Do you have a 401k? Invest in Aliso Viejo Real Estate

by keithwatts on March 10, 2012

in Buyers, Latest News

You could talk with 100 financial advisors in Aliso Viejo and almost all of them would agree buying low, and having a balanced portfolio.  Buying low is critical because investments are cyclical.  The housing market may be low, bonds may be high, if the stock market is down then the price of gold may be up.  Having all your eggs in one basket is a sure fire way to get hurt so being balanced protects your long term goals.

Buying Aliso Viejo Homes at the right time

How many people have a 401K, and don’t own a home?  Isn’t that an unbalanced portfolio?  If buying low is the main objective, I would say that buying a house right now is a great idea.   I know that the 401k is a sacred cow and cashing it out carries penalties which far outweigh the money so how does someone use their retirement in order to buy a home?

Knowing how to diversify with a Real Estate Agent

I have a tenant in one of my rental properties with great credit, and a wonderful job.  I know they have children and when their lease came towards the end I asked them, “Why don’t you buy a home?  Your children are going to be starting school and it’s very hard to find rentals without changing elementary school districts.”  They told me that they would like to buy a home but they couldn’t see any way to save the $100,000 they needed to for a 20% down payment.

They had a few factors that made FHA financing unavailable to them so they were forced to use conventional lending.  I asked them if they had a 401k and it turned out each had one with a combined balance of $275,000.  Something most people don’t know is that a participant can borrow from up to $50,000 per contributor, and if each participant has the money in their individual 401k that could be up to $100,000 per couple.

Own an Aliso Viejo Home while paying yourself interest

The beauty of borrowing from your 401k is that the interest paid goes back to yourself and there aren’t penalties.  Not all retirement plans are created equal so you must check with the plan advisor to research your options but taking a loan against yourself might be the best way to find your dream home, get the financing you need, buy low,  and balance out your retirement portfolio with some Real Estate.

Prices have come down quite a bit and rents have been going up.  Look at your portfolio and you may find that your are a great source for borrowing money.

Teaser Photo Attribution: kenteegardin

Blog Photo Attribution: kenteegardin

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Post by Keith Watts

Keith has written 88 articles.



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