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Agent Debbie Blumenthal tells us how she tapped into a retirement account to pay for an investment property she’s now renting out for $1,150 a month.
“I’m a realtor who lives in Southern California and have been interested in real estate, over and above my job, for a long time. I had long thought of buying real estate in the self-directed IRA that I hold with The Entrust Group, but was reluctant to move forward because of a combination of high real estate prices and a desire to pay for the investment property all in cash. As the real estate market began to fall, I started to look at areas where I thought a rental property would do best – someplace close to a major city and also close to resort areas.
A few months ago, I hit it just right: I found a bank-owned property in Stockton that I liked a great deal and had come down enough in price — from more than $200,000 in the previous sale to just over $80,000 — that I could pay for it all in cash from her self-directed retirement account. The property is accessible to both San Francisco and the Lake Tahoe area. Although it was in relatively good condition at the time of the sale, I spent a number of weeks fixing up the property and am now renting it out with a return of at least 10 percent expected during the first full year.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.