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Question for the Money Doctors

Question submitted on Dec 30, 2012.

Question

I am 59 1/2 years old, nearing retirement. My husband and I are in good financial shape to retire at 64 however I have a small $35,000 Roth IRA & considering using it to buy rental property through a self-directed IRA. Our financial planner is skeptical. What is your opinion?

Answer

There are too many questions that need to be answered first. Most of them are not really financial in nature. realize that if you "use" this 35,000 your liquidity is gone.

1. Why are you buying this? (income investment eventual retirement there, etc)

2. Are you ready to be a landlord and deal with vacancy and repairs and other issues?

3. What is the overall cost? (i.e. is there a mortgage as well?)

4. What is the rent (will it cover your payments/taxes/expenses)?

5. Is this TRULY a great buy?

This is MORE than about money. Having said that I would run the numbers as a self directed IRA and NOT as a self directed IRA. Evaluate the difference. Once you''ve committed there''s no undoing this.


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