Tax-Minded Creative Financing

[Daniel Brandt]

I have a decent amount of money currently invested in the stock market. I would like to use some of that to either pay cash for a second rental property, or use as collateral on a loan that will reduce my down payment.

When I purchased my first rental home, I sold a chunk of stock to pay the down payment.  I could do that again, but the problem I'd like to avoid is paying the capital gains taxes on the stock I sell.

What/how should I approach a lender about using my stock holdings in a creative manner?

[Sandy Sawyer]

Depending on your age and time horizon, you might consider investing through a ROTH IRA. That's what we did. Of course, converting your traditional IRA to ROTH gives you a big tax hit initially, but everything grows tax free! Structured correctly, you can even buy and manage real estate through your ROTH. (We did this as well). Do your homework though before jumping into a strategy, make sure it makes sense for your situation.