Real Estate Articles » Foreclosure Investing

A New Source Of Funds For Foreclosures

By: David Cole
Submitted: 08:41AM on Thursday 21 August 2008

Are you getting your piece of the incredible profits available from foreclosure opportunities?

Wholesaling, Fix and flip, rentals however you decide to make money, right now the investment window has never been better.

However, it takes money to make money…

Have you thought about using your IRA, 401k, 403b or other retirement monies?

You have no doubt heard that you can do this but did you know that the old fashioned IRA is NOT real estate friendly?

Congress recently created a much better plan to use, a self administrated (SA) Defined Contribution (DC) plan. This type of retirement plan is very friendly for real estate investing.

Here are 3 examples of the flexibility of this state of the art plan.

Number One:

Steve and Jenny want to use their IRA’s to invest in bank owned properties.

The IRA tax code says "Oh no you don't because you are related to each other"

The real estate friendly SA-DC plan does away with this problem because ALL of the retirement monies for both Husband and Wife are pooled together into a specialized checking account at their favorite local bank.

So, now the Steve and Jenny may have enough money to pay cash for the house and having cash may even negotiate a better price with the bank?


Number Two:

Steve and Jenny decide that they want to be full time real estate investors. Where will the seed capital come from?

The SA-DC plan to the rescue!

Both Steve and Jenny can borrow from their plan...up to 50% of their individual account balances to a max of $50,000 each. Now they have their very own credit line and can use these monies to snatch up that deeply discounted bank owned properties.


Number Three:

As a part of their plan Steve and Jenny have a Tenants in Common legal agreement. This will allow them to invest their own funds into the same property as the SA-DC plan

So let’s assume that they split ownership with the plan 50/50. When the property sells the profits will be distributed half to them and half to their plan.


Why is all of this possible when it absolutely forbidden to do these things in an IRA?

Because the SA-DC plan is governed by a totally different section of the tax code and that folks is very good news for real estate investors!

As a real estate investor if you are serious about applying your experience and skills to building massive wealth for your future security you need to work with a professional who can structure a real estate friendly retirement plan that has the right features for your situation.

At 12:10PM on May 08, 2009 - Paul Wilson said...

It makes sense investing in real estate during depression since prices are falling but you should be very attentive to know when the prices hit the bottom, you might miss the ride.. You can park the properties and sell it later for a good price and remember “millionaires are made during economy depression!” - http://blog.dodeals.com/