thread/Is-it-a-good-idea-to-use-your-entire-401k-to-buy-an-investment-home-and-rent-it-out/382718/ 2011-01-26T02:06:00Z