Skip to Content

Fund Your First Newport News Rental Property with a Self-Guided 401(k)

Model House and Cash in a Miniature Shopping CartInvesting in residential rental properties is safe and profitable but attaining the funds for a down payment can seem to be an unconquerable obstacle. On another note, accessing the funds you’d like to invest in real estate can perhaps be more manageable than you assume. If you keep a 401(k) plan or an Individual Retirement Account (IRA), you may be able to benefit from them by using them to fund a rental property purchase in Newport News. Even more than that, with appropriate planning, utilizing a retirement account to fund an investment in real estate, could result in little or no tax implications. By employing funds you already have, you really can invest in a much more profitable future today.

An IRA or 401(k) is a long-term savings account that can impart quite a lot of tax advantages when certain IRS regulations are followed. In several instances, these retirement savings accounts are self-directed, in this connection you can choose how to invest the funds in the account. As for instance, a self-directed 401(k) can be laid out in mutual funds, bonds, and much more. But, the law prohibits direct investment into real estate from a 401(k). To avail access to your 401(k) funds, you will have to comply with a couple of required steps.

To benefit from a 401(k) to invest in real estate, the choices available for you are either filing a loan against your retirement account or transferring the funds in your 401(k) to an IRA account. The hassle with getting a loan against a 401(k) is that it will surely lead to those funds being taxed, an instance that various investors would rather avoid. Because of this, the better choice is to transfer your 401(k) into a self-directed IRA. The transfer itself is typically tax-free. In addition, and unlike a 401(k), many IRA accounts can be used for a wide range of investments, including real estate.

To open a self-directed IRA, you’ll have to open it with an IRA custodian such as Equity Trust, Community National Bank, IRA Services Trust Company, or others. The new IRA account can be funded by using an existing IRA or rolling over a 401(k), a procedure your IRA custodian will have to guide and help you with. Hence, when you feel you’re ready to secure your residential rental property, you’ll just have to submit a direction of investment form and get it approved. As soon as approved, you can make a request for the funds you want to finish off buying the property you want. To make this possible, the name of your IRA must appear on the title of the property, sanctioning your custodian to issue funds. You would then have an investment property straight from your IRA account holder.

Owing to the manner that ownership is arranged when making use of an IRA, all current spendings and revenue from the rental property would then be undertaken by your IRA custodian account. This constitutes any proceeds from the eventual sale of your investment property. Once you sell a rental home that was purchased with an IRA account, the proceeds from the sale must remain in the IRA account. The benefit of actualizing it in this process is that all these funds are not swiftly taxed, but quite the opposite. The tax liability is delayed to the future use of the funds.

One necessary piece of detail to comprehend regarding the use of a self-directed IRA to invest money in real estate is that you will not be able to manage your rental property yourself. Instead of that, you’ll have to hire a professional property management company such as Real Property Management to handle the rental’s current and on-going operations. Even though you may take it as a limitation, rather this process to real estate investing is in line with current business models, where an investment property owner partners with quality professionals to grow their wealth.

There are few investment options with the stability and potential that residential real estate has to offer. When you work with Real Property Management VA Peninsula to give you assistance in your investment operations, you are sure that you have a comprehensive and professional team of property management experts on your end. We will deal with all of it, from the usual to the cumbersome nuisances and concerns, leaving you free to build up your investment portfolio into financial freedom. Contact us or call us at 757-251-9188 for more information.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details