I’m 17, Roth IRA vs. Real Estate Investment

[Jaden George]

Hey I'm seventeen years old and trying to figure out what to do with my money. I make upwards of 10k a year from a w2 job and save every penny. I want to own a multi-family house in my college town by the time I am 20. My question is when or how much should I start investing in a Roth IRA to start the compounding effect while not imposing on my potential real estate investing money? Thanks!!

[Joshua Hanning]

Why not both? If you are able to invest in a Self Directed Roth IRA, You could effectively have the option to use those funds to invest in an investment property. There are many types of self directed IRA's and you will want to research them to make sure the one you get can hold real estate (you will get some that say "Yes you can invest in Real Estate" which is not the same as purchasing property in your Roth IRA) With the proper product, all proceeds that come from the Rent or sale of the property are Invested back into the Roth and will grow Tax free without counting against your contribution limits. The flip side is that expenses will also have to come out of the Roth, such as Vacancy, Maintenance, CapEx, and Management...because you will not be able to manage the property yourself. Please seek out the guidance of a CPA and Financial Advisor knowledgeable about these types of products.